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B. RIE GECASES
2066
APRIL 20, 2007

ALLEGRA YOUNG

MedNet.com Confronts
"Click-Through" Competition
It was just 9:30 a.m., and the day was off to a terrible start. Heather Yates, vice president for
business development at MedNet, walked at a quick cip down the hall of the company's modern
Birmingham, Alabama, office space, her face cdouded with concern. The company, a website
delivering health information free to consumers, generated its income through advertising, mostly
from pharmaceutical companies. Now, Windham Pharmaceuticals,MedNet's biggest advertiser, had
asked to change the rules by which it had done business for the past four years. Moreover, Mahria
Baker, Windham's CMO, had told Yates that this wasn't just an exploratory conversation. Windham
was seriously considering shifting its MedNet ad dollarsto Marvel, a competing website with which
Windham already did some business.

Yates, who had been with MedNet since just after the company was founded in 2002, felt
blindsided and, at the same time, resigned. "We have some legwork to do," she thought to herself.
"We can't afford to say "No and just walk away, and we can't just ask them to stay with us because
we're good people. We have to convince them that our set-up is worth their ad dollars. And we have
to move quickly. Our other adveriisers won't be far behind Windham."
She had asked Baker to fax over a copy of the results of Windham's latest advertising campaign,
and had promised to call her back the next day, as both companies needed to finalize their budgets.
Then, immediately after they had hung up, Yates had called BillBishop, MedNet's vice president of
consumer marketing. "Can you clear some time for me right now?" she had asked him, "Windham is
thinking of pulling their ad dollars from us and taking them to Marvel."
Now she was on her way up to Bishop's office, two floors above, with the fax from Baker and
notes from her conversation in hand.

Industry. Background and Company Origins

MedNet had launched its website with three goals: to provide scientifically based medical
information to a nonprofessional consumer audience; to provide this information for free; and to
generate profits from advertising sales. In a year, it had met allthe goals; by 2006, it generated $1
Aliegra Young has becn a marketing manager and direclor in several national irms; she is now a principal consultant with I+o Comnunications
in Austin, Texas.

Tlus case, though based on real events, is fictionalized, and any resen1blance to actual persons or entities is coincidental. There are ocasional
references to actualcompanics in the narration.

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 a066 TMedNct.com Confronts "Click-Through" Compctition

nilhon in profits. (See Exhibit 1for 2006 income statement.) The accessibly written, easy-to
navigate, and vividly presented content was developed by 24 trained journalists, doctors, designers,
na administrators. Additional materials came from the faculty of a prominent medical school, news
dgencies, a photography service, and an active community of visitors that used social media tools
suen as blogs, community chat, and virtual reality to communicate medical information. (Visitor
3eterated media was reviewed by medically rained journalists.) The award-winning site was
onsidered the best health website for trusted, evidence-based, consumer health information.
havertisements on MedNet proposed specific and immediate solutions to health concerns. MedNet
nad 4.5 million monthly visitors, but new competitors had flattened its audience growth durng the
last quarter of 2006.

Competitors
Now, in the first quarter of 2007, MedNet faced competition both for visitors and advertisers.
Nonprofit and governmental websites competed with MedNet for visitors by providing similar
Content on mainstream medicine. The websites of the U.S. National
Health Organization weren't nearly as easy to navigate as MedNet, butLibrary of Medicine and World
Contrast to MedNet, these two welbsites provided information on they were comprehensive. In
alternative
scientifically based solutions, albeit with carefully worded disclaimers. therapies as well as on
large corporations could increasingly turn to custömized health What's more, employees of
intranets. The theory was that if internal health websites could help websites on their own comparny
problemns (prompting overdue doctor visits) and promote general workers quickly identify health
reduce their portion of employee health care costs. good health, the employers could
For-profit health websites posed different. degrees of financial
advertising revenue and audience. Recently, so-called competition for MedNet's
particular problems, such as Cholesterol.com, had emerged. condition-specific sites that focused on
(Yates
Cholesterol.com was already drawing ph£rmaceutical advertising dollars awaywas confident that
indirect competitor, ClinicalTrials.com, mátketed only experimental from MedNet.) An
Smaller than MedNet's and the material was procedures. Its audience was
difficult for the layperson to understand.
ClinicalTrials.com received a fee for each time a visitor it referred enrolled in a clinical trial.
Then there was Alternativehealth.com, a long-time, popular player
provided information about scientifically "unproven" therapies in the "health space." It
remedies, vitamin regimens, and massage. Its and procedures such as herbal
audience was larger
sales more robust. Due to a recent lawsuit concerning its content, than MedNet's and its advertising
using disclaimers--with no apparent impact on its audience size.Alternativehealth.com had begun
Due to the alternative health
consumer's distrust of phármaceutical companies, the website did not compete with MedNet
advertising dollars.-Still, MedNet had to keep Alternativehealth on its rada. for

