MEDNET.COM CONFRONTS “CLICK-THROUGH” COMPETITION Harvard Business School Case

Ashish Soni

IIT DELHI

MEDNET

MEDNET

The award-winning site was considered the best health website for trusted, evidence-based, consumer health information.

Advertisements on MedNet proposed specific and immediate solutions to health concerns.

MARVEL

Hugely successful search engine.

visitors.

Heather

Bill

Mahria CMO of Windham

Vice President of Consumer Marketing at MedNet

Vice President of Business Development at MedNet

PRICING STRATEGY

PRICING STRATEGY OF MEDNET

Traditional Banner Advertisement, charging pharmaceutical advertisers on a

($100 per 1000 impressions)

Also charged for each .

PRICING STRATEGY

PRICING STRATEGY OF MARVEL

Contextual, or

Advertisers paid website owners for click-throughs and not for impressions

Charged for each

Windham was considering shifting its MedNet’s ad dollars to Marvel.

Mathematical analysis for proving that MedNet is giving better value to Windham

Competition with general interest websites like Cholestrol.com

Analysis to the three possible outcomes

OBJECTIVES OF THE CASE - 1

To use quantitative analysis methods to compare a

Data Analysis and interpretation and decision making.

ISSUES

1. Is Windham getting from MedNet than from Marvel? If yes then how?

2. Is MedNet General interest websites like cholestrol.com? If yes then how?

Is Windham getting

better value from

MedNet than from Marvel? If yes then how?

COST DUE TO IMPRESSIONS

Advertising

Venue

Monthly Visitors

(Given)

Impressions

Windham

received

(Given)

Cost (for

imrpression)

(Given)

Total ad costs

(from

impressions)

MedNet 4.3 mm/month 17.2 mm $100 CPM $ 1.72 mm

Marvel Search 19 mm/month 57 mm $ 0 $ 0

Case page 4

COST DUE TO CLICK-THROUGHS

Advertising

Venue

Monthly

Visitors

Click-

Throughs

(Given)

Cost

(for click-

throughs)

(Given)

Click-

through rate

(Given)

Total ad costs

(from click-

throughs)

MedNet 4.3 mm/month 516000 $ 3.33 per

click-through 3% $ 1,718,280

Marvel Search 19 mm/month 798000 $ 0.54 per

click-through 1.4% $430,920

TOTAL AD-COSTS

Advertising

Venue

Monthly

Visitors

(Given)

Total ad costs

(from click-

throughs)

Total ad costs

(from

impressions)

Total ad costs

MedNet 4.3 mm/month $ 1,718,280 $ 1.72 mm $ 3,438,280

Marvel Search 19 mm/month $430,920 $ 0 $430,920

Did you click on a sponsor’s advertisement today?

3% Yes

For those who clicked on the sponsor’s advertisement, did you make a purchase?

6% Yes

Have you clicked on a health advertisement at a search engine website?

1.4% Yes

For those who clicked on a health advertisement at a search engine website, did you make a purchase?

2% Yes

Advertisement placement Estimated contribution per sale

General interest website $ 48

Search engine $ 45

Healthcare website $ 150

Advertising

Venue

Click-

throughs

(Given)

% of people

buying

(Given)

Total number

of people

buying

Estimated

contribution

per sale

(Given)

Total

contribution

MedNet 516,000 6% 30,960 $ 150 $ 4,644,000

Marvel 798,000 2% 15,960 $ 45 $ 718,200

Exibit 2 Exibit 3 Exibit 4

Advertising Venue Total ad costs Total contribution Profit Margin

MedNet $ 3,438,280 $ 4,644,000 $ 1,205,720

Marvel $430,920 $ 718,200 $ 287,280

Click-throughs of are as strong as that of

Windham is for clicks from Marvel.

Profit margin of Windham from is clearly greater than that from

ISSUE

Is MedNet better than General interest websites

like cholestrol.com? If yes

then how?

POSSIBILITY 1

Take a more prescriptive, diagnostic posture toward site visitors—treating them, as Cholesterol.com did, almost as patients. Then they could charge for content and be less dependent on advertising revenues. But would MedNet’s board stand for this more aggressive approach to dispensing medical information?

