What the Sale of WebMD Means for Medical Marketers

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After considering almost 100 bids, WebMD has finally sold — but what does their sale mean for medical marketing?

On our blog, Medical Marketing Insights, we frequently discuss innovative digital technologies and their impact on the healthcare industry. The rise of the internet has fundamentally altered the traditional patient path to treatment, empowering patients to conduct their own research and make their own decisions about their health. In response, Pharma and medical marketers have begun to adjust their digital strategies, opting for ad buys that emphasize personalization and relevance over sheer visibility.

Nothing illustrates this shift better than the recent news that private equity firm KKR has agreed to buy WebMD — to the tune of $2.8 billion. It’s not exactly a losing outcome for WebMD, but it’s also a sign that patients’ attitudes toward health information are evolving, and that the medical industry is being forced to adapt accordingly.

The Road to a Sale

On paper, WebMD has all the markers of success. In June, it ranked 36th on comScore’s Top 50 U.S. Digital Media Properties list — with 71.7 million unique visitors that month — and was the only website of its type represented. The company’s consistently profitable, and its stock price has risen 250% in the last five years. This begs the question: why did they feel the need to sell?

It turns out that past numbers don’t paint the full picture of WebMD’s prospects going forward. The company hasn’t stopped growing — far from it — but its rate of growth is slowing down. WebMD anticipates a 1% to 4% revenue increase in 2017, the lowest in years. WebMD CEO Steve Zatz cites a number of other reasons for exploring a sale or merger, including “pricing pressure, continued issues around managed care, and challenges in product launches.”

But WebMD has another issue: its business model is, by internet standards, old. The company, which was founded in 1996 and went public in 2005, still relies heavily on banner ads to drive revenue. Meanwhile, research shows that fewer and fewer people are actually clicking on them; in fact, people are actually more likely to win the lottery or survive a plane crash than click on a banner ad. What’s more, they rarely show up on mobile devices, where consumers are now spending the vast majority of their time.

Healthcare organisations may have more money than ever to spend in their digital marketing budgets, but many of them are moving away from banner ads — and therefore “traditional” channels like WebMD — as their popularity wanes. To remain profitable, sites that rely on banner ads will eventually be forced to evolve their advertising and revenue structures. That’s the bet that WebMD is making with its acquisition, which will give the company access to new revenue streams through KKR’s other properties.

The New Frontier: Google and Facebook

A core driver of the shift away from banner ads is a change in how people seek out and consume health information. Patients increasingly trust platforms like Google and Facebook to provide them — either through search or through their social network — with reliable, accurate information to guide their health decisions. And when Google and Facebook control a whopping 57% of the digital ad market, that trust becomes an opportunity for successful advertising.

The main benefit of advertising through Google or Facebook is the ability to precisely target patients who might click through and buy a product or service. By using data-led keywords and targeting parameters, medical marketers can serve ads directly to first-time parents looking for an obstetrician, young Type 1 diabetics choosing a new insulin pump, or qualified prospective participants for a new clinical trial.

Because the ad content is timely and relevant, click-through-rates (CTRs) and conversion rates dramatically increase. Google provides an additional incentive to use AdWords by embedding health information, pulled from a number of WebMD competitors and hospital sites, into Google Search itself. As more consumers turn to that feature to seek out health information, the payoff (i.e., visibility) of a carefully targeted AdWords campaigns will only increase.

WebMD’s sale is a clear indicator that targeted, personalized digital advertising is the future of medical marketing. Savvy healthcare advertisers are moving with their customers to more agile platforms that give them flexibility, access, and ultimately, results.

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