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?
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
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
Top Related