The evolving world of advertising

pharmafile | September 6, 2005 | Feature | Medical Communications |   

The considerable challenges facing pharma companies over the past few years have taken centre stage in analysis of healthcare marketing: new obstacles to prescribing, constantly evolving NHS initiatives, formularies, shifts in prescribing responsibility.

Those working in the service sector could be forgiven for feeling that they have been left to cope with these changes on their own, as pharma marketers regard themselves as the ones who have had to adapt most to these changes.

This process has arguably had most impact on advertising companies. The traditional model has been blown away, with relatively simple briefs to create a press campaign, a bunch of mailings and the odd detail aid replaced by an expectation that the ad agency play a more strategic role in tackling the challenges involved in launching products and sustaining sales in an increasingly competitive arena.

Inevitably, the agency world has had to evolve. Company mergers have gathered pace, partnerships have been struck to offer greater global or regional reach, and service ranges expanded. But is this approach actually meeting the needs of pharma marketing?

What about the smaller, independent agencies operating in a single market – do they have any future? And what will the industry want from its agencies in the future?

A world of change

With brands that in the main only have one customer, it is inevitable that as customers demands change, so will the communications requirements of its suppliers. In the days when press ads, mailings and detail aids were the main output of healthcare advertising agencies, the job was relatively simple and very visible.

But that has changed, as Neil Smith of Affiniti, who also chairs the PM Society's Advertising Awards, points out: "Nowadays, with a few notable exceptions, most agencies are like icebergs – only a small percentage of their output is visible, the remainder being a myriad of below the line activities encompassing strategic product and market development and rafts of technical literature.  

"Indeed one might even have to question the term 'Advertising Agency' altogether. So much of what we do these days is not really 'advertising'."

Brand(x) managing partner Ila Garner-Patel agrees, adding that the lines between traditional advertising and other marketing communications disciplines are becoming blurred. "The breadth of offering is greater, which embraces some of the changes we have seen with respect to new media. There is less of a clear line in the clients' mind between straight promotion and other communications activities such as PR. Having said that, there does continue to be a great deal of focus on the need to deliver top class sales support material."

This obscuring of the demarcation between roles has been the driving force behind a rush towards consolidation, as agencies seek new revenue streams to replace the declining 'traditional' activity.

"Agencies are adding services, such as new media, e-detailing, web, and market shaping activities, things which are perhaps more associated with med ed companies," says Smith. "That's why ad agencies are looking to join forces, either directly or as part of a group that offers complementary services, in an attempt to create a win-win situation for all concerned."

Let's get together

Not surprisingly, views about how well these arrangements are working vary, depending on whether you ask those who have been through the consolidation route or those who are clinging dearly to independence. But all seem to agree that as clients consolidate, life becomes tougher for smaller agencies which are perhaps built on a small number of client relationships.

"Healthcare advertising has always tended to be over-fragmented, a cottage industry of small businesses," says Woolley Pau creative director Dean Woolley. "An agency could be built around perhaps just two or three friendly relationships between the agency principles and senior marketers.

"Things are changing. Pharma clients are merging into ever-larger networks; there are fewer marketing departments and fewer locally created campaigns. Add in the rise of procurement, and its easy to see why fewer and fewer advertising accounts are in the gift of your friendly, local marketing director. This puts pressure on agencies to take refuge in networks or to put together plausible affiliations that look like stature."

This view is echoed by Affiniti's Smith, who also sees client structures driving agency mergers. "The question of consolidation is driven by the needs of the business. Small independent agencies can survive for a while but are overly dependent on one or two key clients. By merging with others they create greater security and critical mass that also makes them contenders for some of the larger pharma companies."

One of the UK's larger independent agencies PAN says it is confident and very comfortable with its position in the midst of changes to the market. Most recently these changes saw advertising heavyweight inChord Communications, one of the largest privately held healthcare communications companies in the world, acquire the UK's Junction 11 to enlarge its global network.

