Primed for a Marketing Revolution According to industry experts, there is going to be a shift in marketing that will include: a move away from rational marketing to emotional brand marketing; initiatives that start earlier in the development cycle with end goals identified; marketing programs that tell an economic story; fewer large DTC campaigns; and the use of outcomes research as part of the marketing strategy. Tull. By nature, pharmaceutical marketing has been what I would call rational or product based. That’s why some marketers outside the industry say pharmaceutical marketing is pretty vanilla; there is not a lot of differentiation. There is a move within pharmaceutical marketing from product marketing to brand marketing. The difference is that when we market a product, we just talk about its features and its benefits strictly from a product perspective. When we talk about a brand, this involves not only the rational, technical attributes of a product but also the emotional needs that the product may fulfill. I believe there will continue to be a move away from just focusing on the product’s features and pushing a product’s benefits to physicians to strategies that build a brand based on the emotional insights of patients and their emotional needs. For example, our Cialis campaign talks about the couple, what their emotional needs are, and how the product fits into their lifestyle. There is more to the advertising campaign than just the technical aspects of the product. Bingol. Environmental pressures and technological evolution continue to be key drivers for change in many marketing campaigns. As environmental and regulatory pressures shift, many marketing campaigns are migrating into a more conservative framework, highlighting safety and tolerability more, especially in light of recent product withdrawals. I think marketing campaigns will continue to evolve, with the most successful evolving internally as well as externally. As more limitations are imposed on pharmaceutical marketers, it will be imperative that brand creation be conducted as early in the drug-development stage as possible. Integrating the broader cross-function development team and gaining early buy-in on strategic positioning will help the entire organization understand, as a drug is developed, what the brand should stand for upon approval. This type of early brand integration will form the underpinning of the campaign years before launch. One way to do this is to start the branding and positioning as early as the start of Phase II. Identifying the vision for the brand and what it will mean to the customer early on, both clinically and emotionally, can help guide the development process to create a product that is going to better meet customer expectations on the back end. Muhammad. In the short term, because of the ongoing changes in CME guidelines and how we can work with physicians relative to medical education, the challenge is maintaining compliance in an evolutionary environment. In the long term, marketers are going to have to go back to basics: educating physicians and communicating the pure science of the product, which we’ve moved away from to some extent in favor of more “commercial” and consumer-focused efforts. Advertising agencies will still have a role, but marketing needs to go back to communicating the merits of the brand.. The playing field will be more intense and the tools available more restrictive. With the PhRMA guidelines well entrenched, companies will focus on compliance leaving their marketing teams with the challenge of how to continue to improve market share in a “no tolerance” environment. Berner. In the next 12 months to 24 months, and even longer term than that, I believe that marketing programs will start to resemble those done in Europe, with cost becoming more of an issue. Marketing professionals will start to look at how their companies can tell an economic story about their product. I believe that this has often has been secondary to the features and benefits of a product. Pharmaceutical company marketers are going to start to build the economic story into their campaigns and even into their product development plans very early on. Rue. There has been an increase in the use of electronic media in pharmaceutical marketing, which has traditionally been a journal based arena. Berner. The PhRMA guidelines have forced all companies to tighten their marketing approach. I’ve been at Takeda for six months, and I’ve noticed that we have very strong firewalls in place for handling CME activities outside a brand’s professional marketing campaign. All CME is all handled in our medical and scientific affairs group. This separation is forcing two tiers of professional advocacy development: the CME channel and the promotional and relationship channel. This is really the biggest change I’ve seen in the last few years. Bingol. Pharmaceutical company salesforces have grown significantly over that past 10 years, yet IMS audited contacts have not increased commensurately with that growth. This means pharmaceutical marketers will be continually challenged to support the sales effort by identifying new ways to efficiently provide messaging to key constituents. Berner. I think marketing is going to move toward more education and less promotion, we need to promote the balance of efficacy and side effects, communicate fair balance, and provide a reason for physicians to prescribe the product and include it in their practice. This goes beyond marketing that positions a product’s benefits and includes