If you’ve been thinking about an advertising campaign, you may well have wondered: is it better to go with a large firm or an industry-specific one? There are benefits to both, but your question may be more specific: what will provide the best return on investment (ROI)?
To answer that, we’ll look at the case of healthcare, which shows some of the tensions present in this decision. We’ll also explore some of what goes in to understanding ROI when it comes to advertising.
The case of healthcare
More and more people are turning to the internet for information on their health and medical needs. Already in 2013, according to a Pew Research poll:
- 59% of adults in the United States looked online for health information in the last year.
- 35% of adults (the study calls them “online diagnosers”) in the US reported that they’d used the internet to try to figure out what condition they had.
- 53% of so-called “online diagnosers” talked with a health care professional (HCP) about what they’d found. (1)
One of the upshots of this is that we know that there’s an active online audience for information about health and wellness. Businesses in that space looking to advertise their products or services need to think carefully about how to strike a balance, between attracting the attention of those people and tending to their obligations around regulation and privacy.
So, should a company in this space look to a big agency, or should they focus their search on a niche-specific, digital healthcare agency instead? To understand the choice, let’s look at how to understand what success looks like from an ad campaign.
What is ROI?
On a very basic level, calculating ROI is simple. You take your growth in sales and you subtract the cost of marketing, then divide by the cost of marketing:
(Sales Growth – Marketing Growth) / Marketing Cost = ROI
Take this example given by Andrew Beattie in an explanation of the concept. You spend $100 on a campaign, your sales grow $1000. What’s your ROI?:
($1000-$100) / $100 = 900%
That’s a very optimistic set of numbers, but they’re illustrative. The challenge is that things are seldom so simple. Marketing campaigns typically go on for a long time, and there are many other factors that may influence sales. You might also be interested in tracking something other than sales, such as interactions or brand awareness. (2)
Recognizing this, digital advertisers have been talking for a long time about how to accurately measure what they do for their clients. Back in 2010, in what feels like a very different era for social media, Donna L. Hoffman and Marek Fodor argued in an article in MIT Sloan Management Review that you could measure ROI for social media campaigns, but it took a different set of metrics than that which people were used to. In the years since, this has become even more of an issue; it’s worth keeping in mind as you make plans for what you want to accomplish with your advertising, and as you look for an agency to help. (3)
What difference does an industry-specific agency make to ROI?
An industry-specific agency may be able to help in a few different ways:
- They understand what metrics are actually important to you.
- They understand your specific concerns (regulatory, culture, etc.).
- They have experience helping clients like you.
In the case of an industry like healthcare, an industry-specific agency would understand the specific concerns of a potential client. Some HCPs will appear reticent about paid advertising, given traditional opposition to it in the industry. An industry-specific agency could give them other examples of providers who have built trust with patients by providing helpful information online. For a pharmaceutical company, an industry-specific agency would understand the complicated regulatory frameworks in-place around advertising a new medication. (4)
While a larger agency could also see the audience for healthcare information online and know that it was important to capitalize, they may lack some of the specific knowledge necessary to do it effectively or within legal limits. Therefore, industry-specific agencies may allow for a better ROI.
Final thoughts
It is worth saying: if your goal with your advertising campaign is something totally outside of what you’ve done in the past, and what’s expected in your industry, then it may be beneficial to consult agencies with broader expertise.
At the same time, if you are in an industry with a large amount of regulation around advertising, an industry-specific agency could be a better bet. Along with the potential benefits, such as better ROI or increased brand awareness, you can also make sure that your campaigns stay on the right side of the legal line. After all, no matter how cost effective, advertising that gets you in trouble later on is already too expensive.