MedNet.com Confronts“Click-Through” Competition

Harvard Business School Case

-----------------------------------------------------------------------------------------------Submitted by: Piyush Gupta

B.Tech (CHE)IIT-Kanpur

What is MedNet.coma Company Delivering Health Information free to consumers.

Who is Heather YatesVice President (Business Development) @ MedNet

Heather YatesVice President (Business Development) @ MedNet

Maria BakerWindhram CMO

Bill BishopVice President (Consumer Marketing) @ MedNet

Who are the Players?

What is the Present Situation?

Situation Analysis

MedNet’s Chief Advertising Company(Windham Pharmaceuticals) is asking for Change of underlain Rules in their Revenue Model

Widham Planning to shift its MedNet ad Dollars to Marvel, a Competing Website which gives more Flexibility to their Advertising Companies with

their different Revenue Models

In Case MedNet either Loses Widham or Changes it’s Model as being asked for, in both Cases MedNet loses a Behemoth Share of its

Current Revenue

Scientifically based Medical Information to a Non-ProfessionalConsumer base Free of cost.Trusted and Evidence Based Information.Accessible, User Friendly and Vividly Presented Content

Developed by Highly Trained Professionals.

What Places MedNet in a Standout Position from its other Competitors?

Threats to MedNet (Competitors)

US National Library of MedicineWorld Health OrganizationCholesterol.comClinicalTrials.comAlternativeHealth.comMarvel( The Most Important One)

Illustrate the Design, Implementation, and Interpretation of Research Surveys.Suggest a Strategy to Survive in the Growing and Competitive Health Services Market.Garnering better Revenues and Avoid Losing the General Customer Base and Advertising Agencies

Objective of this Case

RevenueAdvertisement Income: $12,000,000ExpensesPurchased Content: $3,700,00Sales and Marketing: $3,000,00Tech-Support: $1,300,00General Administration: $3,000,00----------------------------------------------------------------------------------Net Income: $1,000,000

MedNet’s Income Statement,2006

CPM(Cost per thousand impression) Basis

One impression meant that one visitor requested from a web-server a page that had a specific advertisement on it, hereby monetizing of “eyeballs” i.e. Site Visitors

MedNet’s Revenue Model

Marvel(A highly successful search engine) Turned the Tables on itscompetitors by declaring that it would provide impressions for free and charge advertisers only for click throughs.

Pay Per Click Basis Revenue Model where CTR(click through rate) wasmeasured as the number of clicks divided by total number of ad impressions delivered.

How Marvel Posed a Challenge to MedNet?

This Proved to be the main Reason, some advertisers began to ask other sites to charge only for click-through sales model.

Ex: MedNet’s & Windham Case

Insights from the MedNet’s Web-Traffic Analytics Reports and Surveys.

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

Strongly Agree: 85%Strongly Disagree: 15%Will you return to MedNet next time you need Medical InformationYes: 93%No: 7% if you saw an advertisement on television or in a newspaper, would you call the

call center?Yes: 74%

Shows visitors MedNet Visitors clicked on more pages and advertisements than general interest web surfers

MedNet’s Visitor Survey Results(Key Points)

Windham Pharmaceuticals Ad. Campaign Results

Ad Venue Monthly Visitors

ImpressionsReceived

Cost Click-Throughs

CTR Total Ad. Cost

Cost Per click Through

MedNet 4.3mm 17.2mm $100CPM 516,000 3% $1.72mm $3.33

MarvelSearch

19mm 57mm $0.54perclick through

798,000 1.4% $430,920 $0.54

U.S. Newspaper

2.5mm/day 5mm $260,000/2-day ad

37,000 0.74% $260,000 $7.03

Advertisement Placement Estimated Contribution/Sale

General Interest Website $48Search Engine $45Health Care Website $150News Paper(Via Call Center) $165Television(Via Call Center) $75

Average Profit Margins Per Pharmaceutical Prescription for Heart Medication

1. Search Page2. Advanced Medical Search3. Weight Control Center4. Pharmaceutical News5. Insurance News6. Advanced Pharma. Search7. Health News Update8. Cholesterol Controlling9. Depression Center10. Medical Encyclopedia Search Index Page

MedNet’s Most Viewed Pages (Top 10)

“If MedNet decides to Sell only Click throughs at a rate competing with of marvel’s, their revenue will drop by the least of 80% given that their audience space remains the same.”

The Looming Threat: Marvel

MedNet’s Service Provide More actual Sales rather than just Giving a opportunity to give Medical information.Marvel’s audience are less lucrative to Windham as MedNet

ProvidesMedNet Provides Evidences and is more User-Friendly than

Marvels, also uses Coupons Sale Confronts

What’s the Edge of MedNet over Marvel

Take a more Prescriptive, Diagnostic posture toward site visitors-treating them as cholesterol.com did, almost as patients.They could charge for content like magazine/e-file Subscriptions,

and be less dependent on advertising revenues.Bring Alternative Health Information to the site, like Conservative

Scientific Studies of Acupuncture, Chiropractic medicines and Herbal Remedies.Going Global by presenting information in Several Languages like

cholesterol.com did, this will also improve their ad. Revenues.Build Customer Relations, integrity and their Trustworthiness.

Strategic Options to be implemented

Disclaimer

"These slides were created by “Piyush Gupta” as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)"

Piyush Gupta Sameer Mathur