Recently, I had the pleasure to speak at the 2010 ePharma Summit on how online direct-to-consumer marketing for pharma brands was driving increased treatment and adherence. It was a great opportunity as most of the leading marketing minds for the industry were in attendance. There was much to be discussed this year as 2009 saw increased activity from the FDA in both warning letters and hearing on online marketing. Below are my thoughts on the state of pharma online and the situation with the FDA.

comScore’s analysis of holiday shopping trends during the 2009 season was, in some ways, reassuring, with online sales during the November – December period growing 4% over a disastrous 2008 period. However, a closer examination reveals that for smaller retailers it was another bitterly disappointing shopping season:

As you can see, while the largest 25 retailers (including the likes of Amazon, Sears, Best Buy and Walmart) grew their sales by 11%, the remaining retailers saw their sales drop by 7%. That’s not say that each of the retailers outside of the top 25 saw their sales decline but, taken as a group, it’s clear that many smaller retailers struggled this past year. In these economically difficult times, I suspect that many smaller retailers are simply not able to compete with the aggressive promotions and price discounting being implemented by their larger brethren. There’s an old marketing axiom which says that companies who are able to continue to invest in marketing during recessionary times actually emerge from the recession in a stronger competitive condition. That certainly seems to hold true today for the larger online retailers.

The sad plight of smaller businesses is revealed in stark reality in a report from the National Federation of Small Businesses. In December 2009, they conducted a survey of their members in which they explored sales and profit trends and expected hiring plans. Here are some of the key results. They are very disturbing.

• When asked if their sales had increased or decreased during the Oct – Dec period compared to the prior three months, a net 25% of small businesses said sales had declined. I think this is a staggering finding when one considers that this means that many small businesses are saying that their sales in the peak holiday shopping period were actually lower than in the prior three months.
• Widespread price cutting contributed to the reports of lower nominal sales
• Lack of sales was the single most important problem faced by small businesses, being cited by 35% of respondents
• When asked if their profits had increased or decreased during the Oct – Dec period compared to the prior three months, a net 43% of small businesses said that their profits had declined. Again, very disturbing results.
  • Only 12% of owners reported higher earnings in most recent three months
  • 54% reported lower earnings with 65% citing weaker sales as the cause
  • Low sales volume was the number one reason cited for lack of earnings by 35% of respondents
• Historically, small businesses have been the source of new job creation in the U.S., accounting for two thirds of all new jobs created. But today, the “job generating machine” remains in reverse. Jobs are being lost and new hiring is very weak.
  
  • When asked if they were planning to create new jobs, a seasonally adjusted net 2% of owners reported they didn’t plan to create new jobs over the next three months. Nonetheless, this is an improvement of one percentage point over the November number.
  • However, while the trend for increased employment is going in the right direction, there is no indication that job growth from small businesses will not be strong enough to dramatically reduce the unemployment rate. This is a particularly thorny issue because without this engine running at full throttle we will really struggle getting the unemployment level back down to reasonable levels.

So, what’s a small retailer to do in this ultra-competitive environment? Well, staying close to one’s customers is probably more important than ever. I think that using social networking to build communities of customers and then reaching out to them with relevant and frequent communications holds a lot of promise, especially for smaller retailers. They should be able to execute better than their larger competitors. For one thing, they don’t have to deal with the internal organizational bureaucracy and delays that can hinder many larger companies when deciding how CRM / social networking programs should be executed. And, the use of social networking offers significant opportunities to reduce marketing costs, which will help smaller retailers overcome the challenge of their larger competitors’ greater financial resources.

Hello, my name is Frank Findley and I’m the VP Research at ARSgroup, which just this past week was acquired by comScore. ARSgroup is a leading communications research agency specializing in the measurement of advertising persuasion for TV and multi-media campaigns and helping many of the world’s largest brands in the consumer goods, pharmaceuticals, retail and entertainment industries optimize their advertising messages. ARSgroup’s ARS Persuasion methodology is one of the world’s most widely documented and independently validated predictive measures of the persuasive effectiveness of advertising creative.

For the last thirty years, ARSgroup has conducted numerous studies into the relative role of creative strength and media quantity in generating ad campaign sales responses. I thought you might be interested in some of the insights we’ve uncovered. One of the most interesting findings from this research is that the advertising creative is four times as important in determining sales outcomes as the amount of media spent. Said another way, what we say and how we say it plays an even more critical role than how often we say it.

This four-to-one ratio highlights the great leverage to be had in optimizing the creative. Even modest improvements in persuasiveness and message communication can yield sizeable improvements in sales per media dollar spent.

So what are some of the tips and techniques we have found for optimizing creative? Here are four that are especially pertinent to the e-commerce space:

1. Quantifying benefits. When making shopping and product decisions, people can have a hard time valuing the benefits presented. Quantifying these in terms they understand can lead to significantly higher results. Two simple examples are “20% lower prices” rather than “lower prices” and “2 days faster shipping” instead of “faster shipping”. It should be noted that these quantifications don’t have to be verbal or mathematical. The telecoms, for example, have had great success in using coverage maps to help consumers quantify the benefits of their 3G networks. These types of simple changes in copy can have impacts far in excess of the effort applied in finding and executing them.

2. Take advantage of multiple executions when communicating complex or higher order messages. Sometimes a message is too complex to be captured in a single creative execution. This is especially the case of lower CPM advertising like banner ads. One way to circumvent this obstacle is to take advantage of the frequency in a media plan by using multiple executions to break the complex message into smaller chunks. In the minds of the consumers, these smaller pieces get synthesized and elevated to the desired higher message. For example, take the blinded case of one company that wanted to communicate the higher level message that it is sustainability-focused. This was accomplished through multiple ads each focusing on a different “green” initiative the company undertook; implementation of a waste reduction program, gains in manufacturing energy efficiency, and reduced plant emissions. Consumers who saw any individual ad took away that chunk of the message. But consumers who saw all three ads synthesized the message pieces and translated them into the broader sustainability concept. (See Table 1).


Source: Seven insights from holistic campaign testing; Frank Findley, Quirk’s Marketing Review April 2008

3. Don’t forget the emotional content! Our research shows that the advertising campaigns which work the best create both emotional and rational connections with the consumer. When using rich media and video, it is often possible to include compelling emotional and rational content in the same execution. But if this is not possible, use rich media with sound and motion to connect emotionally and lower CPM formats to reinforce the easier-to-communicate rational messages.

4. Make the brand prominent. If the creative doesn’t link back to the brand, then the impact on sales will be missed. Therefore, it is important to prominently mention the brand verbally and visually. The best outcome is if the brand is perceived to be the hero of the action.