The way b-to-b marketers are playing up the Internet and running down print advertising, itâs easy to draw the conclusion that trade publications donât work, wonât ever work and never did work.
A key complaint about b-to-b print advertising is that even if it does generate return on investment, its impact cannot be measured. The bingo card is a relic, so goes the argument, and print doesnât stand up to the Webâs capabilities to assess ROI.
Nonetheless, two recent, if overlooked, studies support the out-of-favor assertion that print advertising does generate measurable ROI. Both studies were commissioned by the Association of Medical Publications, which measured the impact of several marketing tactics (including print advertising in medical journals) on the writing of prescriptions.
"The great thing about the pharmaceutical industry is that itâs so data rich, you can study it," said Robert Osborn, senior VP-magazines at Dowden Health Media Inc. and a past president of AMP.
Osborn said the AMP studies were necessary in part because business and medical publishers had done little to promote their products. "Publishers have been really negligent in the past 15 years in not proving the value of what theyâre doing," he said. "This is our attempt to address that missing link."
The most recent study commissioned by AMP, "Analysis of ROI for Pharmaceutical Promotion," was first presented in late 2002 and built on a previous study completed in 2001. Dick R. Wittink, a professor at the Yale School of Management, conducted the most recent study. Both studies examined the ROI of detailing (sales calls on doctors), direct-to-consumer advertising, events and medical journal advertising.
Wittink studied pharmaceutical brands with $25 million or more in revenue, which included 392 branded and 127 generic drugs. The data covered the period from 1995 to 2000. ROI was defined as the estimated change in revenue for a $1 increase in spending on a particular marketing tactic.
The conclusion: "They all work," said Art Mahoney, president of the Bay Head Consulting Group and a member of the AMP committee that oversaw the study. In most cases, each marketing tactic delivered a positive return. Mahoney stressed, however, that the ROI figure didnât indicate whether one tactic was more effective than another; instead, it showed whether a tactic was being overused or underused.
In general, the higher its ROI, the more underused the tactic. No matter how the data were parsed, medical journal advertising consistently delivered the highest ROI figure.
For pharmaceuticals launched between 1998 and 2000 and generating more than $500 million in annual revenue, journal advertising produced an ROI of $12.20, according to the study. ROI was lower for events ($11.70), detailing ($11.60) and direct-to-consumer ($1.20).
For pharmaceuticals launched in the same period that generated between $100 million and $500 million in annual revenue, journal advertising again delivered the highest ROI at $4.20, followed by events ($3.60), detailing ($2.10) and direct-to-consumer (20 cents).
The results were similar for pharmaceuticals launched in the same period and earning annual revenue between $25 million and $100 million. Journal advertising posted ROI of $7.20, followed by detailing ($1), events (10 cents) and direct-to-consumer (0).
Journal advertisingâs high ROI indicates it is a chronically underused tactic. Indeed, it generally receives the smallest share of pharmaceutical marketing budgets. From 1995 to 2000, direct-to-consumer spending grew from $200 million to $2.5 billion, an annual growth rate of about 44%. Over the same period, journal advertising grew at an average annual growth rate of 7.6%, to slightly more than $500 million, according to the study.
Can the studyâs results be applied to other b-to-b industriesâmanufacturing, for instance, or technology? Osborn believes so. He argues that doctors, who arenât using the prescriptions for themselves but recommending them for their patients, are similar to architects specifying products for their customers or to engineers specifying components for a new design.
American Business Media found the studies had enough relevance to its members to create advertisements using the data. "I think itâs indicative," said Gordon Hughes, ABM president-CEO. "I donât think any of these businesses are aberrations. I donât think any of them operates in a vacuum. I think there are great similarities."