POSSIBILITY 2

Bring alternative health information to the site, starting conservatively (perhaps with scientific studies of acupuncture) and slowly becoming more liberal. But would this help the problem of flattening advertising revenues from pharmaceutical firms like Windham?

POSSIBILITY 3

Take a more prescriptive, diagnostic posture toward site visitors—treating them, as Cholesterol.com did, almost as patients. Then they could charge for content and be less dependent on advertising revenues. But would MedNet’s board stand for this more aggressive approach to dispensing medical information?

POSSIBILITY 1 REJECTED

Take a more prescriptive, diagnostic posture toward site visitors—treating them, as Cholesterol.com did, almost as patients. Then they could charge for content and be less dependent on advertising revenues. But would MedNet’s board stand for this more aggressive approach to dispensing medical information?

SUPPORTING POINTS

Many of the visitors want information free of cost, therefore charging for content would repel potential customers and decline the business

SUPPORTING POINTS

It may decline the revenue and business of the site as majority or visitors click on both condition-specific pages and general health information (given on page 12 - most viewed pages). This may reduce the activity in the site

SUPPORTING POINTS

It may come at risk of violating both state and federal government regulations regarding diagnosis conditions and prescribing treatments.

POSSIBILITY 2 REJECTED

Bring alternative health information to the site, starting conservatively (perhaps with scientific studies of acupuncture) and slowly becoming more liberal. But would this help the problem of flattening advertising revenues from pharmaceutical firms like Windham?

SUPPORTING POINTS

Alternate health audience will not click on a pharmaceutical as Most of them don’t trust pharmaceutical companies or Western medicine.

SUPPORTING POINTS MedNet’s content is provided and reviewed by the experts due to which people trust their articles. And alternate approaches may have discrepancies as they don’t have qualified professional for these fields.

SUPPORTING POINTS This approach will also not help in the problem of flattening advertising revenues from pharmaceutical firms like Windham, as Windham is more about authentic medicines rather than alternate approaches.

POSSIBILTY 3

Build on their greatest strength—their integrity and trustworthiness—as well as their web business expertise, to evolve into a developer and manager of employer websites. But would employers let them introduce pharmaceutical advertising? If not, wouldn’t they still lose in the long run?

SUPPORTING POINTS

It is very easy, TRUSTED and informative website for non-pro consumer audience.

The content was developed by 24 journalists, designers, doctors and administrators

It is reviewed by medically trained journalists.

SUPPORTING POINTS According to data provided by the case

85% of the people believe that

advertisers at MedNet are more likely to provide them with useful remedies and information than advertisers found on websites that don’t adhere to the same evidence-based standards.

SUPPORTING POINTS

25% of the people decide to go online

to find health information on MedNet via search engine like Marvel,etc which has

19 million visitors per month, So people’s knowledge about MedNet is evidently growing and thus more people are getting connected.

SUPPORTING POINTS

Also 93% of the visitors claim

that they will return next time they need medical information to MedNet.

SUPPORTING POINTS MedNet board members also perceived that some condition-specific sites(e.g., cholestrol.com) came dangerously close to diagnosing conditions and prescribing treatments for their visitors, and thus were at risk of violating both state and federal government regulations (and the laws of many foreign nations) that required medical advice to be dispensed in person by a licensed physician.

SUPPORTING POINTS Also general interest sites are very condition specific whereas people seem to be fickle minded as given in case than people of MedNet stayed long, explored avidly, clicked around to clarify symptoms.

SUPPORTING POINTS

According to the data people value the integrity and trustworthiness of MedNet. Hence most will follow it and even become repeated visitors.

WOULD

RUN?

Employers wont let them introduce pharmaceutical advertising as MedNet would adversely affect their business and may also attract their potential customers.

MedNet would thus lose its potential employers and thus its business may decrease drastically.

If not, MedNet wouldn’t lose in the

long run because the contribution per sale provided by MedNet is far greater than that provided by any other site

Advertisement placement Estimated contribution per sale

(Given)

General interest website $ 48

Search engine $ 45

Healthcare website $ 150

So more employers will like to associate with

MedNet for the profitability of their business.

Also due to its trustworthiness and authenticity, more employers will get connected.

These slides were created by Ashish Soni, IIT DELHI, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)