how a patient should take the medicine and in what circumstances. We’ve seen research that states DTC is more effective when the patient is told the full story about the drug; not just the good information. This strategy allows marketers to build trust and credibility with all their customers. Tull. II believe the larger pharmaceutical companies are moving toward some of the marketing tactics that are employed by other industries in terms of building a brand based on emotional insights. Berner. DTC is an excellent approach for a category leader and it’s an excellent strategy for a brand that is coming into a underserved area, where physicians might not recognize that they need to treat a disease or when patients may not recognize that they should be talking to their physicians about a condition. A few years ago, products that treat the condition of overactive bladder started to be advertised. Until then, this was a condition that patients didn’t even think they should bother talking to their physicians about. Now, there are multiple products on the market because it’s a large and growing category. DTC helped to build this awareness. Beyond DTC, I think direct-to-patient (DTP) is an excellent strategy. If my product is not the category leader, as a marketer I don’t want 50% or more of every dollar I spend on DTC used to drive patients to my competitor. With DTP, if we can get patients to self identify and raise their hands and contact us, we’re building a relationship, and this is an excellent approach. Muhammad. I believe that customer relationship marketing is definitely taking on more prominence. I think it’s important to leverage the entire chain and all the different customer segments — physicians, patients, consumers, and managed care externally — and really making the integration between marketing and sales internally seamless. Even though these are two different disciplines, marketing really has to understand the competitive environment faced by the salesforce, while the salesforce has to understand the strategic direction of the brand. Communication between these two groups must be ongoing and aligned for flawless execution to occur. Overall, having CRM as a strategy from the outset will be key rather than trying to link these pieces post-launch. Tull. In terms of DTC, most people think of TV or print. I think the industry is going to move beyond this type of traditional push advertising and use more types of pull marketing, which could be as simple as directing patients to a Website where they can request information. This would allow a company to develop a direct relationship with that customer and address whatever his or her needs might be. Berner. I think there are going to be fewer hundred-million-dollar DTC campaigns in the future. I think that DTP is going to become a bigger part of the marketing mix and that the use of the European disease state model is going to grow in importance. We’re already beginning to see consumer ads going to quizzes and check lists with BRC cards. This is a more conservative and responsive approach from just the unbranded efforts. I don’t think there will be a lot of reminder ads on TV, such as: “Ask you doctor if brand X is right for you.” I think there will be more focused DTC investments. Koenig. The biggest marketing trend is going to revolve around Medicare Part D. Now that the government is involved, either directly or indirectly, as a payer in so much of the selling efforts, companies, if they haven’t already done so, are going to have to reexamine every technique they use to sell their products because of government scrutiny. Tull. Today the government purchases about 30% of pharmaceuticals in this country; come January this will increase to about 50%, at which time the government becomes the largest customer for pharmaceutical companies. I believe the whole industry is going to have to evaluate where the balance of promotion should be placed. The question will be how much of marketing should be geared to the consumer and how much to the payer? In the next 12 months to 24 months, I think there is going to be a shift to marketing more to the payer. There has always been marketing geared to the prescriber, and in the past five to seven years, there’s been a greater emphasis on marketing to patients. Depending on how the Medicare Modernization Act plays out, there will be potentially 40 million Americans who are going to have their drugs paid for through Medicare. The question is, what are we doing for those payers? Because the payer will become as important as the patient and the prescriber, marketing will have to do a better job of communicating the value of not just clinical outcomes, but also health economic-based outcomes. Koenig. Managed-care customers are the only customers who purchase products as part of a business decision. Patients pay for medications because they have a disease or condition. Physicians don’t actually pay for anything. They do put their professional reputation on the line when they put that pen to pad but they are not actually paying for the product. Managed-care marketing has evolved significantly because payers are demanding more and because the areas of outcomes research and pharmacoeconomics have advanced significantly. There is a long way to go in standardizing what is good outcomes research, but the amount of insight has increased tremendously. The message has to be about the total outcome for the patient. For example, if patients take drug X, what is the impact on global healthcare costs, whether they