Methods Used to Calculate Advertiser Payment

Yates's thoughts raced through the company's competitive landscape she waited for the
elevator. In her short phone conversation with Bill, he had told her to take asa little time to revieY
MedNet's original value proposition to its acdvertisers. What they needed to do was re-justify their
approach, if it was possible to do s0. But, he had cautioned, they were compelled to
mind. "Think through the facts," Bill had saicd. "Why don't youcome up here in about keep an hour
half an open
I'Ilstart to mull over our options as well."
Yates thought back to MedNet's roots. Back in 2002, MedNet's founders had made some kev
choices regarding revenue generation. MedNet could, in theory, sell content to site visitors. like an
online magazine, charging a few dollars per article or an annual subscription fee. On the other hand
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 MedNet.com Confronts "Click-Througlh" Competition I 2066

*e slle could draw advertisers, and if advertising revenues were strong

COula provide content free of charg-which is what most web users enough, the company
expected. An. aaverusi
GVenue model was made possible by sophisticated web analytics: technology that trackea the
venavioT of each site visitor--pages viewed links clicked. and so on. This software made t easy ror
advertisers to calculate their retun on advertising
investment (RO).
Lne obvious candidates to buy onscreen advertising space from MedNet were pharmaceutical
companies, which for over a decade had promoted their drugs aggressively, to consumers. As it
happened, MedNet was launched at a time when many other consumer health care websites were
going out of business, leaving pharmaceutical firms looking for welb promotion outlets. MedNet
seized the opportunity to build relationships with these advertisers.
ln deciding how best to generate revenue from advertisers, MedNet chose traditional banner
advertising, charging phamaceutical advertisers such as Windham Pharmaceuticals on a cost-per
thousand inmpressions (CPM) basis. (One advertising impression meant that one visitor requested
from aWeb server a page that had a specific advertisement on it) Measuring impressions was the
Closest way to estimate the number of people who actually saw an online advertisement. By
inventory
pursuing an impression business model, MedNet was fully "monetizing" its available
of "eyeballs" (site visitors). An independent auditor verified the company's impression counts each
month.

Marvel's Challenge
was on the phone, but he waved
Yates reached BillBishop's office and pushed the door open. Bill
and sat back. She thought about what
her to a seat. "Two minutes," he mouthed at her. She nodded,
she knew about Marvel.
decided to follow the alternative advertising
Marvel was essentially a large search engine that had
Under these terms, advertisers paid website
model: contextual, or pay-per-click, banner advertising.
advertisement to learn more about an advertised
owners only when visitors actually "cicked" on an
campaign was the click-through
product. The key metric to measuring this kind of online advertising of ad impressions delivered.
number
rate (CTR), measured as the number of clicks divided by the center generated by a
Advertisers considered website click-throughs (and telephone calls to a call potentially making a
interested in
newspaper advertisernert) to be the equivalent of customers
purchase.
a pay-per-impression
Yates thought back to 2002. No sooner had MedNet's founders opted for from general-interest
mainly
model than advertisers began resisting that pricing structure-butuninterested in their products.
websites, where the majority of impressions came from visitors
click-throughs that ads yielded; the
Advertisers based this perception in part on the percentage of half focused as high as on highly
click-through rate on a general-interest site tended to be
2006, MedNet.com therefore could still command a $100
"destination" content sites like MedNet. In
advertisers--10 to 20 times what general
CPM ($100 for each 1,000 impressions) contract from its advertisers paid for impressions
interest websites might charge. Similarly, Alternativehealth.com's
only, andnot for click-throughs.
But Marvel, a hugely successful search engine, turned the table on its competition in the fall of
and charge advertisers only for click
2006 by declaring it would provide impressions for free visitors per month), charging for even a
throughs. Because Marvel had avast audience (19 million
handsomely. If the site sold adyertisements in
small percentage of click-throughs would pay off
bring in huge revenues. By
enough categories, including the pharmaceutical market, Marvel couldfor click-through "sales leads" like
late 2006, some advertisers began to ask other sites to charge only

