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Transcript of Harvard Business School Case Study Analysis on "MedNet confronts click through competition"framed by...
![Page 1: Harvard Business School Case Study Analysis on "MedNet confronts click through competition"framed by Madhusudan Dahal](https://reader030.fdocuments.in/reader030/viewer/2022032618/55b6ce3abb61eb236c8b470a/html5/thumbnails/1.jpg)
What is Med Net?
It is a website delivering health information free to consumers
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Main motto of launching MedNet are:
1.To provide scientific based medicine information to a non professional consumer audience
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Objective contd..
2.To provide this information for free
3.To generate profits from advertising sales
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What is its source to run?
Gets income via advertising from pharmaceutical companies.
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What is windham?
Biggest advertiser for MedNet
Pharmaceutical firm
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1.Who is Heather Yates?
2.Who is Bill Bishop?
3.Who is Mahria Baker?
“Real players”
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Heather Yates is the vice president for business development at MedNet
Bill Bishop is MedNet’s vice president of consumer marketing
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Mahria Baker =windham’s ceo
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What is marvel?
Marvel is a large search engine which follows the alternating advertising model
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Alternating advertising model includes:
Contextual , pay per click, banner advertising
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It depend on “click through rate”=(no. of click) /(no of impression delivered)
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What is the present situation?
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Analysis :1
a)Mahir Baker planning to shift ad dollars to Marvel because Marvel advertisement value becomes lesser for windham
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b)MedNet has to convince them that MedNet set up is worth their ad dollars
It is because windham is biggest advertiser for MedNet .If they break up with them then they will be in loss
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Let’s look at MedNet’s background
In 2006 it earned profit to $1million
The credits goes to trained doctors ,journalists ,designers , administrators &social media even
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Revenue
Advertising income$ 12000,000
Expenses Purchased content 3700,000
Sales and marketing 3000,000
Technology support 1300,000
General administration 3000,000
Net income =$1000,000
Total= 11000,000
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Maximum r
In 2006,Maximum expense was from purchase content
Net profit was one million dollar
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What happened in 2007?
But ,
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Faced tough competition
By providing similar content on mainstream medicine ,non profit & governmental competed with MedNet
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Resulted ..
Divergent on customersCompany’s economy declined
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Condition specific sites gave birth such as cholesterol.com could focus on cholesterol but was minor competitor for MedNet
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yates found clinicaltrial.com audience was small but was minor competitor
Alternativehealth.com provided information regarding herbal remedies ,vitamin regimens , massage
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Alternativehealth.com audience was greater than MedNet but it had begun to use disclaimers with no impact on audience size
That’s why it could not compete with MedNet but had to consider as minor competitor
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What method is used to calculate
advertiser payments?
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Advertising revenue model was possible by sophisticated web analytics:
A technology that tracks the behavior of each visitor-pages viewed , linked clicked etc
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Software made easy to calculate Return on Advertisement investment(ROI)
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Old methods :
How best to generate revenue from adverti sers?
Analysis 02
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MedNet charged windham pharmaceutical on cost per thousand impression (CPM) basis
One advertising impression meant that one visitor requested from a web server a page that had specific advertisement on it
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By imposing an impression
business model MedNet was fully
monetizing
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Analyse 03
What can be the Marvel challenge?
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1.Was to control click fraud as competitors were fraudulently clicking on advertisements to drive up advertising cost.
2.To capture MedNet customers gradually by offering different offers
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Analysis 03
Challenge for MedNet to sustain
Challenge 1:windham pays $0.54 for each click through to marvel
Windham pays $3.33 for each click through to MedNet
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Now which strategy will MedNEt be following ?
How can it protect from going into loss?
Click through really what matters at Windham.
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Baker is in commotion- but cant pay six times as that of paying to marvel?
Baker’s investment is constant
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Yes!!! It was necessary to think it upon Windham’s
advertising campaign results
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Windham pharmaceutical advertising campaign results
Advertising venue
Marvil search
U.S newspaper
Monthly visitors
MedNet 4.3mm/month
19mm/month
2.5mm/day
Impressions Windham received
17.2mm
57 mm
5mm
cost
$100cpm
$.54 per click- through
$260000/2-day ad
MedNet only came in crisis season
Exhibit 02
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Exhibit 03
MedNet visitors survey results:
Did you click on a sponsor’s advertisement today?
3% yes
For those who click on sponsor advertisement ,did you make a purchase?
6% yes
Have you clicked on a health advertisements on search engine website?
1.4% yes
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Contd..
For those who clicked on heath advertisement website , did you make a purchase?
2% yes
If you saw advertisement on television or newspaper , would you call the call center?
.74 % yes
If you called about an advertisement on newspaper or television and found the information credible ,would you make a purchase?
