Some brands thought to shift online ad dollars, creating uncertainty for WebMD
The news that WebMD is considering a sale or merger and Everyday Health's new owner plans to divest its less profitable businesses underscores the challenges facing “traditional” health content sites at a time when drugmakers are spending their money elsewhere.
Several factors are at play. Millennials, now at an age when they are actively seeking information about health changes, like parenting and pregnancy, prefer information formats like video or mobile. In addition, healthcare marketers are also increasingly turning to sites like Facebook and other media sources, like patient communities, that rely less on banner ads.
Advertisers, in general, are no longer spending as much banner ads, with Zenith reporting a 3.1% decline in banner-ad spending in 2016.
“Companies like Everyday Health and WebMD have been the biggest beneficiaries of web banner advertising,” said Charles Benaiah, CEO of technology startup Watzan. “As the web banner advertising comes down, they're going to be disproportionately affected.”
Because, in fact, pharma ad budgets are up — 72% of healthcare marketers reported an increase in their 2017 marketing budgets, according to the MM&M and Guidemark Health's Healthcare Marketers Trend Report, and spending on DTC ads rose 10.4% to $5.8 billion in 2016, compared to the year before.
Ad spending isn't down at WebMD, which declined to comment for this story. What is changing, though, is the online locations where companies choose to place ads for consumer-facing healthcare brands, like consumer packaged goods, pharmacy chains, and and OTC drugs. WebMD's OTC and CPG advertising and sponsorship revenue rose 6%, to $132 million, from 2014 to 2016, but the biopharma and medical device ad and sponsorship revenue jumped 30%, to $428 million, during the same two-year span.
As such, the company's physician site, Medscape, most likely remains a valuable resource, even as it faces more competition from sites like Doximity, a social network for doctors.
WebMD's consumer business could also be facing more competition from other consumer media sites, such as The New York Times or The Wall Street Journal, said Mark Kelley, an analyst at Citigroup.
“In the realm of digital, WebMD is very much considered a traditional outlet,” he said. “So maybe [brands are] being experimental with social media or other channels on the internet.”
During a call with investors in February, WebMD CEO Steve Zatz cited several reasons for the need for a sale or merger, including drugmakers facing pricing pressure, continued issues around managed care, and challenges in product launches.
“Investors are trying to figure out what the value is between the biopharma side,” Kelley said, “and then the OTC or more consumer-facing side from the advertising business.”
Source: ComScore, February 2017
Healthline, a health content site that owns Medical News Today, and represents Drugs.com and Livestrong, is gaining traction among millennials who are internet-savvy and likely to block online ads altogether, said Healthline CEO David Kopp. There are also re-launched sites like About.com's Verywell, and sites like CNN Health and Healthgrades, both much smaller than WebMD, that have seen their traffic grow over the last year.
According to February ComScore data, the percentage of millennials who visited Healthline and Medical News Today is 45% and 48%, respectively, while the percentage for WebMD and Everyday Health is 36% and 37%, respectively.
Part of Healthline's strategy is to partner with influencers such as motivational speaker Gabrielle Bernstein and physician and comedian Dr. Priyanka Wali, Kopp said. In both of those cases, they used Facebook Live to engage with patients on topics such as diet and multiple sclerosis. The company also operates patient communities, like a rheumatoid arthritis community, which has about 30,000 followers.
Another company, Health Union, has condition-specific patient communities on Facebook and platforms for 12 conditions such as Migraine.com and Asthma.net. It plans to launch seven more platforms in the next two years.
“Through these communities that we develop, we're able to provide clients with patient insights, clinical trial recruitment, anything that involves impacting the patient population,” said Tim Armand, president and co-founder of Health Union.
Additionally, the shift of consumers moving from desktop to mobile is affecting online publishing across all verticals, in part because users more often rely on mobile apps rather than websites, noted Mitchell Reichgut, CEO of advertising agency Jun Group. Among pharma companies, there is more interest in “value-exchange advertising,” he said.
“Value-exchange, even in an airport [where advertisers show users a video clip in exchange for free wifi], provides those opportunities. If you suffer from hayfever, you can opt in and see something that's relevant to what you're going through, and spend 60 or 90 seconds learning about it,” Reichgut said. “They need to know they can tell a longer story.”