When MM&M debuted its Healthcare Marketers Trend Report, in 2013, it had a single major goal in mind: The aim was to get a better sense of the collective mind-set among higher-up healthcare marketers, especially within the context of sweeping changes that threatened to unsettle established practitioners and newbies alike.
How were they adjusting their strategic and tactical approaches in the wake of the digital revolution? How were they tackling challenges old (the patent cliff, channel bloat) and new (freshly assertive payers, patient centricity, and everything that comes with it)?
The first two iterations of the report revealed a sense of unease among marketers, a sense that the industry’s sudden and ongoing transformation could render everything they knew about their business out of date. At the same time, they also suggested a resilience that, frankly, had never sat near the top of any list of the marketing industry’s most durable characteristics. On the surface, the results were largely unremarkable — but if you delved deeper, you found a lot to be encouraged by and, indeed, like. Digital budgets were on the way up; would-be earthshaking events like the rollout of the Affordable Care Act had proved less an earthquake than a mild tremor.
Which brings us to the third edition of the trend report and the first since June 2014. Your super-glib headline? “Industry Rolls With the Changes.” Many of the encouraging trends that emerged a few years back have continued and some — notably, and obviously, the increased focus on, and budgets for, digital programming — have surged.
This year’s survey, fielded between late November 2015 and early January 2016 by MM&M in association with Guidemark Health, tapped 181 director-level-and-above execs, split among pharma (45% of respondents), biotech (21%), device (28%) and diagnostics (6%) companies (see below). They were asked to weigh in on a broad range of issues — everything from the size of their budgets to their preferences vis-à-vis branded and unbranded programs to the intensity of their challenges and opportunities.
The number of C-suite execs who participated in the survey increased since the last go-round, from 25% of respondents in 2014 to 31% in 2016. Sixty percent of respondents came from companies with more than $500 million in revenue, while 41% said they were “solely responsible” for deployment of their company’s marketing budgets. A majority of respondents (38%) noted that their budget covered a single brand, but 16% reported that they handled six brands or more.
In the following pages, we present the results of the 2016 MM&M/Guidemark Health Healthcare Marketers Trend Report, with comments from industry execs to add context.
BUDGETS AND AUDIENCES
The mean total marketing budget in 2015 slumped slightly, sliding to $11.9 million from $12.2 million a year ago, a 2.5% drop. Mean pharma budgets (down from $20 million to $19.4 million) and biotech budgets (from $11.9 million to $11.5 million) decreased too, though mean devices budgets jumped from $2 million in 2014 to $2.3 million in 2015.
Median total budgets saw a slight increase, from $1.8 million in 2014 to $2.2 million in 2015. A substantial outlier was the 95% increase in biotech median budgets, from $2.2 million to $4.3 million. (For the record: Comparisons of 2014 versus 2015 are based on reports from this year’s survey respondents rather than on a comparison of this year’s budget figures with the ones published in MM&M‘s 2014 Healthcare Marketers Trend Report.)
So while survey respondents reported some small degree of change in their marketing budgets, it is not huge percentages — a blip upward here, a blip downward there. One respondent, InteloMed president and CEO Jill Schiaparelli, isn’t surprised by the relative lack of movement.
“Big-picture-wise, I don’t see [marketing] budgets shrinking. I see them being reallocated,” she says. A former top exec with Johnson & Johnson, Schiaparelli says what has changed most is the decision-making calculus for pretty much every person in the healthcare world.
“That process has been diluted,” she explains. “More than ever, there are lots of different decision-makers in the process. You’ve got clinicians, obviously, but you’ve also got nurses, administrators, payers, you name it. So you’re seeing budgets that used to be [directed] at one audience get shifted to another.”