be hospital visits, emergency room visits, office visits, additional drug costs, or testing? The story has to talk about how their global healthcare costs will go down. More of the cost burden of pharmaceuticals is being shifted to patients through three- and four-copay tiers. Marketing people really need to be able to tell an outcomes story, especially when they are looking to get formulary placement. So the challenge is to determine what other message marketers can deliver to consumers so that they will pay more for a product on third-tier than the second-tier alternative. Muhammad. Managed care is going to become much more critical. There is going to be more pharmacoeconomic analysis required and defining of the value message and value proposition for a brand. Integration is Key A confluence of tactics — DTC, CRM, DTP, PR, e-detailing — have changed the marketing paradigm. But according to some experts, integrating all of the functional skills is still a challenge. Berner. Ten years ago, integrated marketing was the big buzz word. I think integrated marketing is something that good marketers do as part of good marketing. Focusing on bringing all of a brand’s agencies together, as well as on the things that the brand needs to make a difference in the marketplace, is essential. A good marketer brings everything together and looks at an initiative’s strategic objective and not just at a lot of tactics. By using a hub-and-spoke model, all the agencies work together toward a common, central objective. If marketers communicate well, everybody then is marching in sync. A good integrated campaign includes public relations, publications, medical education, patient education, salesforce promotion, as well as patient associations. The marketer’s challenge is make sure they are all working together toward a common objective. Tull. In the last three to five years, marketing has tried to move toward more integration using a mix of communications channels. The sales rep is still the largest and most expensive channel companies have to promote a brand. But the incremental gains that companies once realized from large salesforces are becoming less and less throughout the industry. All pharmaceutical companies are experimenting with a mix of alternative marketing channels — the Web, TV, print programs, live programs, and so on. Today, with the different information vehicles, marketers have to be consistent across all those channels with the messages being communicated. If the messaging is not in sync, people will become confused. As pharmaceutical marketing continues to mature, consistency of communication across channels will become even more important Managing an integrated campaign is something that the industry has been struggling with because companies have always used a push strategy — we pushed campaigns at people. We dictated the message that would be heard, when it would be heard, how frequently it would be heard, and who would hear it. From an integration perspective, we’re trying to move toward a balance of push and pull marketing. By pull I mean making information available so that people who want information can get the information when they want it, when they need it, and in the quantity that they want. Balancing and coordinating the push and pull is a challenge. Rue. It has always been my view that integration is absolutely critical. Campaigns are streamed throughout the collateral materials, whatever the medium, so that the brand look, the brand feel, and the brand promise are consistent. Granted, there might have to be some modifications for example, the physician audience needs a somewhat different view of information from a lay person. But by and large, integration is critical. Companies invest a lot of money to develop a look and a recognizable unique selling proposition, and these should be translated through all materials. Berner. Managing an integrated campaign requires a lot of joint meetings. In our company, our brand teams are set up so that each of the product managers has a focus, whether it’s on professional strategies, which is the thought-leader development; patient strategies, which is all patient education as well as any DTC or DTP campaigns; and sales strategies, which is everything that is going through the promotional channel and the salesforce. Tull. For each brand, there is a global marketing team that is basically responsible for maintaining the consistency of the branding elements, the positioning of the product, the core message elements, and the strategic direction of the brand on a global basis. These teams work with local affiliates in the various countries where our products are marketed to make sure the strategy, branding elements, positioning, and messaging are consistent. The affiliate brand teams dictate what the marketing mix will be in specific countries, but there is a strong collaboration between an overall global marketing brand team and the local brand teams. Bingol. We bring together all of our vendor partners on a quarterly basis for face-to-face meetings. At the quarterly meetings, we make sure everybody is aligned on the vision of the brand and provide direction that is consistent across all partners. We have multiple agencies working on multiple tactics where the potential for project overlap exists. Openly discussing tactics and responsibilities in this forum fosters a sense of trust and cooperation among individual agencies. Being a small company, it is fairly easy to ensure that all commercial disciplines are being represented across the