Thursday, June 23, 2005

WWW/Rx: The Prescription for Healthy Sales

WWW/Rx: The Prescription for Healthy Sales

Published: June 23, 2005

A new eMarketer report examines why pharmaceutical companies are shifting a significant portion of their marketing focus and dollars online.

According to data from the Pew Internet and American Life Project, 45% of American adults, or 91 million Americans, regularly consume prescription drugs. And Manhattan Research estimates that as many as 45.7 million Americans go online to search for information about pharmaceutical products in particular, while other industry observers estimate that millions more Americans use the Internet to look for health information in general — either for themselves, or on behalf of friends or family members.

"As a result of this growing Internet audience, pharmaceutical companies are continuing to shift a significant portion of their marketing attention and advertising dollars online," said Steve Butler, Senior Analyst at eMarketer and author of the report, Pharmaceutical Marketing Online.

As pharmaceutical companies build on their past online advertising experience, many are doing a better job of integrating online tactics with overall brand strategies. Nowadays, for example, television and print advertisements typically include a Web site URL where consumers and physicians can go for more information about a particular pharmaceutical product, or get instructions on how to obtain free product samples.

"Beyond these basic measures, the industry's leading advertisers no longer view the Internet as a special niche area of their overall marketing strategies," said Mr. Butler. "Rather, executives now see the Internet as an essential element of their broader marketing plans, operating under the assumption that most advertising campaigns will have an online marketing component. This in turn has required marketing executives to become more familiar with the broad, and sometimes more complex, range of online marketing tactics."

In light of the growing importance of the Internet as a marketing channel, eMarketer believes that pharmaceutical companies will continue to allocate a greater share of their advertising dollars to the Internet over the next several years. Within this general category of online marketing spending, pharmaceutical companies will likely increase their investments in search engine marketing and behavioral targeting.

"There is one apparent contradiction in the online pharmaceutical world, however," said Mr. Butler. "Despite the fact that many consumers are comfortable with using the Internet as a resource for information on prescription drugs, fewer than 10% of US consumers actually purchase medication online."

That is likely to change by the end of this decade as the baby boomers begin to move into their peak demand years for prescription medication, while also bringing their online experience and relative comfort with using the Internet — something that the current generation of seniors age 65 and over do not have.

eMarketer believes that the combination of improved online customer service by established retail pharmacies and the growing pressure by employer health plans for consumers to purchase prescription drugs via mail order services (for 90-day refills, in particular) will lead to a notable increase in Americans' online prescription drug purchasing habits over the coming years.

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