OTC drugmakers face an uphill battle on Amazon. But they should still be there, expert says

By | November 19, 2018

Amazon is now the third-largest digital ad platform, but pharma marketers are mostly shut out. That’s because most of Amazon’s ads are for products sold by retailers, and of course, prescription drugs can’t be purchased that way.

At least, not yet. Amazon continues to show interest in healthcare in general and in the pharmacy and prescription drug delivery business, specifically. In June, it bought online independent pharmacy PillPack, which analysts cast as “the tip of the iceberg” for Amazon’s plans in healthcare.

Still, even as Amazon looks for an Rx entry, it’s already launched its own Basic Care OTC medicine lineup. Pharma marketers with OTC brands should be figuring out their own strategies for Amazon, said Wes MacLaggan, senior vice president of marketing at ad management platform Marin Software, which works with OTC drugmakers including Pfizer and GlaxoSmithKline on optimizing advertising on search, social and e-commerce channels.

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Over-the-counter remedies, which are part of many of Big Pharma’s consumer divisions, are burgeoning on Amazon, so much so that Amazon quietly launched its own Basic Care brand line of OTC products last year, made by private-label manufacturer Perrigo.

RELATED: Amazon finds it’s not so easy to sell drugs—and nixes one plan entirely: CNBC

What’s an OTC player to do? There are two typical Amazon advertising choices: sponsored brand ads or sponsored product ads. Sponsored brand ads appear much like a banner ad at the top of the page with a “Sponsored By” label beside the brand, for example Advil or Vicks, followed by two or three of each one’s specific products that can be clicked on to buy.

The next ad form is sponsored product ads, which appear in the row just below the sponsored product banner ad on the Amazon search results page. Those ads are for single products in a line, each one boxed and containing the word “sponsored” so that shoppers know the ads are paid. Sponsored product ads work much like keyword buys on search giant Google, where OTC companies bid on specific health-related or symptom words and the ones with the highest bids appear first.

RELATED: Amazon finally moved into healthcare. What’s next for pharma?

So guess where organic results appear? Under both of those paid ad forms. In competitive categories like “cold and flu” or “nasal sprays,” that means the typical consumer won’t even see the organic results of best-rated products without having to scroll down the page.

It’s not really an advertising game OTC makers can sit out. Amazon is approaching a 50% market share in U.S. e-commerce sales, MacLaggan said, which means that when people want to buy something, they often look to Amazon first. It’s even more important in light of Amazon’s Basic Care line as a competitor, which gives the giant the advantage of being able to undercut prices, as it’s been known to do in other categories. Still, other brands shouldn’t give up.

“Rather than trying to avoid it entirely, it’s advisable to figure out how to cooperate and work within the system as best as possible because customers are very loyal to Amazon. If you’re not on the channel, people will find other products to use in your category,” MacLaggan said. He advised marketers to create robust and differentiated product information pages and create a positive buying experience to ensure that the product reviews many shoppers rely on are good.

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