The meds stop working so WebMD needs a makeover

Parents worried about their toddlers have long turned to the WebMD website to check symptoms, but the popular site now needs a doctor itself as WebMD Health Corp suffers from a fall in advertising by budget-slashing pharmaceutical companies.

The ad crunch comes as WebMD struggles to overcome issues with the way consumers use its sites - jumping straight to the information on diabetes, for example, and then not hanging around once they get the information they want.

“What WebMD needs to do is figure out how can they get the next level of user engagement and in turn use that data in a way that can help pharmaceutical companies realize that there is real value in the platform,” said Stifel Nicolaus analyst Steve Rubis.

The company collection of website, led by flagship http://www.webmd.com, was ranked No. 1 in health in the United States by online data tracker comScore Inc in September, but competitors such as EverydayHealth (http://www.everydayhealth.com) are better at turning eyeballs into revenue.

WebMd’s latest quarterly report in July showed that while the number of unique users rose 29 percent to 106.9 million and page views grew by 25 percent, the company posted a loss and its advertising revenue fell 20 percent.

WebMD is trying to improve the “stickiness” of its sites, which also include http://www.MedicineNet.com, http://www.eMedicineHealth.com and http://www.RxList.com, to make them more attractive to advertisers. The changes include adding general well-being tips and advice, and creating mobile apps to help users track their health.

“Nowadays there is a lot more emphasis on the return-on-investment and being able to show exactly what you are getting for your advertising dollar,” said well-known pharma marketing blogger John Mack, also known as “Pharmaguy”.

DATA IS KING

The slide in advertising coincides with the end of patent protection on many blockbuster drugs and the pharmaceutical industry’s increased focus on niche treatments, which are better promoted by tightly targeted advertising.

Drug companies also want assurance that advertising works.

EverydayHealth, ranked no. 2 by comScore among health sites and WebMD’s closest rival, uses data to show clients how advertising with its site leads to an increase in prescriptions.

“We use that data to make sure that the advertising is targeted, and then to prove that our marketing actually works,” EverydayHealth Chief Executive and Co-founder Ben Wolin said.

Plans for a similar approach by WebMD, in which activist investor Carl Icahn last reported a stake of 13.3 percent, is aimed at helping to convince clients that marketing translates into sales.

Most of WebMD’s current revenue comes from its consumer portal business. The company also owns a subscription-based site for physicians and health professionals, Medscape.com, and provides private health portals to employers and health plans.

WebMD has already started to highlight more consumer-friendly and lifestyle-related content - such as ways to include more whole wheat in your diet, the pros and cons of birth control pills, and offering makeup tips.