multiple tactics. On the commercial side, we have a managed-markets team and a market-research team. These teams, along with the product management team, routinely meet to share information, update each other on on-going activities, and participate in all vendor partner meetings. Tull. Today, marketing dollars are more precious. Companies are now challenged with weighing different marketing tactics in terms of ROI. For example, if a company airs DTC commercials in prime time, it’s difficult to measure the impact in light of all the different ways people can get information. They can pick up a newspaper or magazine and read about a product, they can go on the Internet, and so on. I don’t think we can pinpoint any one particular channel and say we get an X% return from the medium. We look at ROI from an overall campaign and marketing mix channel perspective. Bingol. ROI is still tricky to determine. Of course the ultimate ROI is determined at the end of the year and is pretty obvious to all. Specifically, did the brand reach its sales forecast? But trying to determine ROI for individual tactics within a robust promotional mix is still fuzzy math in many ways. Short of being able to tie individual tactics to increased script volume, marketers have to prospectively define what the metrics for success are going to be. And the return is not always based on a dollars and cents metric. It does, however, have to be a metric that is measurable to some extent. Putting “E” Into The Plan As technology platforms have evolved, so too has the use of e-detailing to physicians. According to some of this month’s Forum experts, e-detailing is paying dividends; but others remain skeptical as to whether the tactic can really deliver. Tull. Typically, e-detailing efforts have been targeted to physicians who are hard to see or who don’t see sales reps at all. This is an effective strategy because we know who the customer base is because physicians have to sign up for the intervention. I believe that e-detailing has been successful for three key reasons. First, it’s convenient; the physician has access to the information when he or she needs it. Second, accessing new information is fast. Third, it’s less intrusive to some physicians than a sales rep because the physician can control when he or she wants to see the information. Berner. We haven’t done a lot of e-detailing, but we are going through an initiative of evaluating and working this into our campaigns across all of the brands. I view this tactic as a very effective way to launch a product because there already is a buzz and this is a good way to provide physicians with information and answers that supplement in-office sales rep visits. The e-detail is there when physicians need an answer, even in the off hours. Rue. I’m not a believer in e-detailing. I have not yet been convinced about, or seen compelling data on, its utility against my particular target audience. If I were presented with evidence that high-prescribing urologists do act on e-detailing, I would be glad to entertain the option. But right now, providers of this tactic haven’t convinced me that urologists are using e-detailing to any substantial degree. I would need to know that there were X number of hits on a given site. For example, if 7,000 physicians were exposed to a message and 5,000 responded positively, this would be compelling data. I would like to see a call to action on an e-detail that is unique to this audience. Muhammad. I believe that e-detailing is going to become more prominent. It’s well known that salesforce costs are a major expense for pharma. With advances in technology, more physicians using the Internet and the ability to reach more physicians with the appropriate message in a cost-effective manner, e-detailing will become much more attractive to the industry, especially to smaller pharma companies. The Partner Component Marketers can’t do it alone. They rely on strategic, creative, and passionate agency partners to help meet their objectives for their products and brands. Berner. Business is becoming more complex. As such, we are looking for agencies that can source a wide variety of approaches, whether they do this internally or have strategic alliances. We want our agencies to be partners in helping us to understand the complexities of our business. For example, if we need to build a managed-care program or a computer animation program, we don’t want to have to go to a separate managed-care agency or Internet agency. Rue. First and foremost, agencies must be creative. They should also have strategic insight, but if they don’t have creativity I don’t care how well they can deliver anything else. I look for agencies to be my creative voice; they need to create a memorable campaign that will move people to action. Bingol. I look for agencies that not only have the commercial aptitude for the product but also the scientific aptitude. An agency really has to possess both of those skill sets. One thing that has changed in our agency evaluation is requiring more medically trained personnel on our accounts. They really need to understand the business to be as effective as possible. Tull. When we choose agencies, there are three things that we look for. One, the agency has to be strategic in nature; it should be able to paint a vision and assist in creating the position for a brand. The second issue involves creativity. Once the position and vision for the brand have been painted, then the agency can creatively come up with concepts and big ideas that characterize that brand