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GlaxoSmithKline seeks ROI from marketing suppliers
Wednesday, May 08, 2002 The 'ammunition' to justify pharmaceutical company investment in marketing initiatives must come from suppliers, a senior GlaxoSmithKline executive has said. Since its merger in January 2001, GlaxoSmithKline has led a trend towards ruthless cost-cutting in its outsourcing deals. Kate Priestman, Head of Return on Investment (ROI) at GlaxoSmithKline explained the company's approach to partnering at a PM Society debate on ROI. She said pharma marketers were under great pressure to justify their marketing costs internally, with GSK now intent on becoming a very 'lean' company. "If the nineties were about developing capabilities internally such as in-house advertising agencies, then the 'noughties' are about outsourcing. For us, it's a balance of developing and protecting that expertise internally and getting outside help when we need it," she said. Pharma marketers must now account for every part of the marketing mix used to support a brand, and attempt to say what is delivering return on investment and what is not. Kate Priestman said: "Give us the ammunition that we need to go in and make those decisions." Commenting from the audience, Suzanna Grix from Novartis Pharma said: "Some of the onus is on the service providers to estimate value but it's not a stick to beat suppliers with. We need ammunition to estimate that long-term ROI. From my point of view additional help with that would be very helpful." Fellow speakers on the panel, chaired by Gary Johnson, Managing Director of InPharmation, were drawn from across the spectrum of marketing services suppliers. Martin Ellis, Managing Director of Cohn & Wolfe, and Richard Purchase, Director of Service Development, Innovex UK, broadly agreed that attempting to isolate the ROI of elements of the marketing mix would not paint an accurate picture. However, Richard Jackson, Country Manager UK & Ireland, IMS Health, said IMS's monitoring of doctors' prescription writing habits before and after marketing initiatives, such as symposia, could demonstrate their return on investment. Meanwhile, there was general consensus with Kate Priestman's views that "one size never fits all," and that the most effective marketing tool for one brand may not work for another. Kate is marketing director for a portfolio of GSK products with sales from 1 million to over 70 million, and said innovation and risk share were an important part of partnering. However, Martin Ellis said his experience of risk share with GSK has been very one-sided. "The agency was paid 80% of the total [initially] and it was paid 100% for achieving 150% of the target. There's never an upside with your organisation, " he said. However, when asked if Cohn & Wolfe would still do business with GSK he said yes, joking: "They are still a very great and dear client of ours." Finally, Kate reinforced a general feeling that measuring ROI was not a precise science. "You shouldn't underestimate gut feeling within the marketing mix. Whatever the arguments are for a particular brand, we won't do it unless we believe in it," she said.