12% yes
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Contd..Advertisers at MedNet are more likely to provide me with useful remedies and information than the advertisers found on website that don’t adhere to the same evidence based standards
Strongly agreed 85%Strongly disagree 15%
How many health sites will you visit to research condition?
85%=3 or more
How did you decide to go online to find health information on MedNet?
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Contd..25% search engine
10% advertisement print
25% online advertisement
20% bokmark this site
10% trusted advisor recommendation
10% email letter from friend recommending article
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Contd..
Will you return to MedNet next time you need medical information?
93% yes 7% no
Will you allow midNet to store your personal information about your condition such as blood pressure , weight etc?
40% yes60% no
Would you pay for the content at MedNet site?75% no
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Contd..
Would you use MedNet if you have to register for some information?
50% no
Conclusions:
MedNet visitors clicked on more pages and advertisements than general web surfer does
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Which types of website does visitor visit from MedNET?
• FOR THAT ONE MUST LOOK UPON EXHIBIT -4Advertisement placement
General interest website
Estimated contribution per sale
$48
Search engine $45
Health care website $150
newspaper $165
Television $75
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Conclusion of exhibit -4
Health website visitors tend to buy more products from advertisers when they did decide to purchase.
If product advertised is not available on counter they can go to doctor for prescribtion
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What is vesselie ? and did coupons selling become effective for windham?
Vesselia is the prescription medication that cures cholesterol and plaque
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In order to increase prescription of vesselia windham generated coupons on website so that they could print out and redeem at pharmacy
On average patient took three months to redeem coupons for vesselia after windam had first placed the advertisement
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Analysis 04
Windham only pay for click through???
If audience remains constant and provided that MedNet sells only by click through then MedNets gets its revenue depreciated by 80%
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What if audience is increased and click through also gets increased???
Or should they focus on practices like chiropractic medicine or acupuncture ??
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But alternative health audience don’t like western medicine or say pharmaceutical companies?
So it becomes clear that no acupunture or
chiropractic medicine can help to get out
from loss
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What about instead of selling click through MedNet contract with large employee to become corporate health site of record?
If they make their money from corporation they can reduce
their reliance on advertisers like Windham
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But ,One worry !!!
Baker underestimates the genuine value that MedNet impression deliver to an advertiser
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The only way to win this arguments is with numbers not intuition
Lets compare numbers that MedNet generates on an impression basis with the number that Marvel generates
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Insights taken from telephone conversations
Proposal : 01
Marvel has provided through click through but those are just opportunities to get windham in front of person “not actual sales”
What click through worth if it provides NO SALE??
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When all vesselia coupon gets returned to windham then Windham will realised what MedNet delivered the best sale result
But how can windham make profits from heart medication profit margin??
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If Windham want people to click on their ads at low rate Marvel ca give that
But !!!
If Windham want people to see at content and consider their message Windham want MedNet
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Analysis 05
Since budget is constant , windham has to pay for ads on cholesterol.com.if it does not pay its competitor will gets its consumer .so what to do in such condition?
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How to sell vesselie in a ways that cholesterol.com cannot ??
Bakers analogy
Both MedNet and cholesterol.com had targeted high profit audience that returned for up to date and trustworthy solution about cholesterol medication
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Cholesterol.com is category killer
Focuses on chronic condition such as cardiovascular disease ,obesity
Cholesterol.com was launched by lawyer with$47
This sites recruited international doctors and designer .they could make information in 13 language including chinese
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Cholesterol.com was powerhouse in Asia
Could offer travel agencies to promote Global Health Tourism
Site significant marketing budget paid for a large ,multilingual advertisement campaign
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What MedNet could do when niche’s competitor was existing in market??
MedNet continued to believe that providing source of information that could deliver real value to its reader
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Mednet perceived that some condition specific sites came dangerously close to diagnosing condition and prescribing treatment for visitors
Were at risk of violating both state and federal government rules
So mednet refused to provide medical treatment
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Insights from conference call
Treating visitors as patient as that of cholesterol.com did can reduce the dependency on advertising revenue
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But would Mednet board stand for aggressive approach to dispensing medical information??
Bringing alternative health information(like acupuncture) to the site ,can it be fruitful?
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But would this help the problems of flattening advertising revenue pharmaceutical firms like Windham??
But main thing is to develop healthy relationship , trustworthiness among users.
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At last ..think on it
Would employers let them introduce pharmaceutical advertising ?
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Sameer Mathur
MBASkills.in
Indian institute of Management Lucknow
Marketing professor 2013-
Marketing professor 2009-13
Ph.D and MS(marketing)2003-2009
Madhusudan DahalNational Institute of Technology surat
intern