Accountability is the buzzword throughout marketing circles today. In the pharmaceutical industry, where millions of dollars are pumped into communications budgets every year, the need for measurable results has never been greater. Calculating return on investment for marketing is complex, though it is no longer in doubt that marketing is fundamental to commercial growth. But even when using agencies—survivors only through demonstration of their success—evaluation methods vary both in complexity and value. So how easy is it to identify a suitable agency? How much can you tell about its likely future performance before committing funds? And once a campaign has started, how are its results best evaluated?
Definition and Focus
In the hunt for public relations consultancies, advertising agencies and market researchers, the choice can seem overwhelming, as thousands of consultants vie for business.
While marketing directors are presented with an enormous range of skills and abilities, finding the fit for a successful program is tricky. Many agencies will perform competently; some excellently. But how does a potential client spot its ideal partner?
Setting the Criteria
Knowing exactly what is required from an agency makes the selection process simpler. What are the objectives? How much, if any, international work is to be done? If international, can the campaign be handled via syndication and communication from a central location with one point of contact, or is local reach via offices in each market necessary? This choice is one of economics and message control, and both are better served using one central point. It may also dictate whether all the key markets can be tackled at once or whether a phased plan will be needed. Is experience in the specific sector essential, or are other transferable skills such as languages or expertise in a particular medium an advantage? Is client conflict a problem? Is an agency close to your own premises needed? How often are face-to-face meetings needed, in reality? Finally but importantly: should the campaign be businesslike and to-the-point, or creative and risk-taking?
Through-the-line campaigns managed by one agency offer simplicity and cost-effectiveness, maximize synergy and maintain tight control. They will also offer the lower-risk creative solutions. On the other hand, single-focus agencies (advertising, PR, direct mail, sponsorship, etc.) may offer better-developed skills in one area of expertise but the client has to work hard to coordinate and integrate individual campaigns to keep them synergistic.
Information on agencies, their experience and offerings, can be found through industry associations1 or one of the growing number of consultancies that help in agency selection.
The Pitch . . . or Not?
Having researched potential agencies, a maximum of three agencies should be invited to pitch, to avoid a lack of choice for the client and lack of incentive for the agencies. Many agencies are not interested in pitching for business if the list is more than three. But pitching is a hot potato in pharma. In February of this year, PRWeek reported on a growing number of agencies advocating the abolition of the pitch process because of the drain on Resources and the threat of over-selling capabilities in an attempt to differentiate.
Opinion remains divided: many major pharma manufacturers remain staunch supporters of PR pitches, partly because people are at the core of good campaigns. An agency may have produced excellent work in the past 12 months, but if its core people move on, so does the expertise. A stable team is of value.
On the other hand, one U.S.-based pharma company last year felt that, due to the sensitive nature of its products, a pitch was not an option and approached an agency directly. It now has a five-market campaign running. In general it is best to assess an agency from its general calibre and proven work, as the pitch team may well be just that—the pitch team—and phased out from personal contact quickly. The capability of the future account handlers is perhaps the single most important factor, above credentials and experience, by which to judge the pitch. (A further contentious issue is payment for pitches. Because of the extensive time, creative input and undisclosed competition, many agencies now require remuneration at this stage.)
The Essential Audit
The first crucial step is a thorough review of the client company, its product(s) and current marketing activity. Obvious as this may seem, the review can seem unnecessary or too time-consuming in the rush to commence a communications program, especially if it focuses on a new product launch with a specified deadline. Yet failing to invest resources at this stage may lead to an inappropriate choice of communications methods, the oversight of key audiences, or a lack of synergy in the program as elements which were originally overlooked are subsequently bolted on. Issues to address in the audit typically include:
It is only when this information is to hand that the suitable marketing communications tools can be selected. As each has a different function, reach and cost structure, agencies need to have a clear definition of the product and the current market and direction.
Assuming a pitch does take place, a clear and thorough brief is essential for getting the best from agencies. This should include:
It is essential to share information openly and speedily with agencies: they will sign confidentiality agreements but need to be well-informed. Sales personnel can provide valuable information on the market, for example. Very little information is genuinely of such high sensitivity that it cannot be given to the agency, but failing to do so will compromise the quality of the work.
