With the current environment challenging healthcare organizations to keep an eye on cost without taking the other eye off quality, many companies are turning to in-house healthcare PR agencies rather than outsourcing their needs.
For example, pharmaceutical giant Wyeth-Ayerst's in-house advertising and PR arm, 30 West Advertising located outside of Philadelphia, currently handles a diverse roster of brands whose combined annual sales exceeded $700 million in 1996. In most instances, this amount of work would have been doled out to a handful of independent agencies.
Many healthcare companies such as Wyeth-Ayerst are combining their sales and marketing departments and allowing these "in-house" agencies to make decisions at a more local level. Illustrating the significance of such agencies, many outside PR and ad agencies told Healthcare PR & Marketing News that they are seeing many of their employees being recruited by in-house agencies.
"I see a resurgence of in-house agencies," said Morris Kline, VP of the 30 West Agency. "The key facts about in-house agencies are: they can operate at substantially lower cost; they can be more efficient in media planning and placement, and they make it unnecessary to have a separate advertising department as well."
Those who are considering the possibility of opening an internal agency should be aware of the critical difference between having a full-service agency that belongs to the organization, and something merely called an agency that is an expanded advertising department, he said. (See Box below for tips on creating an in-house agency)
There are several advantages to an in-house PR department. For example, the most challenging work going on in the industry right now -long before anyone starts working on promotion campaigns - is strategic market planning, said John Ruane, PR manager for Johnson & Johnson.
Ideally, an agency should be involved in this planning process almost as soon as a product comes out of R&D. New brands are too precious and too rare to rely on the traditional agency relationship. However, at that point in the planning process, the agency all too often has not even been appointed.
"In this case, the in-house agency is far better positioned to play this role of helping to structure the brand profile," said Ruane. "Since it's part of the corporation, there's less concern about confidentiality; in addition, such an agency is more in tune with what's going on in the company, more likely to be intimate with corporate thinking."
The second advantage insiders cite is more efficient communication.
"Proximity allows for daily, on-going, bump-into-you-in-the-cafeteria dialogue with product management," said Mark Ellis, media manager for Eli Lilly.
The benefit of such daily contact can be shown in the development of new campaigns. These in-house agencies' work sometimes gets rejected, but because communication is swift and precise, it happens less often.
"They are also not averse to showing the client preliminary sketches or to discuss copy strategies as they evolve," said Ellis. "As a result, by the time the campaign is finished the two are usually in close agreement."
The third major advantage from the product manager's point of view is that an in-house agency is significantly less expensive. While the average rate for independent agencies now ranges from $100 an hour and up, in-house agencies charge 30 to 40 percent less.
Another economy factor is that there is no advertising department, hence no duplication. Instead, there are two technical groups: one for print production, the other for audiovisual work.
The agency media department also plays a key role in the company's bottom line. Since they handle all Wyeth-Ayerst products, whether assigned to 30 West or not, it has assumed the number one position in space placed among all healthcare agencies. (Wyeth-Ayerst, 800/777-6180 Johnson & Johnson, Eli Lilly, 800/545-5979)
Tips For Building An In-House Agency
- Treat the parent company like a client.
- Keep time sheets and set up a fee structure.
- Negotiate compensation with the client (the parent company) at the beginning of each year, based on projected work load, and adjust the fee periodically if necessary.
- Don't let clients just pop in to see you. They should call and schedule meetings, just as if they were located in another office.
- Make competitive presentations, as if you were a competitive bidder for a project.
- Take the same aggressive attitude toward new business as any other agency. The excitement is the same, and this strong competitive sense keeps the creative juices flowing.
- Know you can be fired, just like an outside agency.