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Spending wisely

Investment in healthcare communications, like any other pharma budget item, needs to be appropriately analysed

We're moving into a whole new world. One in which the role of healthcare PR is being increasingly viewed as pivotal, not only as a part of the overall product marketing mix, but also in supporting the whole sustainability of an industry under increasingly intense scrutiny. As such, it is right and proper that investment in communications should be appropriately analysed - alongside all other lines on the pharma budget sheet. As part of this, the value of communications activities themselves must be assessed in terms of contribution to overall business success. In addition, however, the manpower costs also need to be factored into the equation, with the aim of ensuring that the most appropriate mix of human resources is deployed in delivering what the pharma industry increasingly needs.

The developing role of healthcare PR and the growth of reputation management
The latest Healthcare Communications Association (HCA) benchmarking surveys, among both communications agency and pharma industry members, highlighted just how much PR is on the rise. Part of this can be attributed to its increasing value over other more `traditional' elements of the marketing mix, especially in reaching complex and diverse audiences to whom access is often denied by other routes.

The implications of the Health Select Committee, in imposing restrictions in certain areas, has also necessitated an overall reappraisal of the promotional mix. At the forefront, however, were considerations of brand, corporate and industry reputation, and the recognition that reputation management and effective stakeholder relations are increasingly important topics of conversation in the boardroom. Sales are, of course, the ultimate goal of all pharma-marketing activities, but superimposed on this is the recognition that short-term gains cannot be made at the expense of longer-term sustainability. Interestingly, in the general business world, reputation and risk management are thriving disciplines, with the vast majority of the FTSE 500 companies now including them as key elements of their corporate strategies.

Indeed 'reputation' is increasingly regarded as an asset to be protected at all cost. Little wonder that the pharma industry, with all the issues that it has encountered recently, should be at the forefront of this trend.

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Assessing the value of communications programmes
While PR in general has, perhaps, been viewed historically as more of an art than a science (and a black art at that, some might say!), healthcare PR is arguably much more of a strategically driven, systematic science. Similarly, assessing its value and measuring its tangible effects has become a science in itself. At this point, it is important to differentiate clearly between Evaluation and Return on Investment (RoI) in relation to healthcare communications:

  • Evaluation is the process of systematically measuring the effects of various different communications activities, (education programmes, media relations, events etc), both in terms of direct tangible outputs and resulting outcomes, for example, awareness and attitude change . Assessed against set SMART objectives, this evaluation process effectively provides a measure of how well a particular activity has been carried out 
  • RoI, however, goes to the next stage and assesses how the outcomes generated contribute to the ultimate success of the product and the company concerned ie, how far the pennies invested have contributed to the overall business gain.

Great strides forward have been made in making evaluation easier and more commonplace, including support initiatives such as the HCA Evaluation Toolkit, but it has to be said that the types of activity that are currently most likely to be fully evaluated are still the more tangible, `traditional' PR areas such as media, symposia and meetings. Hopefully, this will change as evaluation becomes further entrenched in daily practice.

The thorny question of exactly how best to measure RoI for healthcare PR is something that continues to challenge senior brains around the industry. Understanding of its importance is there, together with the willingness to measure, but the greatest barrier is a lack of clear understanding of how best to go about it in practice. The HCA benchmarking survey highlighted that demonstration of RoI is the single biggest factor likely to lead to further increases in the use of PR. Indeed, in another HCA survey last year among industry marketers, 92 per cent said they would be prepared to increase spend on healthcare PR if RoI could be demonstrated. Given all this, the HCA is leading an initiative to help define the most useful and meaningful measures, essentially based around surrogates for success, which it is hoped will bear some edible fruit for the industry in 2006.

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Achieving optimum deployment of people
Of course, it's important not only to consider the return from the communications activities themselves, but also that the people involved are working together in a way that produces optimum payback. The HCA benchmarking survey indicated that in 77 per cent of participating pharma companies, the use of agencies is increasing, in line with both the increase in perceived value and use of PR.

At the end of the day, industry needs both the manpower and the specialist experience and expertise of agencies in order to make optimum use of PR in meeting developing business needs. However, human resources, both internal and agency, do not come cheaply and so need to be deployed in the most appropriate fashion, in order to deliver best value. That can only happen if there is good mutual understanding of respective roles between industry and agency partners in particular.

So, how does this translate into the most effective working practices? Essentially, it boils down to true collaboration at all stages of the planning and implementation of communications programmes. This includes early strategic planning and agreement of appropriate evaluation (and ultimately RoI) measures, plus ensuring that the most appropriate members of the extended team are deployed in the right roles at the right time.

If this is carried out effectively it should help build better mutual understanding of how partnering companies function and overcome some of the difficulties that both agency and industry sometimes find in working together - many of which ultimately relate to matters financial. Interestingly, it has been suggested that, rather than simply trying to reduce prices across the board, as has perhaps been the prevailing impression, the procurement function could increasingly work as an objective aid to achieving effective, high value programmes and a fair win-win for all parties. It would be good to think that this could be the case and certainly the trend is moving towards more and more collaborative pricing agreements being forged.

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And then, of course, there is the subject of agency selection, where the surveys showed that over two-thirds of industry respondents, and over 85 per cent of the agency respondents, voiced the need for improvement. With the average estimated cost of a pitch for a £200,000 programme being in the order of £20,000 per agency, it stands to reason that reducing the number of pitches where possible makes ultimate sense.

Certainly the recognition is that the classic pitch scenario may not always be the best way of assessing what companies increasingly need from their agency partners, and other less formal means of assessment should therefore be considered.

Checking the value of investment
Finally, there is the 'chicken and egg' question of how much to invest in checking the value of your investment. Companies are becoming much more sophisticated in establishing baselines and measuring outcomes but there is still an attitude in some quarters that money spent on evaluation could better be spent on, for example, another doctor being taken to a congress.

The latest HCA benchmarking survey indicated that, on average, participating pharma companies estimated that they were spending a mean of nearly nine per cent of PR budgets on evaluation, and could envisage that rising to more than 10 per cent in future, although it has to be said that this is still very variable. In many cases, there is a perception that measurement will cost a lot, when it doesn't need to.

For example, the addition of a couple of well-chosen questions in an existing market-research programme is likely to incur minimal if any cost, but can be of fundamental importance in measuring the ultimate effects of a PR programme. It's really just a matter of effective internal co-ordination.

So, with increasing scrutiny of the pharma industry, rising importance of PR in supporting its sustainability, and pressure on budgets, assessment of meaningful payback for healthcare communications activities overall will arguably have to become routine practice.

Meanwhile, the whole way in which the industry operates with its various corporate partners is evolving too. The Health Select Committee determined transparency, integrity and true partnership as being crucial in pharma relationships with external third parties, such as key opinion leaders and patient groups.

Perhaps not surprisingly, such factors also came out top in the HCA benchmarking surveys, in terms of what both industry and agency communications professionals are looking for in their working relationships. Certainly the same principles would seem to apply as we move forward together in our new world.

the author
Julia Cook is the principal of StepBack Healthcare and chair of the HCA. She can be contacted at julia.cook@stepback-hc.com

2nd September 2008

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