in the way it needs to be positioned and communicated to prescribers, patients, and payers. The third part is execution. A premier agency should be able to do all three well. Berner. I look for solid thinking and people who are able to provide a business reason behind a strategy or tactic that’s being recommended. They need to understand what we need and why a solution is going to meet an objective. I don’t want off-the-shelf tactics. Beyond good thinking, agencies also need to have processes so the work can be replicated. They also need enthusiasm and passion. I love walking out of a meeting and being able to feel the excitement and the energy of the ideas and thinking and passion from those I’ve met with. Rue. I evaluate an agency’s performance in a number of ways. In the simplest context, when I leaf through a pharmaceutical magazine, I look at my ad and evaluate whether it is different and whether it is impactful. When it’s different and looks good, and admittedly that’s subjective, I feel a great sense of pride. But the real test is if the product is adopted by the target audience, which in our case is the physicians. I also evaluate whether the sales reps, who are the primary users of promotional materials, are comfortable with the executions and whether the materials are serving their purpose. If I hear negative feedback from the field force then I know we are on the wrong track. PharmaLinx LLC, publisher of the VIEW, welcomes comments about this article. E-mail us at [email protected]. PharmaVOICE DTC Reader Survey DTC is one of the hottest targets for public and media scrutiny, and it is often blamed for starting the industry’s public image problems. Is this deserved? Yes 48.8% No 51.2% Do you expect PhRMA’s new DTC guidelines will alleviate some of the public scrutiny on the industry? Yes 41.5% No 58.5% Source: PharmaVOICE, Titusville, N.J. For more information, visit pharmavoice.com. Note: The 254 respondents to these questions include the following types of companies: 25% pharmaceutical, 23.8% marketing/communications suppliers, 8.2.% biotechnology, 8.6% contract research, 6.6% service, 4.3% information technology, 3.1% biopharmaceutical/biology, 2.3% device/diagnostics, and 18.1% other. The Forum There are going to be fewer hundred-million-dollar plus, mass-market DTC campaigns in the future. DTP is going to become a bigger part of the marketing mix and the European approach to marketing using a disease-state awareness model is going to increase in importance. Aimee Berner Takeda Pharmaceuticals North America thought leaders n Aimee Berner. Marketing Director, Gastroenterology, Takeda Pharmaceuticals North America Inc, Lincolnshire, Ill.; Takeda Pharmaceuticals North America, a wholly owned subsidiary of Takeda Pharmaceutical Company Ltd. of Japan, markets oral diabetes, insomnia, and cholesterol-lowering treatments. For more information, visit tpna.com. n A. Demir Bingol. Senior Director, Marketing, Adolor Corp., Exton, Pa.; Adolor is a biopharmaceutical company specializing in the discovery, development, and commercialization of novel prescription pain-management products. For more information, visit adolor.com. n Thomas Koenig. Senior Director, Segment Marketing, Endo Pharmaceuticals Inc., Chadds Ford, Pa.; Endo Pharmaceuticals is a specialty pharmaceutical company with a focus on pain. For more information, visit endo.com. n Keeshia Muhammad. Senior Director, Marketing, Daxas, ALTANA Pharma US, Florham Park, N.J.; ALTANA Pharma, the pharmaceutical group of ALTANA AG, is a research-based company with global operations and focus on researching, developing, and producing drugs to treat gastrointestinal and respiratory diseases. For more information, visit altanapharma-us.com. n Matthew Rue III. VP, Marketing and Commercial Development, Valera Pharmaceuticals Inc., Cranbury, N.J.; Valera Pharmaceuticals is a fully integrated specialty pharmaceutical company concentrating on the development, acquisition, and commercialization of products for the treatment of urological and endocrine conditions, diseases, and disorders. For more information, visit valerapharma.com. n Mitchell Tull. Director, Global Marketing Capabilities, Eli Lilly and Co., Indianapolis; Lilly, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. For more information, visit lilly.com. VIEW on Marketing September 2005 It has always been my view that integration is absolutely critical. Campaigns are streamed throughout the collateral materials, whatever the medium, so that the brand look, the brand feel, and the brand promise are consistent. Matthew Rue III Valera Pharmaceuticals Pharmaceutical Direct-to-Consumer to Evolve Holistically in Europe Companies using DTC advertising need to rapidly learn how to target customers, develop effective product advertisement, and ingrain DTC advertising in product marketing campaigns, says Himanshu Parmar, healthcare analyst with Frost & Sullivan. Restrictions against using brand names have rendered pharmaceutical direct-to-consumer advertising (DTCA) in Europe an informative rather than promotional exercise. DTCA is now broadening its scope, evolving from its narrow publicity orientation to a more comprehensive approach focused on improving patient outcomes and adding value to patient health. DTCA is expected to enable government and healthcare insurance providers to optimize healthcare expenditure. Marketers are expected to increasingly adopt DTCA because of the potential benefits it offers both patients and pharmaceutical companies. For patients, DTCA promises increased