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January 17, 2018
healthcare (1)

CVS/Aetna Merger to Disrupt Health Sector

As we enter the year 2018 and look at the latest trends in advertising, the value of consumer data and analytics continues to serve as one of the most important tools in advancing the marketing industry.

The ability to follow consumer activity and analyze their behavior benefits brands in getting to know their audience on a deeper level, which in turn can result in stronger relationships between the brand and consumer. The pharmaceutical industry is one that is knowingly limited in consumer data by law, making it more challenging for brands to form advertising strategies through data driven analytics. However, recent shifts in the pharmaceutical industry could change the consumer brand relationship in the near future. In December, CVS officially announced they are going to acquire Aetna, one of the leading healthcare benefits companies. Through this merger, CVS will be able to integrate their data with Aetna, which could potentially allow for a better quality consumer experience in terms of cost, efficiency and convenience. The New York Times quoted executives on the merger writing,

“The new company, combining one of the country’s biggest pharmacies with one of its largest health insurers, will create a world where patients will get the “human touch,” they said. Fewer people will fall through the cracks, they promised, and getting high-quality, low-cost medical care will be as close as your corner drugstore.”

While the CVS and Aetna acquisition has sparked conversations about the pharmaceutical industry as a whole, so have rumors of Amazon making its own attempt at entering the industry. Although nothing is definite, the thought of the giant e-commerce site entering healthcare is certainly interesting, considering consumers use it to purchase so many other necessities used in their daily lives. The thought of adding prescription refills to the laundry list of many other things available through the site would only add to its reputation for convenience and efficiency. In their recent interview, Adweek quoted retail expert Bruce Winder who said,

“This entire space—drugs, pharmacies, insurance and medical care—is ripe for massive disruption, because it’s dysfunctional on so many levels,” added Adamson. “The bureaucracy is the perfect case for someone like Amazon to come in and say, ‘Does it need to be this hard to fill a prescription?’

It is possible CVS has felt this threat, as it recently announced it would begin offering same-day delivery in several cities in early 2018, which is an offer Amazon is popular for with certain retail items. Adweek also wrote about Walgreen’s rebranding as a reaction to the competition. This rebranding is occurring not long after the FTC recently blocked their merger with Rite Aid this past July. The pharmacy chain is aiming to feel more like a mom and pop store. They altered the logo to reflect this by adding the phrase, “Trusted since 1901.” Although Amazon may not have the ‘mom and pop’ feel at the moment, their recent ownership of Whole Foods stores gives them the ability to offer the in-store experience consumers value, should they decide to open pharmacies in their supermarkets.

The eMarketer US Healthcare and Pharma Industry Report on 2017 Digital Ad-spending and Trends highlights the importance of digital media as health physicians and pharma brands begin to modernize the patient experience. For instance, patients can now access healthcare information via patient portals, and can even track things like symptoms and medication dosages with branded apps. If patients begin to manage their health online, advertisers may look to increase their digital ad spending as well. Although the pharmaceutical industry still relies on TV for advertising, digital video is becoming increasingly popular. This trend could also be occurring as more consumers are becoming accustomed to streaming television. The chart below shows digital video ad spending growth rates across multiple industries, with Healthcare & Pharma ranking the second highest.

Healthcare and Pharma Graph

As CVS and Walgreens compete to win the hearts and loyalty of consumers, it will be interesting to see how the potential shift towards digital will affect the media industry in the health sector. If patients and physicians begin to spend more time online, this could translate to a stronger increase in digital advertising in the future.