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What ARPP Says/Doesn't Say ARPP Says 1. Provides the average marginal ROI results for the average brand within a $ revenue/launch date group. The average brand represents brands that spent money on that tactic. 2. The four major promotional tactics with available audit data were studied. They were: Detailing (DET), Direct-to-Consumer Advertising (DTC), Advertising in Medical Publications (JAD), and Physician Meetings & Events (PME). 3. The study was based on comprehensive historical data looking back at what happened, a retrospective study, as opposed to an experimental study which would look forward in a controlled environment. 4. The ROI results are presented as the average marginal ROI, the return on the last dollar spent by the average brand that spent money on that tactic. The next dollar spent will normally generate that ROI or less. 5. Within a product group each of the brands that spent on a tactic will have their own individual marginal ROIs that will be either be higher or lower than the ROI for the average brand. 6. The average marginal ROI can be interpreted as an indication of overspending/overutilization or underspending/underutilization for that tactic, not a failed tactic. 7. An average marginal ROI of $1.00 indicates that the return on that $1.00 investment was $1.00, equal to the investment for that tactic. 8. An average marginal ROI close to or less than $1.00 indicates that overspending/overutilization occurred for that tactic and budget reallocations to other tactics/discontinuation of spending on the tactic might have been appropriate. 9. The higher an average marginal ROI is above $1.00 serves as an indicator that underspending/underutilization occurred, and there was potential to achieve greater overall returns by making additional investments/starting investments for that tactic. 10. An important factor in looking at the study results for a marketer is the ROI that a pharmaceutical company is looking for on an individual brand. An additional critical factor is the corporate revenue criteria for a promoted/non-promoted brand. 11. Based on the results of the study observations can be made about overspending/overutilization and underspending/underutilization for the 9 cells
12. The average marginal ROIs ranged from $0.0 to $12.2. This indicates that there would be a tremendous opportunity for reallocation of promotional budgets to maximize promotion resources within the marketing mix. 13. Based on these observations it can be concluded that all four of the promotional tactics work but that there are opportunities to increase the efficiency of the spending for each tactic by increasing/allocating funds to a tactic or decreasing/stopping allocations of funds to a tactic depending on brand age and $ revenue. ARPP Doesn't Say 1. Does not say what the average ROI is for any tactic, but says what the average marginal ROI is for the brands that spent money for that tactic. 2. Doesn't indicate that one tactic is better than another. 3. Doesn't say that a tactic works or doesnít work. 4. Doesn't measure results for any specific brand. 5. Doesn't incorporate non-ROI specific strategies that pharmaceutical companies may use for allocating promotional funds to a tactic, e.g., competitive reactions, brand building, "wall street" agendas, or internal political agendas. 6. Doesn't provide results that can be used to determine the optimal allocation of funds to tactics for an individual brand since the results are only for the average of the brands that spent money on that tactic. The results would only be applicable to optimal allocation if an individual brand exactly matched the average profile of the brands that spent money on that tactic. 7. Doesn't provide results that can be used to refute research results that pharmaceutical companies have obtained from their own controlled research studies for individual products |
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