PAN's managing director Ben Davies says: "There will always be a place for a well-structured, creative and well-resourced agency whether it is independent or not. The threat at the moment to independents are clearly these global deals that are being done with large agency networks."

He points to Sanofi-Aventis and its global decision to consolidate its advertising accounts with one major network of companies in French group Publicis as one example of this. The company was a former client of PAN's with Plavix, but Davies is philosophical about it.

My view is very much that there is no point sitting there and grizzling about it, you have to get on doing what it is that you do and ultimately we have a lot of new business enquiries and the resource that was on the Plavix account was almost immediately re-allocated to a new one.

In the longer term he says these things are cyclical and he doesn't see it continuing and becoming the norm because of the lack of ownership they engender.

But can well-thought-out networks of independent agencies not offer the same kind of critical mass and breadth of services, without sacrificing their uniqueness into a bigger, more anonymous corporate whole? Surely there will always be pharma marketers who value the independent-minded boutique agency, who, it could be argued, bring a freshness and creativity, not stifled by a big company mentality. Dean Woolley certainly thinks so.

"Independence happens to be what we like about our agency; we also present independence as an attractive part of our offering to clients. So we are not about to give independence up, but to compete we have to take a bullish view about what we offer, we have to make the case that what clients need most from their agencies are ideas. Global reach is all very well, but what value is there in carpeting the world with dull, generic thinking?"

But there are plenty in the industry who don't subscribe to that view, arguing that virtual networks are false, and offer the worst of both worlds. Stephen Wheatley, chief executive of GSW Worldwide/Junction 11 is one of them.

"Life for independents today is tough, in part because procurement now influences decisions about approved supplier lists, and inevitably they are looking to achieve efficiencies from bigger relationships with fewer agencies. Virtual networks don't deliver that."

A rather more forthright criticism of networks comes from Euro RSCG Life MSC managing director John Syner, who sold his own independent into Euro RSCG Life two years ago.

"Networks of like-minded companies don't work. Clients know they've been cobbled together and eventually the loose affiliation fall out over who gets what share of the client's money. Big independent agencies will continue to sell to the large holding companies because how else does an owner/manager realise his or her assets?

"Also, big pharma are increasingly looking for integrated global networks to handle all the communication channels for their brands across all major markets. Try doing that with 10 people in an office in Covent Garden."

The global view

Given the UK's traditional strength in healthcare advertising, is this trend towards the global view threatening our industry, or does it represent an opportunity to extend its reach?

Richard Gibbs, managing director at FCB HealthCare, suggests UK agencies will have an important role to play in the new global future. "The creation of great advertising is not country specific and it does not reside in the largest market but in the ability to create great advertising," he says. "UK agencies have the ability to create great work and because of our presence in probably the most culturally and socially diverse market in the world you could make a good case for UK creative work to feature more prominently in the development of true global brand campaigns."

He also sees the relative newness of global branding in pharma as providing more room for manoeuvre than people realise.

"Pharma companies have not yet established line management accountability between local marketing or brand managers and those responsible at a global level. This means the local brand management team do not have to adopt the campaign deliverables given to them by their global colleagues, providing they can give appropriate reasons for doing so."

There also seems to be broad agreement that life will become increasingly tough for agencies trying to operate in only one market.

"Not taking a global view is not an option," says Stephen Wheatley. "The value of the brand is in its ability to work across all aspects of the marketing mix from advertising to a dose card, right around the globe. Just think of how many global conferences there are in oncology for example. You have to think in terms of one world, one brand."

Smith agrees, saying: "More and more pharma companies are looking to global branding and commonality of messages.  While there will remain a need for UK agencies to be prepared to adapt head office campaigns to give them a fighting chance of succeeding in the UK, those that can genuinely offer a European and/or international presence will be more likely to succeed in the long-term."