Schiaparelli’s theory makes sense in the context of the MM&M/Guidemark Health data on budget allocation with regard to key audiences. At the same time, when asked about the importance of these audiences, the usual suspects continue to rank high. Physicians/specialists came out on top, with 93% of respondents ranking them in the top three and 62% ranking them first. Patients/consumers, perhaps a little surprisingly, seized the second spot (56% top three/15% first) ahead of payers/managed care (55%/9%). There was a falloff after the top three, with nurse practitioners/physician assistants (39%/2%), shareholders/investors (24%/9%), pharmacists (17%/3%) and NGOs/advocacy groups (16%/1%) lagging behind (see below).
Budget allocations among these audiences didn’t necessarily correlate with their perceived importance, however. Fifty-two percent of respondents reported an increase in their 2015 physician budgets against the year-ago period, but 40% reported a decrease. Even more pronounced disparities were revealed with payers/managed care (38% increase/51% decrease), nurse practitioners/physician assistants (23%/63%), NGOs/advocacy groups (25%/58%), and especially pharmacists (17%/69%) (see below).
Asked about these figures, Schiaparelli cautions against making snap judgments, especially in the absence of specific information about respondents’ marketing priorities.
“Right now I’m focusing on dialysis clinics, which come in different flavors. Some are freestanding, some are part of 1,000-clinic groups,” she says. “I find myself going to more nursing conferences — because if you don’t get nurse buy-in, you’re going to have problems no matter what the doctor has to say about it. When I was at J&J, my marketing goals were very different.”
Equally interesting — and less challenging to pin down or explain — were the responses to a question about budgets for branded and unbranded programs. As might be expected from an audience of marketing execs who ply their trade primarily in the U.S., branded budgets saw sharp increases over 2014 levels. Fifty-six percent of respondents noted that those budgets increased in 2015, while only 7% reported a decline. Unbranded budgets experienced no such spike: 31% of respondents said these budgets increased and 19% said they decreased (see figure 3). The easy explanation for this? U.S.-oriented marketers do branded programs because they can.
TACTICS AND CHANNELS
Not that any results from the Healthcare Marketers Trend Report were preordained, but one was close: It was a safe bet that the trend toward a greater use of digital channels would continue. The so-called digital doctor isn’t just a figment of some pharma marketer’s imagination: Eighty-six percent of survey respondents said they used digital channels to reach HCPs during 2015, up from 82% in 2014. The use of websites (78% of respondents used them in 2015 versus 71% in 2014), digital sales materials (57%/46%), social media (51%/43%), digital ads (50%/44%), and mobile/tablet apps (40%/30%) to reach this coveted audience all surged (see below).
“News flash: Doctors like digital,” deadpans Guidemark Health CEO Matt Brown.
Still, marketers targeting HCPs didn’t exactly abandon their support of non-digital approaches. Eighty percent said they turned to meetings/events in 2015, the same percentage that did in 2014. In fact, at least 50% of respondents devoted significant attention to printed sales materials (64% used this channel in 2015), sales reps (64%), research/data/analytics (58%), patient-education materials (57%), and paid speaker programs (50%).
Even journal print ads — supposedly enjoying their eighth straight year on the pharma-marketing endangered species list — received a reasonable amount of play from survey respondents, with 48% using them in 2015. Twenty-six percent of respondents reported using them more in 2015 than in 2014; 32% said they use them less. Schiaparelli, however, says that the impact of journal ads may have been overstated when they were a go-to tactic for pharma and healthcare marketers — and that they pale beside the digital tactics currently surging in popularity.
“Journal advertising has never been cost-effective,” she argues. “I’ve been doing this 20 years. Never once has a clinician told me that they were compelled to do something because they read it in a journal. For something like ‘visit us at trade show X,’ it’s fine. But by and large, journal ads aren’t compelling.”
By way of comparison, Schiaparelli talks about her increasing satisfaction with digital events like webcasts. “You get a much better return. You can count how many people attended and then you can benefit from the information they gave you when they signed up.”
She believes that as such tactics evolve, however, the current one-size-fits-all model needs to be further refined. “When we do a webinar and invite a bunch of people, we get mixed results — they get on, they get off,” she explains. “When I make it more exclusive — saying there are only so many slots, ask people to do some pre-reading, make it invitation only, it works much better. Make it clear that certain people are being courted.”
