ROI calculation for digital programs

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Ferdinando Scala provides his thoughts on developments within pharma, and how this has affected ROI calculations. Over the last few years, the pharma industry has witnessed a strong transformation in business model, operational modalities and organizational structure... Ferdinando Scala provides his thoughts on developments within pharma, and how this has affected ROI calculations. Over the last few years, the pharma industry has witnessed a strong transformation in business model, operational modalities and organizational structure... Ferdinando Scala

Publicis Healthware International

Over the last few years, the pharma industry has witnessed a strong transformation in business model, operational modalities and organizational structure.

This transformation has been particularly dramatic, resulting from the convergence of several factors, each capable of generating a limited crisis when taken alone. When summed up, these factors have been at the basis of a complete overturning of the previous certainties, and required a deep readjustment of pharma companies’ attitude.

First, the progressive drying of the pipelines and the massive introduction of generics in the major European countries has produced the first serious profits’ crisis ever in the healthcare industry. The previously blockbuster-based business model, especially for general medicine, is not there anymore. In this context, the traditional sales force, built of hundreds of sales reps, is a thing of the past.

Secondly, the access to doctors by pharma companies has been progressively crunched, in response to the high-pressure promotional practices implemented in order to gain minimal increases in terms of share of voice in a growingly competitive market. Sales representatives’ mirroring strategies have resulted in doctors having to push back the discussion with pharma companies, so as to defend their own time and limiting the impact on their professional duties.

Thirdly, the pressure toward cost reduction was already strong in the pharma industry before 2008, and it has been further exacerbated by the worldwide economic crisis. In an effort to improve commercial operations’ cost-efficiency, companies have reduced breadth and extent of their geographical reach, and focalized on high-potential areas as never before.

Fourthly, following several issues in the post-marketing of drugs, namely after the Vioxx case of 2004, there is a steadily growing regulatory pressure toward all sorts of promotional activities. This led to resounding decisions by industries, such as the suspension of sponsoring for all the international congresses (AstraZeneca) and the renouncing to distribute all sort of gadgets (GSK).

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"... the pressure toward cost reduction was already strong in the pharma industry before 2008, and has been further exacerbated by the worldwide economic crisis."

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The resulting panorama of the pharmaceutical market is a completely new one, with many pitfalls with respect to the past, but also with a number of opportunities. The most important consequence of massive divestment and efforts’ concentration operated by pharma companies in response to all the above mentioned factors has been a consistent loss of training and exchange opportunities for doctors.

Almost contemporary to the convergence of which above, the emersion of digital as a new mean of communication between doctors and pharma companies has progressively emerged. The first attempts in moving towards digital communications have been performed throughout the first years of the decade, but it included tools that nowadays seem trivial. “Making digital communications” at the time meant to use CDs or DVDs for storing and distributing contents, which basically remained the same as the paper-based ones. Most importantly, measuring these activities was no issue to pharma marketers, since distribution was performed through sales reps, and therefore could be assessed by the traditional full time equivalent (FTE) model.

The sudden explosion of digital assets across the last three years, and namely the introduction of the iPad as a substitution of traditional paper-based sales-aids, defied, for the first time, the consolidated thought models in pharma marketing. For the first time, remote-detailing calls, online self-detailing, remote and interactive participation to congresses, social networking, became possible at a viable cost. Coupled with the growing need of making more for less, the technological opportunity determined a swift rephrasing of spending models in pharmaceutical marketing. While a common percentage of investment in digital before the e-revolution was included between 5% and 10%, starting from 2010 this percentage solidly placed around 60% of total promotional budget at brand, franchise and geography level.

While investment shifted, a widespread need emerged, e.g. the demand for viable methods of measuring the return of investment (ROI) of digital activities. The marketers, indeed, rapidly realized that the traditional FTE metrics were not useful anymore to measure the new relationships. This generated problems among middle and top management, since while both acknowledged the need to make a swift transition to digital, the answer to the question “how do you measure the return of the money you invest?” remained evasive. Furthermore, since field activities are far from being abandoned, and are still measured according to the traditional FTE model, the problem about how to combine the ROI of field activities and the one referring to digital activities in order to derive a general measure of efficacy for commercial operations remains elusive.

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"It is therefore apparent that measuring the efficacy of digital calls has to rely on a wider number of parameters..."

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Traditional digital metrics such as the number of hits, the number of visitors per page, the number of page views, and the time spent on a certain page, etc., resulted, in this respect, to be ineffective. While theoretically allowing a direct comparison with FTE (number of digital visits = number of face-to-face visits), the number of hits or the other traditional digital metrics didn’t restitute anything about the quality of the visit. This parameter is somewhat taken for granted with face-to-face visits, since sales reps only refer to visits where doctors’ attention is ensured for a while. Digital metrics apparently fail in this respect, since there is no direct way to measure the rate of attention a doctor is paying to certain content. It is indeed possible, for example, that a doctor accesses content and then receives a phone call, which distracts him. When measured only in terms of time to access the content, this call seems to be highly efficacious, while indeed its value is near to nil.

It is therefore apparent that measuring the efficacy of digital calls has to rely on a wider number of parameters, whose combination allows assessing the quality of a single digital interaction. Furthermore, in order to ensure a full overall measurability of ROI deriving from field and digital activities, a measure of direct comparability between FTE and digital call equivalent (DCE) has to be established.

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About the author:

Ferdinando Scala is International Digital Strategist at Publicis Healthware International, a Publicis Healthcare Communications Group company. His main fields of expertise are digital strategy, digital metrics modelling, marketing and communications, change management.

An Alumnus of the prestigious Nunziatella Military School of Naples, Italy, Ferdinando holds an MSc in Biology (summa cum laude) and received MBA training. He spent 12 years in Big Pharma companies, holding positions in Sales, Marketing and Commercial Operations at national and international level. A passionate Wikipedia author, on June 2011 he has been shortlisted for becoming a member of the Board of Trustees of the Wikimedia Foundation, and he was the Candidacy Leader for the City of Naples to be the hosting town for Wikimania 2013, the global conference of Wikimedia Foundation.

LinkedIn: http://www.linkedin.com/in/ferdinandoscala

Twitter: @fscalapro

How have developments in the pharma industry led to changes in ROI calculations?