empowerment, enhanced compliance, and greater involvement in personal health management. Further advantages of DTCA include improved and early diagnosis, better awareness of the variety of therapeutic options available and the facility to select therapies suitable to their needs and preferences. For pharmaceutical companies, DTCA will increase rates of market growth, market share, and market penetration. At the same time, it also will boost credibility, improve corporate branding, encourage brand loyalty, and advance brand sales. Spurred by these factors, the European pharmaceutical DTCA expenditure will experience rapid growth. Total DTCA expenditure is poised to expand at a compound annual growth rate of 42% from $85 million in 2004 to $345.5 million in 2008. Despite these encouraging indications, DTCA continues to raise concerns, such as increasing cost of branded medications, information reliability, and the impact on patient–physician relationships. In Europe, there are strict rules against DTCA of prescription pharmaceutical products. Such an environment compels vigilant self-regulation and efforts for achieving a balance with brand promotion campaigns. The United Kingdom, Germany, France, Spain, Italy, and the Netherlands are major regions for DTCA activities. Traditional advertising media are used extensively, with print media accounting for 60%, broadcast media about 30%, and online media constituting the remainder. While print media is extremely popular in Germany and Scandinavia, TV is the most widespread medium in the United Kingdom. Trends now seem to indicate that across most regions a combination of media will be deployed for DTCA. Most major pharmaceutical companies are examining the potential of implementing DTCA in Europe. “DTC is extremely rewarding to the manufacturer in terms of greater revenue, better prices, increasing end-user numbers, and brand awareness,” says Himanshu Parmar, healthcare analyst with Frost & Sullivan. “Companies using DTC advertising need to rapidly learn how to target customers, develop effective product advertisement, and ingrain DTC advertising in product marketing campaigns.” Better understanding of drug and consumer life cycles and a more sophisticated brand-oriented approach are likely to parallel greater experience with DTCA. The focus is likely to be on a more developed and integrated DTCA approach. This will augment reach and maximize returns on R&D investment. With heightened emphasis on direct-to-patient (DTP) approaches, DTCA expenditure will continue rising and will be particularly high in customer retention and compliance areas. Many companies will integrate CRM in their DTCA campaigns. For the most part, DTCA expenditure is likely to be for newer drug candidates for under-diagnosed conditions. With treatments for cholesterol, diabetes, and depression among the most advertised, DTCA would be used to convert the current patients before they switch to generics. “The marketing strategy is to create a point of difference that is meaningful to the patient,” Mr. Parmar says. “The advertising agency’s and the manufacturer’s internal regulatory departments should be doing extensive editing to bring out the most appropriate messages, balancing commercial interests, and social responsibilities.” Himanshu Parmar Healthcare Analyst Frost & Sullivan Source: Strategic Analysis of Pharmaceutical Direct-to-Consumer in Europe, Frost & Sullivan, San Antonio. For more information, visit frost.com. Because the payer will become as important as the patient and the prescriber, marketing will have to do a better job of communicating the value of not just clinical outcomes, but also health economic-based outcomes. Mitchell Tull Eli Lilly I look for agencies that not only have the commercial aptitude for the product but also the scientific aptitude. This creates a scientific synergy between the client and agency, as well as between the account management and creative teams. A. Demir Bingol Adolor Marketers Investing Resources in E-Marketing and Database Development Disciplined planning still eludes many marketing organizations, says Richard Hochhauser, President and CEO of Harte-Hanks Inc. He also notes that 58% of firms have an informal process or no process at all for direct marketing planning. Richard Hochhauser Jim Dickie To be successful, organizations need to challenge sacred cows, master new skills, constantly innovate, and excel at personalization, says Jim Dickie, Analyst at CSO Insights Inc. And, they need to do it all, very, very fast. More than one in five organizations across various industries spend more than 45% of their entire marketing budgets on “target marketing,” and an additional two in five spend between 15% and 45% on such activities, according to a survey report underwritten by Harte-Hanks Inc. and prepared by CSO Insights Inc. The 2005 Executive Report: Target Marketing Priorities Analysis report found that nearly three of four companies plan higher investments in database management this year; three in five companies are planning to spend more on e-mail, Web design, and data quality initiatives; and more than one in two plan to increase spending on search marketing. A total of 281 companies participated in the survey, reflecting a cross-section of vertical markets among them retail, manufacturing, technology, and services, as well as other categories. The survey, conducted via the Web in April and May 2005, was distributed to senior marketing executives from a combination of proprietary and commercially available sources. One