FOCUSING ON THE CONSUMER
When it comes to consumer marketing tactics (see below), digital is similarly surging. Seventy-six percent of respondents said they used digital channels to reach consumers in 2015, up from 72% in 2014. By comparison, 40% of respondents reported using traditional advertising to reach consumers in 2015. While that percentage is up two points from 2014, the bottom line is that the gap between digital and traditional continues to widen.
For the first time, the Healthcare Marketers Trend Report asked respondents about payer marketing tactics (see below). The results were less than remarkable. Market research and advisory engagements (used by 56% of respondents in 2015) proved most popular, trailed by discounts and rebates (46%), value communications like publications and economic tools (45%), and conventions/non-personal promotion (44%).
The one place where the increasing digital dominance wasn’t reflected was in the data about channel marketing mix (see below). Respondents devoted the greatest percentage of their marketing budgets — 13.7% — to professional meetings/conferences. Sales reps sponged up 13.3% of budgets, sales materials 10.3%, and content/materials development 9.8%. Digital channels lagged behind: Respondents assigned 8.8% of their budgets to websites/microsites, 4.5% to paid digital advertising (versus 7.4% to print/TV/radio ads), and 4.0% to social media.
The obvious explanations? That it costs a whole lot less to create a website than it does to stage a major-league industry get-together and that digital ad rates are much lower than traditional ones. Look for the latter to become more expensive, but not to catch up with anytime soon, traditional marketing costs, although our findings show that digital continues to rise. Twenty-seven percent of respondents increased the amount of budget devoted to paid digital ads in 2015, while only 16% increased the amount devoted to paid traditional ads (and 13% decreased their budget allocations there).
While the pharma and healthcare industries have notoriously been reluctant to share specific details about their marketing programs — both the effective ones and the stinkers — executives have always been willing to speak freely about the challenges confronting them. That holds double for the top challenge identified by this year’s survey respondents, the intensifying pressure from payers/managed care (see below). Seventy-three percent acknowledged feeling this pressure, making it the top concern among execs from companies medium or big (with more than $500 million in revenue) and small (less than $500 million in revenue).
This was to be expected, especially in the wake of the very public pharma–payer contretemps over the pricing of hep.-C drugs and PCSK-9s. What’s slightly surprising is that, despite feeling payer-related strains, 51% of respondents reported decreasing the amount of budget allocated to payers/managed care audiences. No one is suggesting that the best way to solve a problem is to throw money at it indiscriminately, but one wouldn’t think that decreasing budget devoted to an area of intensifying concern makes a lot of sense.
CHALLENGES AND OPPORTUNITIES
The other challenges respondents reported mostly fell in line with expectations. After payer–managed care pressures, the most-reported challenges were delivering innovative beyond-the-pill programs (66% of respondents from companies with more than $500 million in revenue, 35% of respondents from companies with less than $500 million), FDA regulations/guidelines (64%/59%), clinical development/time to market (61%/60%), MLR/internal medical/legal approval (59%/31%), and smaller launch budgets (56%/58%).
If there was any surprise in the challenge data, it’s that media fragmentation was only cited by 28% of respondents from big and midsize companies and 36% of respondents from respondents from small ones. And a slightly greater percentage of respondents pointed to the economy in general as a challenge (55% big–midsize companies/54% small companies) than they did the last time MM&M surveyed healthcare marketers (52%/57.5%); this ranks as a surprise because, by most measures, the economy was stronger at the dawn of 2016 than it was in early 2014.
As for opportunity potential, a few likely areas topped the list for respondents from firms with greater than $500 million in revenue (see below). Big data was cited by 63% of respondents, customer behavioral change by 59%, pipelines by 59%, delivering innovative beyond-the-pill programs by 58%, and social media by 56%. Neither big data (37%) nor pipelines (39%) ranked among the top 10 opportunities cited by respondents from small companies, who sense more promise in social media (51%) and M&A activity (44%).