3
HARVARD BUSINESS SCHOOLIBRIEFCASES

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 reports of increasing "click Iraud."
atvel did. One drawback to this popular revenue model:
advertisements to drive up advertising costs.
vertusers competitors were fraudulently clicking on
like Windham different
NOT only was Marvel offering Med Net's long-standing advertisers Visitors oftern caine to
tems, but it also competed for visitors intercsted in healthcare.
YeaNet by way of a search engine such as Marvel, although such search enginesserved as a startn8
pont of inquiry, not a serious source of trusted medical information.
Mahria Baker's challenge stuck with Yates: "AtMarvel we get all our impressions for free, and we
pay S0.54 for each click-through. At MedNet we pay for every impression, and by my calculaton we
pay $3.33 for each click-through. Granted, we're not averse to getting impressions--anytime that
anyone sees your logo, your slogan,and your product's name,you are theoretically doing your brand
Some good. But here at Windham, click-throughs are really what matter. They separate accidental
observers of our ads from the serious prospects who proactively seek more product information and
may buy our product. Ican't justify paying six times as much for a click-through from one of your
visitors." Baker had paused a moment. then added. "Heather, help me here. Is there another way Or
looking at this that I'm missing?"
"Yes, there is," Yates had replied, "and if you let me call you back tomorrow I believe Ican show
you what you are missing."

MedNet's Audience and Visitor Behavior

Bill Bishop hung up the phone and thurned to Yates. She spread out a copy of the results of
Windham's latest advertising campaign, and the two of them pored over it. (See Exhibit 2 for Baker's
data.)
Many search engines and general-interest websites had large audiences that returned to thesites
regularly, in apredictable pattern. By contrast, most visitors to targeted health websites such as
MedNet came only when "in crisis." However, when they did come, they stayed long and explored
avidly, clicking around to clarify symptoms or determine the best course of action for a pressing
health problem. They often researched unrelated symptom areas as well, in order to help family
members, or out of curiosity. These visitors then returned during the next crisis, although some did
become repeat visitors. MedNet visitors clicked on more pages and advertisements than general
interest web surfers did (see Exthibit 3). In addition, health website visitors tended to buy more
products from advertisers when they did decide to purchase. (See Exhibit 4for astudy of results and
frequently viewed web pages oh MedNet.) If the product advertised was not available over-the
counter, then the visitors would urge their physicians to prescribe the medication that thev'd
discovered in the advertisements on MedNet.

Windham produced Vesselia, a prescription medication that reduced cholesterol and plague in a
patient's veins with fewer side effects than competitors' offerings. High cholesterolwas one causeof
heart disease, and it was attributed to both genetic predisposition and lifestyle choices. Keeping
cholesterol low could be a long-term issue for many patients, requiring months, possibly years, of
daily medication. Each patient who began a series of treatments would use the medicine for an
average of 12 months.

