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GfK HealthCare | November 2011 | |
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Building Agency of Record Contracts with Trust and Competence  By Joern Kleebach, Director In times when global health care spending is skyrocketing and cost containment measures are being implemented by public and private payers alike, the pharmaceutical industry faces a paradox. On one hand, decreased profits result in headcount and budget cuts across all functions, including business intelligence; on the other hand, utilizing market insights and understanding all stakeholders needs become key for a product and, ultimately, pharmaceutical company’s success. In such an evolving environment, marketing research plays an increasing strategic role. The internal marketing researchers have long moved from pure information providers to strategic partners of the marketing teams. Because many of them have a wider therapeutic knowledge than product managers who are often focused on one specific brand within a franchise, marketing researchers are often instrumental when devising franchise strategies and bridging knowledge gaps between brands and research programs. To fulfill this important role, corporate business intelligence teams are looking for marketing research partners that can not only provide methodological and indication expertise when designing, conducting and analyzing marketing research programs, but also think strategically and help company researchers present and implement the insights gained in a way that makes a difference to the business. First steps in this direction, combined with the intent to save costs by negotiating discount rates based on certain targets (e.g., overall volume spent, number of studies, reaching certain thresholds), led many pharmaceutical companies to create preferred vendor lists and negotiate Master Service Agreements (MSAs) with marketing research companies. However, these agreements usually fall one step short of bringing the agency marketing researchers into the brand and franchise teams in the way that creative agencies are typically seen as part of the brand teams for their specific accounts. In recent years, some pharmaceutical companies looked at initiating so-called Agency of Record (AOR) programs, whereby certain accounts are given to only one marketing research agency for an agreed upon time period. The basic AOR approach is similar to the ones pharmaceutical companies follow with creative agencies and comprises certain key elements:
This is an achievement for both pharmaceutical companies and marketing research agencies because it saves the pharmaceutical marketing researchers from having to bring new agencies up to speed on past research, business questions and strategies. It also gives them reassurance that their external marketing research partners know what information is already available, the background of a program and the business questions and information needs, thereby avoiding duplication of previous research, and they are able to design a program that precisely meets the team’s needs. For external marketing research agencies, AOR contracts provide not only a guaranteed business but also allow agencies and their researchers to gain in-depth understanding of industry processes. It helps them position themselves as fact-based consultants who understand the needs of their client partners and proactively help them in their strategic orientation and ultimate success. In this role, the marketing research agency is not only seen as an information provider but as an integral part of the overall team. An added benefit for company researchers is that their external partners understand all legal, marketing and clinical requirements, as well as the need to be on top of all compliance programs. They can therefore be assured that not only all research is conducted in adherence to these requirements but also that direct communication lines with DS&E, sourcing/procurement or legal departments are established that free company researchers from having to deal with issues such as adverse events reporting, respondent consent forms or renewals or amendments to all types of agreements. In a nutshell, the main benefits of adopting an Agency of Record model for both pharmaceutical companies and agencies are as follows:
Pharmaceutical companies expect their partners to accommodate their own structures and ensure that the knowledge accumulated is used throughout the whole company in all interactions with their partners, i.e., both on a global and domestic level, within all franchises and business units and for all services or programs. As pharmaceutical companies are often operating in ethical, OTC or even wider consumer health units, and buying not only PMR and syndicated studies but also panel data, the implications for companies like GfK are far reaching. To meet clients’ expectations, marketing research agencies must operate as a global unit among all offices, not only HealthCare but also Consumer Health and R&T/Panel Services, to provide streamlined, standardized and aligned services; to speak with one voice; to provide consistently high quality; and to guarantee adherence to client processes across all teams. Moreover, a close cooperation between global and domestic offices should enable a smooth exchange of information on studies being conducted on either level. Clients usually endorse this exchange as it keeps them on top of what is going on in their SBUs and gives their SBUs the possibility of building their research on global programs – thus avoiding duplications of studies, or using existing programs for more cost-efficient research. The latter also offers the benefit of being able to build domestic results into a global analysis. Implications go far beyond the marketing research organization and affect individual researchers, too. Pharmaceutical companies expect AOR team members to bring genuine value to the relationship. For the individual, an AOR means that he or she has to start working in global virtual teams within the marketing research agency; they have to align and stay aligned; they have to keep themselves informed and inform others; and most importantly, they have to develop capabilities regarding strategic and client-focused consultation, in addition to pure marketing research knowledge. Researchers who join an AOR program also need to be willing to become a part of the client’s brand/product teams similar to communication or creative agencies, and deal with all client stakeholder groups, sometimes taking over tasks from company researchers. In this role, agency researchers need to be experienced and comfortable discussing marketing topics as well as consulting on strategic and marketing research issues. They have to transition from researcher to consultant without neglecting the core marketing research skills! While AOR contracts pose significant challenges that need to be initially overcome with regard to resourcing, training and managing expectations as well as building an integrated team, they are definitely rewarding and beneficial for both the industry and the agency. AOR contracts need to be built on trust and competence, and to be successful they need to provide added value beyond traditional preferred vendor contracts and MSAs. |
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