MedNet.com Confronts 'Click-Through' Competition Custom Case Solution & Analysis

Evidence Brief

Financial Metrics

• The Cost Per Mille for MedNet is 33.33 dollars based on the annual spend of Windham. Source: Exhibit 2.
• The Cost Per Mille for Marvel is 13.33 dollars. Source: Exhibit 2.
• The annual advertising budget for the cholesterol drug of Windham is 2 million dollars. Source: Case Paragraph 4.
• The click through rate for MedNet is 2 percent. Source: Exhibit 2.
• The click through rate for Marvel is 1 percent. Source: Exhibit 2.
• Total impressions delivered by MedNet to Windham reach 60 million. Source: Exhibit 2.
• Total impressions delivered by Marvel to Windham reach 150 million. Source: Exhibit 2.

Operational Facts

• MedNet attracts 4.3 million unique monthly visitors. Source: Exhibit 1.
• MedNet content is developed by medical experts and undergoes peer review. Source: Case Paragraph 8.
• Marvel provides general health content with lower production costs and no peer review. Source: Case Paragraph 12.
• Search engines use a cost per click model where advertisers only pay for direct traffic. Source: Case Paragraph 15.
• The audience of MedNet typically searches for specific symptoms and treatment options. Source: Case Paragraph 9.

Stakeholder Positions

• Heather Baker, Vice President of MedNet, seeks to defend the premium pricing model against lower cost competitors.
• Bill Abbott, Marketing Director at Windham, demands proof of return on investment to justify the price gap between MedNet and Marvel.
• Bill Caspar, Advertising Manager at Marvel, emphasizes the high volume of traffic and lower cost per click of the platform.

Information Gaps

• The case does not provide the exact conversion rate from a website click to a pharmacy prescription fill.
• The specific profit margin for the cholesterol drug of Windham is not disclosed.
• The long term retention rate for visitors of MedNet compared to general health sites is missing.

Strategic Analysis

Core Strategic Question

• How should MedNet justify a 150 percent price premium over general health sites as advertisers shift focus from brand awareness to click volume?

Structural Analysis

The bargaining power of buyers is increasing as pharmaceutical companies gain access to high volume, low cost alternatives like Marvel and Google. The health information market is bifurcating into two segments: high intent medical research and general wellness browsing. MedNet operates in the high intent segment where the value of a visitor is significantly higher because the visitor is closer to a prescription decision. The current problem is that the pricing metric, Cost Per Mille, treats all impressions as equal. This metric obscures the superior quality of the MedNet audience. Competitors like Marvel provide more impressions but lower engagement. Search engines provide high intent but lack the educational environment that builds trust in a specific medication.

Strategic Options

Preliminary Recommendation

MedNet must pursue the ROI Proof Partnership. The company should not compete on price. Instead, it must change the primary metric of the advertiser from Cost Per Click to Cost Per Prescription. MedNet visitors are more likely to be patients seeking immediate treatment rather than casual browsers. Proving this link is the only way to sustain a premium pricing strategy.

Implementation Roadmap

Critical Path

• Month 1: Secure a pilot agreement with Windham to track coupons and prescription vouchers specifically from the MedNet site.
• Month 2: Integrate a third party data auditor to verify the conversion rates of MedNet visitors compared to Marvel visitors.
• Month 3: Present a cost per acquisition analysis to the board of Windham that demonstrates MedNet is more efficient at generating sales despite the higher price per impression.

Key Constraints

• The ability of pharmaceutical companies to accurately track offline pharmacy sales back to an online impression is the primary technical barrier.
• The medical ethics board of MedNet may resist any tracking technology that appears to compromise the privacy of the user.

Risk Adjusted Implementation Strategy

To mitigate the risk of data gaps, MedNet should offer a performance guarantee for the pilot phase. If the cost per prescription fill on MedNet exceeds the cost on Marvel by more than 20 percent, MedNet will provide 5 million bonus impressions at no cost. This protects the budget of the advertiser while allowing MedNet to prove the value of the audience. The plan focuses on the 90 day window to prevent Windham from reallocating the budget to search engines in the next fiscal cycle.

Executive Review and BLUF

BLUF

MedNet must immediately pivot from selling impressions to selling verified patient outcomes. The current threat from Marvel and Google is a result of using the wrong measurement. While the cost of MedNet is higher on the surface, the high intent of the audience likely results in a lower cost per prescription fill. MedNet should refuse a price reduction and instead launch a data driven pilot with Windham to prove that their 2 percent click through rate translates into superior pharmacy sales. If MedNet enters a price war with Marvel, it will fail because its cost structure for peer reviewed content is too high. Speed in establishing this new metric is the strategy.

Dangerous Assumption

The analysis assumes that the marketing department of Windham values the quality of the medical education provided by MedNet. If the incentives of the marketing team are based solely on traffic volume and cost reduction, no amount of quality data will prevent the budget shift.

Unaddressed Risks

• Privacy Regulation: New laws could block the ability to track users from health sites to pharmacy fills, rendering the ROI strategy impossible.
• Search Dominance: Google could launch a dedicated health portal that combines high trust with search efficiency, neutralizing the competitive advantage of MedNet.

Unconsidered Alternative

MedNet could transition to a B2B model where they license their peer reviewed content to insurance providers or corporate wellness programs. This would diversify revenue away from the volatile advertising market and capitalize on the core strength of the company: medical accuracy.

Verdict

APPROVED FOR LEADERSHIP REVIEW