in four responses were from executives who represent firms of more than $1 billion in revenue; almost 70% of the companies are located in the United States. “Database and interactive marketing lead all categories in new marketing investments,” says Richard Hochhauser, president and CEO of Harte-Hanks. “Websites and e-mail, in particular, really show strength. Yet struggles with data quality and data management remain pervasive. There is more work to do.” According to Jim Dickie, an analyst at CSO Insights, there are three observations to be made from the survey regarding target marketing. “First, it’s not easy,” he says. “To be successful, organizations need to challenge sacred cows, master new skills, constantly innovate, and excel at personalization. They need to do it all, very, very fast.” Second, Mr. Dickie says, it’s not cheap. “Companies need to increase their investments in data quality, new programs, analytics, and segmentation tools, as well as skills improvement to optimize their effectiveness,” he says. Third, target marketing is not an option. “Companies have no choice but to start to implement target marketing,” Mr. Dickie says. “Target marketing will be one of the key methods organizations will have to rely on to get their messages to the marketplace. Failure, or even poor performance, in this area will significantly handicap a company.” Percent of Total Marketing Budget Spent on Target Marketing Programs Source: 2005 Executive Report: Target Marketing Priorities Analysis, Harte-Hanks, San Antonio, and CSO Insights Inc., Boulder, Colo. For more information, visit hartehanks.com or csoinsights.com. 13.9% Spending less than 5% 23.8% Spending 5% to 15% 26.3% Spending 15% to 30% 22.4% Spending Greater than 45% 13.5% Spending 30% to 45% And the Survey Says… PERSONALIZED MARKETING • 43% of respondents have a regular or constant program to support personalization and one-to-one marketing • 33% believe they are “good” or “very good” at calculating customer profitability • 12% rate their database management as “very good;” more than one-third rate their database management as “poor” or “very poor” • 53% of respondents believe that their own customer data are at least 75% accurate and 40% of respondents believe that less than half of their prospect data are correct Websites, search, and e-mail • 53% of respondents consider Website and microsite marketing as mission critical • 43% believe search optimization is of critical importance • 41% described e-mail as mission critical to their marketing efforts • Wireless messaging and blogs still have not “broken through” — just 7% and 5%, respectively, rate these interactive media as mission critical Market Research and Analytics • Businesses want more customer insight in the way of understanding perception of product and services (49%), knowing reasons why customers buy and respond (49%), and knowing the impact of marketing on awareness, attitudes and intentions (49%) Lists and Segmentation • The availability of the right lists (66%) and the ability to mail to the right segments (65%) are top cited challenges for postal mail Telemarketing • 56% of respondents indicated that they have not shifted marketing from outbound telemarketing, despite added government regulation Information Concerns • Among respondents top concerns for digital marketing are: 60% security, 59% privacy, 56% spam, and 56% data accuracy PhRMA’s Guidelines on Direct-to-Consumer In August, PhRMA President and CEO Billy Tauzin announced the pharmaceutical industry’s Guiding Principles on Direct-to-Consumer Advertising. “With these principles, we commit ourselves to improving the inherent educational value of advertisements,” Mr. Tauzin says. “Patients need accurate and timely information and should be encouraged to discuss diseases and treatment options with their physicians. These principles will help us reach that goal.” PhRMA’s board of directors gave final approval to the Guiding Principles in July, and they will go into effect in January 2006. As part of the new Guiding Principles, which exceed current FDA regulations in many ways, PhRMA is establishing an Office of Accountability, which is responsible for handling comments from the general public and healthcare professionals regarding DTC advertising done by companies that adopt these principles. “The Office of Accountability will issue periodic reports to the public regarding the nature of the comments and the signatory companies’ responses, and it will provide a copy of each report to the FDA,” Mr. Tauzin says. “One year after the principles go into effect, the Office of Accountability will select an independent panel to review reports for that year, track the overall trends as they relate to the principles, and make recommendations in accordance with the principles. The panel’s report will be made public.” Billy Tauzin President and CEO PhRMA PhRMA Member Company Executives Address DTC Issues Richard T. Clark CEO and President, Merck & Co. We believe in the value of direct-to-consumer (DTC) advertising in improving consumer awareness of diseases, conditions, and the availability of treatment options that may improve health and the quality of lives. We support the principles and believe they can further enhance the ability of DTC advertising to help consumers achieve better health outcomes. Peter R. Dolan CEO, Bristol-Myers Squibb Co., and Chairman-Elect, PhRMA We applaud the development of guiding principles by the industry. This is a significant step in the right direction. I am pleased that we have joined together