Agencies include credentials in their own promotional work and in pitches. These show the sectors in which the agency has experience and demonstrate its proficiency. But credentials are by definition one-sided and will not necessarily give a balanced view, which is the reason for asking to see examples of the agency's previous (relevant) work, including its evaluation methods. A good indicator would be a case study of a non-competitive client in the same sector. Status reports will show what types of evaluation take place and to what extent. The most useful are marked * in Table 1.
Marketers argue that marketing is an investment, so it should deliver a Return on Investment (ROI). This will help to secure the backing of senior management and satisfy the marketing skeptics.
Tracking results internally is fundamental to understanding the ROI of a campaign. Yet too few companies are sufficiently disciplined to put in simple measures to do this. Evaluation means that businesses can see tangible benefits reflected in sales, profit margin, market share, brand awareness and reputation, even market equity. Recent examples include:
Actual sales figures are confidential, but the point is clear. Gaining concrete results is critical to success. Knowing which elements of the campaign produced the results creates control of that success. It presents the information to secure future budget and ensures that marketing is used as a driver for growth at board level. Accountability not only justifies last year's budget, but is an integral part of the planning process to improve the future performance of the marketing campaign and the company as a whole.
Aside from the internal results, proven effective marcomms can create markets for a product by stimulating demand in a market prior to the product launch. It can even be used to help set up the infrastructure for the product's distribution.
Past Performance: a Guide to the Future?
At the pitch, an agency does its utmost to (a) prove its ability, (b) demonstrate relevance to the prospect's business area, and (c) allay any potential doubts the client might foresee. To these ends, accurate, specific and useful credentials and evidence of past performance are shown.
Agencies cannot predict, of course, how successfully a new marketing communications program will impact on sales. Legislative, competitive, economic and political factors may all influence results, as can the performance of the company's own people, systems and logistics.
Retainers or Results?
Agencies have traditionally been renumerated by a total annual fee, which is paid in 12 monthly installments. Fee-based remuneration retains the advantage of ongoing (and often more detailed) planning and the ability to adapt to changing market opportunities and needs. But now some agencies are adopting payment by results (PBR). A minimum guaranteed monthly fee will still normally be charged under a PBR system, but payment can reach, say, four or five times that level if the agency beats its targets. Marketing Business has reported that already more than a third of remuneration in advertising is PBR, and 75-90% of all U.S. ad agency agreements are expected to be so within three years5.
If feasible, test marketing can be a desirable next step. This will enable the planned activities to be tested: what messages were sent out, and which audiences were reached? Has the audience understood and remembered the message, and has it changed opinions or behavior? Have the objectives been met, and can the plan proceed in this way? Are adjustments needed? Once the proposed campaign has been discussed and adapted, timelines for initial evaluations can be decided and the program commences.
While all agencies should provide some sort of evaluation of their activity, either conducted internally or through an external specialist6, it is the client's responsibility to track sales enquiries, monitor new contacts and track conversion rates. This is a simple but essential evaluation tool.
PR seems to be ahead of other marketing disciplines in reaching a standard evaluation process or methodology. The methods for evaluating different types of campaigns—business/professional, trade and consumer—need to reflect their differences so that the results can be statistically relevant. Tracking results from an international campaign throws up further challenges.
Particularly in integrated campaigns, several evaluation tools should be used, as this will give a more rounded and accurate view of the quality and effectiveness of the campaign. These methods can be agreed at the outset and then used regularly to track development and progress.
Most agencies would agree that 10% of overall budget should be dedicated to formal research and evaluation. A disturbing number of companies still do not meet this target, but underfunded evaluation is worthless.
Research and evaluation can, and should, be seen as a cyclical and repeated process:
The marketing industry has not yet managed to create a panacea for the problems of accountability. But considerable effort is being made to ensure that benefits to sales, profits, market share, reputation and morale can be objectively assessed. While corporate purse strings are being tightened, recent research7 would suggest that pharmaceutical industry marketing budgets fare better than most during economic downturn, but marketers must continue to improve evaluation and communicate internally successful campaigns. Effective marketing continues to build growth and sales whether it is measured or not. However, only by accountability can value for money be guaranteed and the long-term future health of the company be underpinned.
Evaluating Marketing Agencies
Continuing our series on 21CFR11 compliance
By Susanne Bell
Published August 22, 2005
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