Agencies need to think carefully about how they approach this shift towards globality. If they are happy simply to take a centrally-developed campaign and implement locally, without much creative input, then they remove their central reason for existing and adding value  the creative input itself. Not surprisingly, given his role as creative director, Woolley has strong opinions on the subject.

"It's now impossible to run an agency with any substantial business and not encounter the global view. As an independent we see it from both sides – we're called on to implement centrally created campaigns in our local market and we've also developed campaigns for global use.

"We make the case for an alternative to the global or local models. We offer centrally developed campaigns, which we then adapt centrally  using mother tongue creatives  ready for deployment by local client affiliates. It might be making a virtue of necessity, but, given that the key reasons clients tend to think globally are consistency, control and cost-effectiveness, our model makes for quite a virtue."

So is there any future for agencies operating in one country? Garner-Patel thinks that such agencies can probably survive, but they are likely to find new business opportunities increasingly limited. "At the very least, all agencies must be prepared and able to consider the impact of other markets on the brand they are looking after in one single market," she says.

A DTC role?

What about the patient? Are today's healthcare advertising agencies well set-up to take up the challenge of any loosening of the DTC communication legal framework? Will they be able to compete with more consumer-oriented agencies, which have extensive experience in the fmcg world?

Despite protests to the contrary, much of the healthcare advertising industry has little experience or expertise in this area, and risks losing out to mainstream agencies, who could then try and muscle in on the specialist work, once they have established client relationships.

Here it is likely that those who have consolidated into larger groups which include fmcg expertise are likely to be the winners.  "Big pharma prefer to use mainstream consumer agencies for DTC," says Syner.  

"Despite recent setbacks in the US the long-term future for DTC is positive.  Consumers want and need to know more about pharmaceuticals and it is in everybody's interest to facilitate informed consent. Agency networks with strong healthcare and consumer offerings again have an advantage over the independents."

For once the independent sector is in agreement. "When disease awareness finally becomes full-scale DTC advertising, won't clients look to agencies with more consumer savvy, as they did with the advent of POM-to-P?" asks Woolley. "Even healthcare specialist agencies plugged into mainstream networks will find this business coveted by their consumer colleagues down the corridor."

The future agency role

So what does the future hold? To survive, healthcare advertising agencies are going to have to continue to broaden their offer, but it's not as simple as that. What is required is a change in the understanding of their role.  

No longer is it simply about marketing communications. Increasingly, clients are going to expect their agencies to be a part of the marketing team, helping to shape strategy and in particular taking on more of a brand guardian role. Get this right, and the foundations can be laid for a long relationship  but the emphasis on the pitch itself might be lost along the way.

"Clients want more of a partnership approach from their agency than ever before," says Garner-Patel, "and they expect to see real value being added to the quality of the strategy and thinking behind their communications. There is very little room for complacency once you have won an account!"

Wheatley also sees the opportunity to build long-term relationships, by providing the continuity which is all too often lacking within client organisations. |"Because client personnel changes so often, we tend to be de facto guardians of the brand for six, seven, eight years to the benefit of consistency and continuity. Increasingly, clients want us to understand the evidence base, and how to leverage it."

Does it have to stop there? Smith doesn't think so. "There can be  as much knowledge about the brand vested in the agency as in the company. The ad agency should be regarded as the brand guardian, so why not then go the whole hog and outsource the product management to the agency?"

But despite all the changes, the consolidation and the push to think more globally, some in the industry think that some things won't change.

"Broadly, what clients want is still a reflection of the talent, training and experience of the individual marketers involved," believes Woolley. "Someone whose idea of branding is a big logo is going to want that, someone whose idea of branding is about relationship building is going look for that. Some clients will always want to get the job done with the traditional ad, detail aid, leavepiece and mailer – some see opportunities in other communication channels."

Syner also believes that the fundamentals of healthcare advertising won't change. "Clients want what they've always wanted.  The one thing they can't do as well as agencies is creating brilliant, creative ideas by next Tuesday  and then doing it again, and again, and again."