To encourage customers to request aprescription for Vesselia from their doctors, Windham
provided coupons on its website that customers could print out and redeem at a pharmacy. Printed
on each coupon was a bar code that included information identifying the referring advertisement. For
instance, when a custoner clicked on a Windham ad at MedNet's website, he was taken to the
Windham website. Windham's computer system could identify that the customer came from MedNet
and insert that information into the Windham coupon bar code within fractions of a second. A
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 MedNet. comConfronts "Click-Through" CounpetitionI 206G

aitrerent coupon code was provided to those web visitors who came to Windham from Marvel
Search. (Coupons with yet another barcode were sent by postal nmail by the Windham telephone call
center to respondents to newspaper advertisements.)
When patients redeened the coupons at apharmacy, the pharmacy returned them to Windham.
Windham could thus attribute drug sales to the relevant advertising venue. On average, patients took
three months to redeem coupons for Vesselia after Windham had first placed the advertisements. The
Currentcampaign would be considered closed at the end of February 2007.

MedNet Discusses the Marvel Threat

Bill looked up from the report, turned to his computer screen, then to Yates. "So what youre
saying is that Windham wants to pay only for click-throughs, and that you think Windham isjustthe
tip of the iceberg. But you and I have done the math on this issue many times. If we sellonly click
throughs at arate that competes with Marvel, our revenues drop at least 80% if our audience size
remains where it is."

Yates knew that Billwasn't going to like what she was about to say, but she didn't pause. "lf we
could increa_e the size of our audience," she said, "we'd have more click-throughs to sell."
Bishop had started shaking his head as soon as Yates had started to speak. "The quickest way to a
bigger audience is to extend our coverage to alternative healing approaches. But our board would
have a hard time with that." Bishop was mindful of the two eminent physicians on MedNet's board
of directors who consistently blocked proposals to deliver content about, and ads for, herbal
remedies.

Yates sighed. "I understand their concern, but aren't some explanations of alternative approaches
acceptable? Could we have a rference encyclopedia of alternative medicine that doesn't discuss its
claims, just the plants involved? Or focus on more generally accepted practices like chiropractic
medicine and acupuncture?"
Bishop shook his head agair. "We can't get adverising growth from that group. Idon't think the
alternative health audience will click on a pharmaceutical advertisement. Most of them don't trust
pharmaceutical companies or Western medicine." The two were silent for a few moments.
At length, Bishop looked up. "What about, instead of selling click-throughs, we contract with
large enmployers to become a corporate health site of record? If we made our money from
corporations, we could reduce our reliance on advertisers like Windham."

It was Yates's turn to remember the board's admonition: independence. "It could solve a
corporation's problems regarding employee health record privacy. But we would then be involved in
a debate about driving health care costs down. That could hurt our main business. Plus, we'd be
inviting the perceptionright or wrong--that we'd abandoned our hard-nosed scientific
independence in morphing from an information content business to a human resources service
provider-for-hire."
Yates exhaled sharply and looked down at the fax from Baker. "You and Iboth know there are no
easy long-term solutions to the new competitivechallenges or our need to grow the business. But we
do have a short-term problen to solve--we have to get Windham to recognize that we're a great
solution for them. One worrisome fact is that Baker underestimates the genuine value that our
impressions
helpful
deliver to an advertiser. Visitors to MedNet see those ads in the context of a trusted and
site-a neighborhood of family friends, really-and even if they don't buy right away, they
are left with a positive impression of the advertiser and its products."

HARVARD BUSINESS SCHOOL IBRIEFCASES

 Net.coi Conronts

mcasure in dollars. And if

Iknow Baker.
factors like trust are hard to
^greed," said Bishop. "But intuition. So let's compare the
numbers that
argument is with numbers, not let's take the
Yway towin this basis with the numbers that Marvel generates--but
impression
euvet generates on an Ouraudience is fundamentally differernt from
further than just the cost of oneclick-through.
analysis
Marvel's, and maybe that difference can be quantiffed. Let's try."
A Problem Solved?
Bishop and Yates got Mahria Baker on spcakerphone late that afternoon.
Hello, Bill," said Baker. "I wasn't expecting to hear from you until tonorrow. Does this mean
that you've convinced Heather to sell me results like Marvel does?"
We're all about results, and you know that." said Bishop, looking at Yates. "Our click-throughs
are twice asstrong as Marvol's."
"Then just sell me those lick-throughs," said Baker. "I'd even double the price-$1 per click
through."
"Ithink that you're overpaying for clicks from Marvei," said Yates.
"This I've got to hear," Baker replied.
Yates looked at the analysis that she and Bishop had completed just an hour before. Combining
MedNet's own data with information from Windham's advertising campaign that Baker had
provided in her fax, Yates and Bishop had bult acompelling numbers-based case thatWindham was
getting better value from MedNet than from Marvel.
You're getting a lot more ffom MedNet's audience than Marvel gives you," said Yates. "Your
ads appear on apage with trusted medicál information, our audience is attracted toyour products,
and we have reason to believe that our advertising partnership adds toyour bottom line."
"Mahria," Bishop jumped in,"Marvel has provided click-throughs. But those are just
opportunities to get your information in front of a person, not actual sales. What's a click-through
worth if it produces no sale? We believe that the Marvel audience is not nearly as lucrative to
Windham as the audience we provide. When all of the Vesselia promotional coupons are returned to
you, Windham will see that MedNet delivered the best sales results."
"How about if we don't bill you until the end of February?" asked Yates. "You'll be able to see
what coupons have been redeemed and realize that this is agrcat deal. Would that work?" Early that
afternoon, MedNet's CFO had agreed to let her make the offer to promote good relations with a long
time customer.

"That helps," said Baker slowly. "Ill listen to your case."

Yates carefully aid out the math behind her and Bishop's analysis. At the end, Baker was silent
for what seemed to Yates like an hour. Then Baker said, "Tve got to admit, your case seems solid. I
want my numbers whiz to confirm my reading of this, but if he does, I'd say we're going to have to
agree with you about the value we are getting from MedNet. Would you fax over that study about
heart medication profit margins? I'd like to see what it says about aucdience behavior influencing
those margins.
"Sure," said Yates, smiling for the first time that day. She was relieved that she'd apparently won
this fight for MedNet, and now she wanted to leave Baker with a strong closing statement. "It all
comes down to what Windham wants. If you just want people lo chck on your ads at a low price rate,

6 BRIEFCASES IHARVARD BUSINESS SCHOOL

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Managemenl until Jul 2024. Copying or posting is an infringement of copyright
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 MedNet.com Confronts "Click-Through" Competition | 2066

a Search engine like Marvel can give vou that. But if vou want people to- see
the ads when
PSy nolOgically disposed to actually look at the content and consider their message, youthey re
want
MedNet. And if youwant sales that end up generating a profit, you also want
1MeuNe
Daker Sald, "Interesting you put it that way, Heather. You've just introduced another problem
that we might as well begin tackling right now."
Yates and Bishop looked at one another.

MedNet Confronts the Competition, Round 2

Baker continued. "n arguing this case for MedNet, you've inadvertently made a case for
Cholesterol.com as well. Theyhave the same strengths youjust attributed to MedNet -maybe more
as far as Vesselia is concerned. My ad budget's not growing, and now I have to use some of it to pay
for ads onCholesterol.com. If I'm not on that site, my competitors will get those customers. So even if
you've made your case about the click-throughs,I still need some fresh angles on howyour site sells
Vesselia in ways that a Cholesterol.com cannot."
Yates stared at the phone. Thern she looked over at Bill, who was tilting his head back, his eyes
closed, and his lips pressed shñt. How would they respond to this one? She recognized Baker's point.
Both MedNet and Cholesterol.com had targeted, high-profit audiences that returned for up-to-date
and trustworthy solutions about cholesterol medication. Yates knew that she and Bishop had made a
great case for Baker to move away from Marvel. But could she persuade this tough-minded
advertiser to bypass Cholesterol.com in favor of MedNet?
The new group of niche, condition-specific competitors like Cholesterol.com were "category
killer" sites typically focused on one (profitable) chronic condition such as cardiovascular disease,
depression, or obesity,and sought to disseminate the latest information from medical sources. In
addition, these sites often provided interactive tools on which visitors could store data they wished to
track, such as blood pressure, weight, or cholesterol counts. While the income sources were limited,
their pull on the newly diagnosed was incontrovertilble. Pharmaceutical firms that had relevant
medications rushed to buy ads on these sites, which were quickly becoming the first web resource
that "core constituencies" routinely visited.
A wealthy trial lawyer had recently launched Cholesterol.com with $47 million he had been
awarded in a class-action lawsuit against a fast-food res taurant chain. The lawyer assembled an
international staff of doctors who explained what most large countries provided in chronic
cholesterol care, presenting the information in 13 anguages, including Chinese. Significantly,
Cholesterol.com tailored health recommendations to each visior's specifications and even offered a
travel agency service to promote "global health tourism." Pharmaceutical companies from around the
world advertised their offerings on that site, and, according to third-party web traffic audits,
Cholesterol.con's niche audience was growing, especially in Asia. The site's significant marketing
budget paid for a large, multilanguage advertisement canpaign:
Even in the face of this specialized niche competition, MedNet'sexecutive leadership continued to
believe that providing asource of infornation on a wide range ofmedical conditions delivered real
value to its readers. MedNet's audience-auditing firm showed a majority of visitors clicked on both
condition-specific pages and general health information. MedNet board members also perceived that
some condition-specific sites came dangerously close to diagnosing conditions and prescribing
treatments for their visitors, and thus were at risk of violating both state and federal government
regulations (and the laws of many foreign nations) that required medical advice to be dispensed in
person by a licensed physician. As a result, MedNet's board refused to provide tailored
recommendations about medical treatnment.

HARVARD BUSINESS SCHOOL IBRIEFCASES

 That said, here were Yates and Bishop in a conference call with their biggest advertiser, who was
Sayng she couldn't affordnot to divert advertising dollars from MedNet (as well as other ad venues)
to Cholesterol.com. The pair felt they'd successfuly answered the Marvel challenge only to confront
hs new threat. How would they respond to Mahria Baker? And what about the bigger picture?
ow could they reinvigorate MedNet's growth when they were being hit by new competitive
Challenges that they were blocked, in one wav or another, from taking on headfirst?
"Mahria, we're going to nced a little time on this one, "Yates said, finally. "We're sure that we can
conVince you that MedNet is your best bet, but we don't want to answer on the fly. I'm Sure you
ont want us to do that either. Let u1s get the facts in front of us, as we've done with
regard to
Marvel, and call you tomorrow morning."
"Better yet, would your schedules allow a meeting?" Baker asked. "It would be good to sit down
together, don't youthink?"
Yates and Bishop exchanged glances, and agreed to meet Baker the following morning at the
Windham offices.Then tlhey ended the call.
Bishop puffed out his cheeks and blew out a sigh of exasperation.
evening?" he asked. "We can't let this one wait. And let me see if any"How.
of the
late carn you stay. this
other senior crew is
here."

Much later that evening, Bishop and Yates, joined now by MedNet's president and CEO Frank
D'Onofrio and the company's CO, Bradley Meyers, considered posible responses to Baker--and
possiblescenarios for MedNet's future. Among the options they had scrawled on the white board:
Take a prescriptive, diagnostic posture toward site visitors--treating them, as
Imore
Cholesterol.com did, almost as patients. Then they could charge for content and be less dependent
on advertising revenues.But would MedNet's board stand for this more aggressive approach to
dispensing medical information?
Bring alternative health information to the site, starting conservatively (perhaps with scientific
studies of acupuncture) and slowly becoming more liberal. But would this help the problem of
flattening advertising revenues from pharmaceutical firms like Windham?
Build on theirgreatest strength--their integrity and trustworthiness-as well as their web
business expertise, to evolve into a developer and manager of employer websites. But would
employers let them introduce pharmaceutical advertising? If not, wouldn't they still lose in the long
run?

