Web 2.0 Strategies for Device Marketing

1. Web 2.0 Strategies for Device Marketing 3nd Annual Direct to Consumer Strategies for Medical Devices Sept 26th, 2006

2. Outline • Lessons of DTC learned from Pharma model • ROI for Traditional DTC vs. Internet DTC campaigns • The Conversion Funnel Revisited • Advantages of Pull Strategies • Intro to Web 2.0 technology, sample applications to Pull Strategies • Closing Thoughts

3. Dynamics of DTC in pharma • Why look at pharma? • It’s the current working model. • Some of you have a CEO/Board Member etc who insists that DTC is the magic bullet, based on their perception of its success in pharma. • Pharma holds some lessons about the marginal ROI of DTC vis-à-vis detailing, journal advertising, and professional conferences. • Pharma highlights the importance of Prevalence, Product Lifecycle, Patient Life Time Value (LTV), Targetability and Trialability. • You will be competing against pharma companies for ad space, so it is helpful to know the fundamental dynamics of their business.

4. Promotional Spending in Pharma

5. Lessons on ROI from the AARP Study • One place to look for comparative ROI is the ARPP (Analysis of ROI for Pharmaceutical Promotion) study of 2002 conducted by Dick Wittink of Yale. • Methodology of ARPP study • Evaluated 392 branded drugs with revenues of $25MM or more for the time period 1995-2000 • Used data from Scott-Levin to track impact of DTC, Detailing, and Events spending on number prescriptions and prescription sales. • Data from PERQ/HCI to track effectiveness of journal advertising • Using regression analysis, calculated the average relative ROI for these promotional tools: • Detailing (DET) • Direct to Consumer (DTC) • Advertising in Professional Journals (JAD) • Conferences and other Events (PME)

6. Hi-Level Results of ARPP Study: 25-100MM • R.O.I. for brands with annual sales between 25MM and 100MM

7. Hi-Level Results of ARPP Study: 100-500MM • R.O.I. for brands with annual sales between 100MM and 500MM

8. Hi-Level Results of ARPP Study: 500MM+ • R.O.I. for brands with annual sales greater than 500mm

9. Big & Chronic Made up 61% of DTC in 2004 Acid Reflux Cholesterol Erectile Dysfunction Erectile Dysfunction Constipation Acid Reflux Allergies Allergies Arthritis Cholesterol

10. Why did only big brands have + ROI for DTC? • Big brands targeted prevalent, chronic diseases with a Customer Lifetime Value (LTV) model that justifies the frequency required to reach the threshold awareness that prompts a request. • Big brands targeted disease states characterized by high customer dissatisfaction with current standard of care. The success of DTC is a symptom of customer’s willingness to move from awareness to trial, request, and advocacy.

11. LTV Models for Medical Devices • Devices that act as a drug delivery system have the repeat sales typical of drugs for chronic disease = The razor model. • Platform solutions have the potential for incremental revenue via software upgrades, compliance tools= The software model* • Most devices are a onetime transaction= Capital goods. * The software model for medical devices is still in its infancy, but can be expected to grow as more manufacturers adopt a platform rather than imbedded system approach to functionality.

12. Structural Reasons Traditional DTC has low ROI for devices • Non-recurring purchase • Shorter product lifecycles, less time to recoup marketing costs • No/Limited Ability for Trial • Diminished Patient influence for severe indications • Prevalence of Clinical vs. Consumer Benefits

13. Response to low ROI for traditional DTC • Don't do it: concentrate on professional education and sales support collateral • Use it tactically: Rather than building general awareness, use DTC efforts to give a push in the right place at the right time to accelerate the diffusion curve: • Driving payor coverage in a specific market • Building procedure volume for a cluster of physicians • Strengthening the referral network in a particular location • Creating success stories and buy-in for co-op marketing, self-funded practice marketing. • Focus on Internet DTC initiatives

14. Internet DTC cost-effective for many devices • Multiple Utility Functions • Data Driven/Emotionally Driven consumers, Consumer and Medical Channel served by a single platform • Drive traffic to local specialists: robust doctor locator is the killer application • Well built site can receive high organic rankings within major search engines, drive traffic to call center and or directly to practitioners • Recurring media expense highly targetable and tuneable

15. Television and Radio Ads Print Ads Direct Mail Banners, SEO Website Compliance & Upselling Tools Fulfillment Processes Selling Processes Customer Service Processes The Conversion Funnel Re-Visited Specialist Practice Activity Logs Adoption Consumers Awareness Consideration Device registry data ( if Title 21 requirement) CRM data from rep attending procedure Preference Purchase Loyalty Purchase

16. The Conversion Funnel Re-Visited Corporate Controlled Dimension of Brand Specialist Practice Activity Logs Adoption Consumers Awareness Consideration Device registry data ( if Title 21 requirement) CRM data from rep attending procedure Preference Purchase Loyalty Purchase Partner Controlled Dimension of Brand

17. Advantages of Pull Strategy • Maximizes Upstream Investment • Super Targeted Audience • Leverages existing goodwill and communication channels • If coupled with a co-op plan, directs resources to committed partners, away from free riders

18. Obstacles/Risks of Pull Strategy • Difficult to Control Content • "Cannibalized Content" • "Exaggerated Content" • "Stale Content" • Specialists are not Marketers • Don't have the tools • May not have the skills • Severe time constraints • Need to reconcile corporate and specialist’s messaging needs

19. Web 2.0 Defined Ongoing transition of the World Wide Web from a collection of websites to a full-fledged computing platform serving web applications to end users. Web 2.0 is about software getting out of the way of information so that information can attain its optimal value.

20. Three Core Web 2.0 Examples • Content Syndication • Customer Service and Market Intelligence Syndication • Collaborative Marketing Platform

21. Content Syndication Sample Not integrated with rest of site visually or architecturally

22. Content Syndication: FAQ Example Corp Website FAQ RSS Feed to Partner Sites Separating content from presentation allows content to be controlled at a single point, updated automatically at all end points, formatted to match end user style and site architecture requirements

23. Content Syndication: Current Readiness • Channel Partners need to have websites/webpage that can read and format RSS feeds. Coming but not here yet…2-3 years? • Possible Business Model • Provide RSS rendering modules to channel partners for most popular CMS systems • Provide compelling content that educates & builds awareness free of charge, let them self-select your content • Severe obstacles to adoption

24. 1 Device Co Private Feed : Dr. Lee Jones 2 Current Order: Est. Delivery 9/26/06 Balance Due: $325.00, 12 days New CPT Code Information: more >> Payment: Visa Acct# ….8382 Sales Rep: Sandy Woods, 415-555-1212 Persistent Desktop Presence • Current use: Public Feeds • Emerging Use: Private, Secure B2B RSS Feeds

25. Collaborative Marketing Platform

26. Closing Thoughts • Consumer are looking for consistency between marketing claims and the experience they have at point of delivery of product/service. • Job of internet marketing is changing from building destination sites to creating marketing services that channel partners can leverage at the local level. • Skill of internet marketing is changing from doing to facilitating action by channel partners • RSS configuration and presentation within the browser will make the desktop, not the intranet, the place to support, influence and learn from channel partners • You gotta keep ‘em separated: work with IT partners to build 3-tiered architectures that keep content separate from formatting & business rules