S&R Blog

How did pharma ad agencies become “expendable”?

There was a time, actually not so many years ago, that ad agencies had a real and meaningful place at the table. That is, they were a real part of a pharma company’s strategic and marketing leadership team, and companies actually sought out and listened to the counsel of their agencies.

However, over the past 10 to 15 years, things have changed rather dramatically, to the point that many agencies have fallen to the dreaded “vendor” status. In a sense, many agencies have abdicated their once exalted position as counselors and experts and now are simply gristle for the ever frequent RFP and purchasing agent who is only looking to produce a detail aid at the lowest bid price.

Holy smoke, get on your delivery person uniform (you know, the ball cap, the Dickey heavy cotton work pants, and the ever-present shirt with your name monogrammed on it in script), get your hand truck full of boxes of promotional materials, and load those detail aid vending machines in the halls of purchasing.

So, what has changed that allowed this dreadful thing to occur?  Let’s take a closer look.

The first horse out of the barn was the advent of purchasing departments and their increased role in making marketing decisions. Don’t get me wrong, it certainly didn’t start like that, and yes, there is a role for purchasing departments. However, this began when the purchasing god convinced the company president that boat loads of money could be saved if purchasing had the opportunity to get involved in the marketing “vendor” selection process.  There is that dirty “v” word again!

If purchasing could simply set the guidelines and process for “standardizing” the agency selection process (to the point that you can ever standardize a strategic and creative development process), then the marketing folks could compare apples to apples and make the right decisions on who would best help them obtain their brand goals.

Of course, the average purchasing agent knew little to nothing about the creative process, the needs of marketing, the principles of marketing and the quirks of regulatory, legal, medical and those sorts who often impacted how the process went. In other words, purchasing bought a detail aid much in the same way that they bought a truckload of Erlenmeyer flasks, notepads, or pens. After all, a detail aid is a detail aid.

What about the issues of brand message, positioning, strategy and all the other important but hidden intricacies of brand continuity, image, and so on?  Those were either free or not important.

Purchasing’s power has only increased from that early point.  Today, purchasing often sets the hourly rates an agency may charge, determines how many hours an agency may spend on an awarded “project”, and conducts “reverse” bidding online to see how low they can drive the price.  There is always some fool out there that will do it for less.

After all, a detail aid is a detail aid.

The second horse out of the barn was the arrival of all those preeminent consulting groups.  You know the ones I am talking about–the high and mighty out of Boston, the “big boys” from the “Big 8”, no make that “Big6”, no make that “Big 4” accounting firms who suddenly became experts in pharma operations and marketing.  They came resplendent with their MBAs and regression analysis and operational organization schemes that would assure even more riches.  Of course, these were the very same consultants that came from the top MBA schools in the world and went on to use what they learned to help topple this country’s financial institutions and aid companies such as Enron, WorldCom, and so many others.

Yet, the pharma companies had to keep up with the Joneses and one pharma company couldn’t be outdone by another, so they hired these consultant companies.

So every company had to break itself into business units, often duplicating services and increasing overall overhead costs. And then, each company simply had to have 10,000 to12,000 reps in the field so that every doctors office in the land was swamped by 3 to 6 sales reps (each representing a different product/division) all sitting in the waiting room at the same time.  And of course, each company had to restock their marketing departments with those fresh MBAs whose schools taught them that they were the only people bright enough to think strategically and have the common sense it took to see what was going on in the real world.

And who did these consulting companies and MBA brand managers displace from the strategic decision table?

Find out tomorrow….

-Dave Recht


7 Comments so far
Leave a comment

Funny timing for a post… as an even lower on the totem pool PR practitioner I am reading this while sitting in on a marathon call lead by one of those preeminent groups filled with team members with impressive MBAs whose only discernible skill seems to be suggesting everything ever created come in grid format.

Comment by PRny

Did you expect more? Good luck, and no you are not lower on the totem pole if you stand up for what you think is the right way for your client to go. You let them know that you have something worthy to contribute and maybe, just maybe, if they stop looking at their grids, they might learn something!

Comment by srcomblog

so what’s the way ahead? what should agencies be doing to regain their lost status…and can this be done better by a collective pool?

Comment by rt

Don’t simply accept the client’s directive, strategies or ideas as being the right way to go. Question, challenge and bring your thinking to the table. Present that thinking completely and the rationale behind it. Through this process you will more than likely earn more of the client’s respect, trust and business. If not, you will you question the kind of relationship you have with this client and whether it is worthy of long term investment.

Comment by srcomblog

Nice topic dude!
This is because why i keep an eye on this site so much!

Comment by legalecstasyo

Thanks for following our site dude! The realism of this is that agencies allowed themselves to be displaced and allowed themselves to be led to the slaughter. What we do has real value and we need to stand up for that value.

Comment by srcomblog

Hey back at you. Thanks for visiting.

Comment by srcomblog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: