Advertisers are reaching out to health-conscious consumers who turn to the Web on a need-to-know basis.
A growing number of consumers are connecting to the Internet in search of health information, and the screech of their modems is music to drug marketers' ears. According to a Harris Poll, 70 million consumers - "cyber-chondriacs" in the poll's terminology - logged on last year to learn more about their health. That's nearly three-quarters of the entire online population.
And quite a few of those users are serious enough about those point-and-clicks to turn them into cash. In 1999, consumers spent $93 million on over-the-counter (OTC) medicine online. By 2004, online spending in the category is expected to hit nearly $2 billion dollars, according to Forrester Research.
As sales mount, so too does the Internet's importance as a media channel to reach consumers about everyday health concerns. Between 1997 and 1998 - the latest full-year data available - spending on online advertising for nonprescription drugs more than doubled, to $2.5 million. And the pace doesn't appear to be slowing: By June 1999, online ad spending had already reached $1.9 million, and that's before the cold and flu season ad rush.
But other than jockeying for product placement and placing banner ads on Web sites, mega-pharmaceutical manufacturers such as Johnson & Johnson and Bayer are approaching the Internet cautiously. "The large manufacturers are considering different channel-conflict issues, and are concerned about possibly alienating current distribution channels," says Bradley Mitchell, chief marketing officer of DrugEmporium.com. The possibility of a manufacturer directly competing with its retail partners online is a thorny issue throughout the consumer goods business.
That leaves Web pharmacies like DrugEmporium.com and Drugstore. com to be the major online OTC drug marketers, for now. But while they lack the channel-conflict problems of their vendors, most online pharmacies have yet to fully tap the possibilities of using the Internet to communicate with consumers about their less-serious health concerns, such as allergies and colds, upset stomachs, and minor sleep disturbances. That's because, so far, consumers have been more interested in turning to the Net for information about illnesses that require prescription medications: The top six conditions or diseases that were of interest to consumers online in 1999 were depression, allergies or sinus, cancer, bipolar disorder, arthritis, and hypertension, according to Harris. Although that list includes ailments potentially treatable by OTC products - sinus problems and arthritis pain, for example - prescription drugs have a higher price point, and are therefore worth more of a marketing inve! stment by online pharmacies, ind ustry experts say. Plus, "there's a stickiness to a prescription that you don't have with an OTC order," says Mitchell of DrugEmporium.com.
Rees Pinney, vice president, sales and marketing for FamilyMeds.com, agrees. "It's the model that's been true as long as health-related products have been sold...When consumers fill their prescription, they want to buy other health products. If you're going to pick up your Allegra or your Lipitor, you're also going to get your Tylenol and Chapstick at the same time."
Most of the tap dancing for the prescription-drug market happens out of consumers' sight, however. Thanks to the dominance of managed care in the United States, drug pharmacies must maneuver through the approval process to get on an organization's prescription plan. "We feel that the best way to develop a relationship with the consumer is to develop a relationship with their managed-care organization," says Pinney. "Once that relationship is developed, we can direct market through the plan to the members, letting them know the benefits of our site." FamilyMeds.com supplements its direct mail efforts with traditional marketing campaigns in a particular plan's region as a way to enhance credibility with plan members.
But measuring up to managed care companies' requirements can be a chicken-and-egg proposition, in that a site has to be established and well known. To achieve that status, online pharmacies must attract consumers to their Web pages, and they largely rely on online advertising to make that happen. To date, efforts have been focused mostly on developing banner advertising, creating partnerships with better-established sites, and building databases for future direct e-mail campaigns.
Most-wanted surfers: high-income mothers. Approximately 60 percent of DrugEmporium.com's buyers are female, according to Mitchell, and in households with children under 18 - and the market is far from fully tapped. The proportion of female shoppers online grew to 38 percent in 1999, from 29 percent in 1998, according to a CommerceNet/Nielsen Media Research study. One challenge is that mothers with small children often have an acute need for medication, but they're not going to want to wait seven to ten business days for delivery of their OTC drugs, says Pinney.
Challenge or no, all of the online drugstores want Mommy's eyeballs. To grab their attention, FamilyMeds.com is planning to launch banners on ParentTime.com, a popular site with young moms. And DrugEmporium. com is creating relationships with other sites and portals with proven traffic in this demographic, including America Online, whose health channel is the most visited healthcare site on the Web, according to Media Metrix. Already, sites such as CNN.com, Snap. com, and Dr.Koop.com have various exclusive marketing agreements with DrugEmporium.com
The second-most-wanted Netizens: seniors. Older consumers have the most medical needs and purchase the most medicines of all kinds. The challenge in reaching these consumers is that they are still the least likely group to be online, Pinney notes. And they are also the hardest to please, according to a Surfing Seniors study by Greenfield Online. The study found that 32 percent of seniors aged 55 and older visited an online drugstore in 1999, and 21 percent purchased OTC products, but 56 percent of those who visited drugstore sites said they were not likely to buy products from the sites in the future.
FamilyMeds.com is attempting to attract seniors by developing a partnership with The Senior Network, a national Web site that also develops sites for local senior centers. FamilyMeds.com is planning traditional media campaigns targeting this market, and is in the midst of developing a senior version of the site. And banner ads are not far behind, on sites like AARP.org - "the places that seniors are already going if they are searching for health information," says Pinney.
But one of the best ways to reach these seniors could be through their wired children, says Mitchell. Most caregiving of the elderly in this country is provided by a relative; DrugEmporium.com is researching ways to connect with those relationships in order to spur online sales.
And there's a third, smaller target market for online drug stores: "Young men, aged 25 to 49, have the highest Internet usage, and it's a population that is becoming increasingly health-conscious," says Pinney. He believes that these men can be drawn to his site to get information about and purchase such OTC products as nutritional supplements. FamilyMeds plans to place banner ads on MensFitness.com, C-NET.com, and Wired.com.
Banners and opt-in direct mail are the hallmarks of very early attempts at using the Internet as a media channel, says Parrish Hanna, president and co-founder of HannaHodge, a Web research and design firm in Chicago. But, he says, online drugstores are going to have to tap into the deeper needs and concerns consumers have about healthcare if they are to fully realize the benefits of the Internet. "It's a natural evolution," he says.
And the full results of that evolution are likely to include lots of synergistic relationships between OTC drug manufacturers and online retailers. Mitchell says that DrugEmporium.com is in talks with several large vendors about partnerships in which manufacturers' sites directly link to the pharmacy's site. Tylenol's Web page, for example, could have an exclusive link to the Tylenol Web Store at DrugEmporium.com. It's an approach that may work well for both manufacturer and pharmacy, since brand recognition is even more important online than it is offline, according to Ernst and Young's 1999 Internet Shopping Survey. Eighty-two percent of online shoppers surveyed said that knowing a product's brand name would be important or very important in their decision to buy online.
Still, as online marketing campaigns become more sophisticated, consumers will be wary of overly cozy relationships between Web sites and manufacturers, warns Elizabeth Boehm, associate analyst at Forrester Research. Because the barrier between marketing and information on the Internet is so porous, marketers must be careful to come up with programs that don't undermine the integrity of the site, she says.
After all, the main reason so far that most healthcare consumers go online is to get information. And cyber-chondriacs will keep clicking until they find information they can trust.