8 BRIEFCASESIHARVARD BUSINESS SCHOOL

 MedNet.com Confronts "Click-Through" Conpetition I 2066

Exhibit 1 MedNet Income

Statement, 2006

Revenue
Advertising income $12,000,000
12,000,000
Expenses
Purchased content 3,700,000
Sales and marketing 3,000,000
Technology support 1,300,000
General administration 3,000,000
11,000,000
Net income $ 1,000,000
 This Exhibit 2 2066 -10
Windham Pharmaceuticals Advertising Campaign Results
document
is

& Advertising venue Monthly visitors

Impressions Click
authorlzed Windham received Cost Cost per
for Click-throughs through rate? Total ad costs
g MedNet 4.3 mm/month 17.2 mm
click-through
$100 CPM 516,000 3% $1.72 mm $3.33
Marvel Search 19 mm/month 57 mmn $.54 per click- through 798,000 1.4% $430,920 $.54
2.5 mm/day
eU.S.
ducator Newspaper
5 mm
review $260,000/2-day ad 37,000b .74% $260,000 $7.03
use
only
by
Click-through rate: Here the click-through rate is calculated with click-throughs cdivided
by impressions.
Justin
Click-throughs for a newspaper: In the case of the newspaper, the "click-through" is considered the equivalent of calls
Joy, o°information). into a call center (that is, a measurement of a potential customer seeking more
Newspaper response rates vary widely due to the wide variety of items sold.
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 MedNet.com Contronts "Cliclk-Through" Competition'l 2066

Exhibit3 MedNet Visitor Survey Resultsa

Did you click on a sponsor's
3% Yes advertisement today?
For those who clicked on the
6% Ycs sponsor's advertisement. did you malke a
purchase?
Have you clicked on a health
1.4% Ycs advertisenment at a search engine website?

ror those who clicked on a health advertisement at a search engine website, did you
2% Yes makea purchaser

lf you saw an advertisement on television or in a newspaper, would you callI the call
74% Yes center?

1f you called aboutan advertisement on television or in anewspaper and found the information credible,
would you make a purchase?
12% Yes

Advertisers at MedNet are more likely to provide me with useful remedies and information than advertisers
found on websites tlhat don't adhere to the same evidence-based standards
Strongly agree: 85%
Strongly disagree: 15%
How many health sites will.you visit to research your condition?
85% = 3 or more

How did you decide to go online to find health information on MedNet?

25% search engine
10% advertisement (print)
25% online advertisement
20% bookmarked this site
10% trusted advisor recommendation
10% e-mail letter from friend recommending an article
Will you return to MedNet next time you need medical information?
93% Yes
7% No

Would you allow MedNet to store personal information aboutyour condition, such as blood pressure,
weight, etc.?
40% Yes
60% No

Would you pay for content at the MedNet site?

75% No

Would you use MedNet if you had to register for some information?
50% No

àThe study's results, based on a very large sample size, also reflect general-health-website audience behavior.
N=25,500 visitors

HARVARD BUSINESS SCHOOLIBRIEFCASES 11

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 2066 | MedNct.com Confronts "Click-Through" Competilion

Prescription for Heart Medication?

Exhibit 4 Average Profit Margin per Pharmaceutical

Advertisement placement Estimated contribution per sale

General interest website $48

Search engine $45

Health care website $150

Newspaper (via call center) $165

Television (via callcenter) $75

aThis study measured the average advertising campaign contribution gencrated for the pharmaceutical when pabents witn
chronic heartdisease purchaseda drug for long-term use. The medicine studied helped conirol high blood pressure.
MedNet, most viewed pages, Nov. 2006
1. Search Page
2. Advanced medical search
3. Weight control center
4. Pharmaceuticalnews
5. Insurance news
6. Advanced pharmaceutical search
7. Health News Update
8. Controlling cholesterol
9. Depression center
10. Medical encyclopedia index page
11. Women's content index page
12. Allergy center
13. Prevention screening guide
14. Medical conditions table of contents page
15. Today in women's health
16. Today in children'shealth

Audit of monthly usage and activity: 4.3 mm unique visitors

Unique visitors not included in prior month's audit: 60%

12 BREFCASESI HARVARD BUSINESS SCHOOL