to reaffirm our commitment to appropriately and accurately communicate important information about prescription medicines. Fred Hassan Chairman and CEO, Schering-Plough Corp., and Former Chairman, PhRMA We believe this latest action is another step forward in developing healthcare communications that are appropriate in a very fast-changing and complex environment. We believe that by doing what is right for the patient, we will continue to build common ground in this important area. Karen Katen Vice Chairman, Pfizer, President, Pfizer Human Health, and Chair, PhRMA’s Group on Affordability and Access These principles will help us do a better job in working with patients. Through the principles, we can improve communications about pharmaceutical risks and benefits, educate the public about prescription medicines and treatment options, enhance health awareness, and motivate patients to talk with their healthcare providers about their health. William C. Weldon Chairman and CEO, Johnson & Johnson and Board Chairman, PhRMA By formally adopting these guidelines, we are committing to the American people and the medical community that we will use advertising not only to promote new medicines, but also to educate consumers about health and disease. We are saying we will place a balanced emphasis on the risks, as well as the benefits of medicines. Good DTC advertising empowers patients to speak with their doctors, and it helps them make more informed choices about their health and the medicines they take. PhRMA’s Guiding Principles on DTC 1. These principles are premised on the recognition that DTC advertising of prescription medicines can benefit the public health by increasing awareness about diseases, educating patients about treatment options, motivating patients to contact their physicians and engage in a dialogue about health concerns, increasing the likelihood that patients will receive appropriate care for conditions that are frequently underdiagnosed and undertreated, and encouraging compliance with prescription drug treatment regimens. 2. In accordance with FDA regulations, all DTC information should be accurate and not misleading, should make claims only when supported by substantial evidence, should reflect balance between risks and benefits, and should be consistent with FDA approved labeling. 3. DTC television and print advertising, which is designed to market a prescription drug should also be designed to responsibly educate the consumer about that medicine and, where appropriate, the condition for which it may be prescribed. 4. DTC television and print advertising of prescription drugs should clearly indicate that the medicine is a prescription drug to distinguish such advertising from other advertising for nonprescription products. 5. DTC television and print advertising should foster responsible communications between patients and healthcare professionals to help patients achieve better health and a more complete appreciation of both the health benefits and the known risks associated with the medicine being advertised. 6. To foster responsible communication between patients and healthcare professionals, companies should spend an appropriate amount of time to educate health professionals about a new medicine or a new therapeutic indication before commencing the first DTC advertising campaign. In determining what constitutes an appropriate amount of time, companies should take into account the relative importance of informing patients of the availability of a new medicine, the complexity of the risk-benefit profile of that new medicine, and healthcare professionals’ knowledge of the condition being treated. Companies should continue to educate healthcare professionals as additional valid information about a new medicine is obtained from all reliable sources. 7. Working with the FDA, companies should continue to responsibly alter or discontinue a DTC campaign should new and reliable information indicate a serious previously unknown safety risk. 8. Companies should submit all new DTC television advertisements to the FDA before releasing these advertisements for broadcast. 9. DTC television and print advertising should include information about the availability of other options, such as diet and lifestyle changes where appropriate for the advertised condition. 10. DTC television advertising that identifies a product by name should clearly state the health conditions for which the medicine is approved and the major risks associated with the medicine being advertised. 11. DTC television and print advertising should be designed to achieve a balanced presentation of both the benefits and the risks associated with the advertised prescription medicine. Specifically, risks and safety information in DTC television advertising should be presented in clear, understandable language, without distraction from the content, and in a manner that supports the responsible dialogue between patients and healthcare professionals. 12. All DTC advertising should respect the seriousness of the health conditions and the medicine being advertised. 13. In terms of content and placement, DTC television and print advertisements should be targeted to avoid audiences that are not age appropriate for the messages involved. 14. Companies are encouraged to promote health and disease awareness as part of their DTC advertising. 15. Companies are encouraged to include information in all DTC advertising, where feasible, about help for the uninsured and underinsured.

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