4 Reasons Pharma’s Organizational Structures Are Not Built for Digital Transformation

Spurred into action by the pandemic, many pharma brands are undertaking or accelerating their digital transformations. While many have already moved to agile, technology-based approaches for HCP and DTC outreach, it’s time for us to assess our progress and consider a few tweaks to improve our approach.

Five key areas impact digital adoption and effectiveness:

  1. Organizational Structures
  2. Diversity, Equity, and Inclusion
  3. Omnichannel Marketing Strategy
  4. Creative Development and Deployment
  5. Medicare Changes

Each area deserves its own attention, and I plan to address each in a series of articles throughout the coming months. But today, let’s focus on organizational structures. As a relative newcomer to pharma (I joined the industry in 2019), several things stand out about the industry’s approach to digital. These practices differ significantly from early adopter channels, such as travel, fashion, consumer-packaged goods, and publishing where I spent the first 17 years of my career. We often discuss pharma being 10 to 15 years behind other industries and attribute it to the regulatory oversight. While this does have some impact and is prevalent in other heavily regulated industries (e.g., finance and commercial real estate) it is not the biggest driver of this lag.

Underfunding and underprioritizing digital is the biggest barrier to pharma’s digital transformation. According to eMarketer, pharma investment in digital media was flat for several years at 2.9% of total marketing budgets. For other industries, not only did digital investment grow steadily annually, but digital marketing is the bulk of budgets and the priority in marketing strategies and outreach. Furthermore, Americans became mobile-first in 2015, which means consumers had already shifted to mobile channels five years pre-pandemic. People’s behaviors do not change based on the industry trying to interact with them. Yet, our approach to people is based on one identifying characteristic—is the person a doctor or a patient?

To effectively engage audiences, we must meet people where they are. That is, and has been for some time, on the Internet. Rather than necessitating an immediate acceleration of digital, brands should have already been digitally focused when the pandemic began. Instead of shifting strategy, we could have just increased funding to digital channels that saw massive usage increases. Advanced, Over-the-Top (OTT), and Connected TV as well as social media and search are a few channels that come to mind. Telehealth is another. Have your agencies checked the opportunities in search? Most brands, unless they have large budgets (think Pfizer, Eli Lilly, GSK), are significantly underfunded in both search and social. Tech-enabled television and telehealth are still not on most media plans at scale.

Organizational Areas Where Pharma is Lacking

So, how did the industry miss this shift? There are a few key differences in pharma that made this happen. I love a good list, and for discussion purposes, it’s easier to isolate each variable.

1. Pharma prioritizing industry knowledge over media knowledge.

This was common in all industries when digital marketing first took off. Digital marketing is a specialized expertise that can be applied effectively across all industries, regardless of the vertical. Other industries shifted prioritization to digital skill set vs. industry skill set 10 to 15 years ago. This allowed them to become agile and deliver more effective media plans that lowered costs and improved ROIs.

2. Limited data collection/ownership and internal digital knowledge.

Because digital has not been the priority, we have missed opportunities to be proactively prepared for industry changes such as cookie removal and mobile ID targeting changes. Most pharma companies rely heavily on their agencies for these services. Having your own first-party data is critical to effective targeting in this new world order. Pharma brands collect very little of the data around their DTC and HCP audiences.

When your agency owns the tools used for advertising, e.g., your demand-side platform (DSP), they also own your data. For years, other industries have been collecting and refining usage of behavioral data gathered from these tools. When I worked for Hershey’s digital agency, the brand owned the contracts for their platforms, which allowed them to own their data. Robust consumer personas and data-driven customer segmentation enabled better creative development and omnichannel digital media planning.

3. Digital is a subfunction house in Commercial Operations.

Your digital team and agency are marketers too. In most industries, digital marketing and media teams are not only separate functional areas, but they also LEAD strategic marketing approaches. Because, at the risk of beating a dead horse, all people are digital first and have been for almost a decade. Agency-side, your teams are usually built from many agencies under the umbrella holding company. Consider IPG. In 2016, when I was there, McCann handled traditional media agency planning and buying for brand marketing. Matterkind (formerly Cadreon), handled the programmatic, performance-driven marketing. Budgets were separate and teams collaborated but had autonomy and individual responsibility for their own strategies and budgets.

Digital marketing and media should not require approval from brand marketers with limited or no digital subject matter expertise. This would improve more than just performance and efficiency. We say agile often, but to achieve true digital agility, these functions need equality, not hierarchy. In other industries, where hierarchy exists, digital leads. Check your site traffic and I would guess that greater than 85% of it is from mobile. Why are we still applying analog approaches. Develop a plan to give your digital marketing employees their own space and budget oversight and assign a digital resource to manage the digital agency relationship. Your costs will decrease and your ROIs will increase. We aren’t operations people! This will flatten your organization structure significantly, increase employee happiness and retention (for digital team members), and allow for more innovation.

4. Build and own your marketing technology stack.

As a new member of the industry, I am blown away by all the missed opportunities to gather non-protected health information data to power strategic marketing approaches. Your DSP for programmatic can give you not only a wealth of data about the people engaging with your digital ads, but it can also tell you a lot about the people who are not. This data collection can help with your approach to multicultural marketing and help the industry connect better with Hispanic and Black audiences. The U.S. is a multicultural country; your marketing should reflect that and the martech stack can enable it.

Whew, I know! I said a lot! While everything is not always immediately actionable, developing a roadmap to implement these changes will help your organization catch up with the people you are trying to reach. Regulations do not require an approach that has been tried and retired by other industries. We can and should mimic these approaches since American consumers are also our audience.

In part two of this series, I will dive into why diversity, equity, and inclusion should be another pillar of a successful digital transformation.

  • Erica N. Hawthorne

    Erica N. Hawthorne is Owner, Principal Consultant at The People People, a consultancy focused on true diversity, equity, and inclusion and authenticity in advertising. Erica has worked in digital marketing for 20 years, including for notable brands such as Bayer, Marriott International, USAToday.com, Burberry, Mandarin Oriental, Black Rock, Dow Jones, Forevermark, Colgate, and The J.M. Smucker Company. She transitioned to the pharmaceutical industry in 2019 to bring representation and awareness to medical disparities and systemic racism in healthcare.


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