MedNet – Analysis and Strategic alternatives

We are presented with a case where Heather Yates, vice president for business development at MedNet.com, a website delivering health information free to consumers, was losing one of their biggest advertiser ‘Windham Pharmaceuticals’. She along with the leadership team were on the task of convincing Mahria Baker, Windham’s CMO to continue advertising with them instead of investing their advertisement dollars on ‘Marvel’ which was essentially a large search engine with a huge audience. Mednet is also facing tough competition from several other websites providing expert information on therapeutic treatments and condition specific diseases like cholesterol.

About MedNet:

Services Provided by MedNet

MedNet is an American corporation which provides health information services. The website was created with a mission of providing reliable and trustworthy medical information to consumer audience for free and to make profits through advertising from pharmaceutical companies. Two important aspects to be always monitored by MedNet to be on top of the things are it’s Visitors and Advertisers.

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What does an advertiser want? Sales, leads, brand awareness? What are the best metrics for measuring these? The advertisers here are pharmaceutical companies who buy onscreen advertising space from websites. Though branding in the form of promoting company’s logo, slogan, and their product’s name along with its features is paramount to any company, it is the ‘numbers’ in terms of Sales revenue that matters the most. The possible measuring metrics is the Banner advertising charging advertisers on a cost per thousand impressions (CPM) basis where an impression means that one visitor actually saw an online advertisement.

The second is Click through rate (CTR) method which counts each time a potential buyer clicks the advertisement seeking more product information. CPM accounts more for the brand awareness whereas the click through accounts more for the Sales revenue generated in general, however, the winning metrics greatly depends on the industry one is catering to.

What specific consumer behaviors determine whether or not a business model produces the results an advertiser wants? MedNet is greatly financed by advertising, selling online magazines and sponsorships. It has a business model that’s very much centered on advertising. MedNet is a go-to resource for basic health and diagnostic information. However, competitors like cholesterol.com and others emerged that offered tailored and condition-specific health recommendations to each visitor’s specifications for such chronic diseases. Though MedNet was known to post the most up to date and reliable health information which helped them enforce trusted relationships with their audience, it was important that they ensure that the customer returns back to them each time. Based on the CTR and the CPM, the advertisers can precisely analyze the consumer’s preferences and purchasing patterns. What is the best argument Yates can make to justify charging Windham for impressions instead of click - throughs?

Does she have acceptable alternatives?

MedNet charges for cost per thousand impressions to Windham Pharmaceuticals while Marvel, the search engine is doing it for free. Yates, the VP, rightly argues that though the impression might not be an accurate measure of a sale of the product but it does have an assuring and positive impact about the advertiser on the consumer. It instills a belief of goodness of a product making it highly likely that the consumer buys it at a later point of time. She laid emphasis on the ‘trusted’ relationship which however, is not quantifiable. I think, the best argument she puts across is along the lines of the targeted audience. According to reports, more consumers seek health information than finance or health information online. ‘Health’ comes first and a diligent consumer would want to access only reliable diagnostic information which is guaranteed via MedNet which is an established well known website for its health information services. Thus, audience looking at the Windham’s ad through MedNet is more likely to buy the product. The alternative approach to this is as follows:

1) MedNet could charge Windham for click throughs only. However, this is NOT acceptable given the small audience that MedNet captures. It is less likely for this limited audience to actually go click an advertisement. This would affect their sales revenue. 2) Windham can wait to see the results of the Vesselia (prescription medication) coupons that were redeemable at the pharmacy. This way, Windham could know if MedNet was more promising and profitable than Marvel. What value to the customer does a general interest site contribute that a niche site can’t? General interest sites like MedNet faced tough competition from the specialized niche sites like cholesterol. However, the following are a few aspects that give the general sites an edge over the niche ones. 1) They provide a wide source of information on different medical conditions. This way, they are running a business that attracts a larger audience. They are providing real value to these customers. 2) General interest sites are more ‘well known’ to the unprofessional and less sophisticated consumer base. They might not be aware of the niche sites. Thus, general interest sites provide a larger coverage of the general audience. 3) Because general sites cater to larger audience who are their regular visitors, they can afford to provide cheap services to their advertisers thus making their scheme much more attractive than the niche sites. 4) The niche sites providing Tailored recommendations were running a huge risk of providing the full diagnosed information violating the state and federal govt. regulations thus in turn, risking their customer’s integrity.

What steps can MedNet take to address emerging competitive threats?

MedNet is facing a tough competition from potential competitors like Marvel, Cholesterol etc. The major underlying issue being the limited visitor traffic. Most of the traffic gets diverted to Marvel.

1. In order to increase their popularity and generate more returning traffic, they can do the following: Retain the same content but add more value by using social media to create community groups to encourage group discussions, create forums and blogs that helps people learn from reviews and feedbacks. These community tools will make the site more interactive and encourage visitors to return to the site. MedNet is in the business of advertising where it is promoting its advertisers. But ‘self-advertising’ is important too. Promote and Publicize self, using conventional means of advertising like prints on paper like newspapers, Yellow pages and magazines. They should target advertisers of more common ailments like high blood pressure, allergies and depression/anxiety. Thus, in order to increase the value provided to Windham, MedNet needs to focus on the volume of the consumer traffic and make sure these consumers return.

2. Target employer websites and private online health portals, which give employees a secure gateway through which they can access their personal health information, and insurance claims. This will help diversify revenues and maintaining existing consumers. Alongside, it would help in branding through Corporate Word of Mouth. Though there will be initial setup and marketing costs, but this will pay off in the long run. MedNet should also discuss with the employers to provide pharmaceutical ads in addition to these services they offer to the employees.

3. MedNet can broaden their pool of advertisers that currently focus only on pharmaceutical companies to others like professional high profile clinics, pharmacies, health insurance companies etc. There is a tough competition among these smaller advertisers because they are large in number and thus would need advertising to promote self-more than ever. So these are potential customers to MedNet.

Thus above are a few alternative approaches that MedNet can take to have an edge over it’s competitors.

References:

About WebMD. Retrieved from http://en.wikipedia.org/wiki/WebMD. The official WebMD site to understand the look and feel of a health information service website. Retrieved from http://symptoms.webmd.com/default.htm#conditionView.