Freelance Consultant's Diary

Well, if you believe many click fraud experts (who by the way often have a vested interest in scaring advertisers because they sell click-fraud detection services), it would appear that the advertising world is about to come to an end. At iProceed , we conducted research into the extent of click fraud, and here are our findings: The advertisers would rather not have click fraud in a perfect world but they understand that advertising effectiveness is extremely low in all cases. In fact, in our analysis, we learned that advertisers found text links to have the highest ROI even if one considers the high-end estimate of click fraud (~20%). (Related link: Comparison of advertising costs ) Advertisers understand that banner ads click rate is ~0.25%, the response rate on direct mail is ~3%, and most advertising in print and television media has not been producing a ROI for years now. The only advertising that really works is text links (in search results or as listings on a content rich websi

Management consultants are not big fans of CEO's who take major business decisions based on their gut feeling and refuse to do quantitative analysis. At least that is the impression I got watching Hank McKinnell go about putting together a Celebrex strategy. As I said last week, Pfizer was pursuing a wrong Celebrex strategy and the numbers are here to show (Celebrex prescriptions dropped by half) that McKinnell was not thinking it through. I was hoping that after watching Merck's flawed Vioxx recall strategy , another pharma CEO will pay attention and learn from it. The manner in which was Vioxx was recalled and the whole process managed by Merck has been very interesting and there are many great lessons for all executives (Related article: Vioxx recall lessons for business executives ). But what McKinnell did was totally opposite to what I had said last week: Pfizer, like any other firm, should have managed its appetite for risk . From here on too, it is going to be downhill f

Today's decision by the Eighth U.S. Circuit Court of Appeals that VOIP phone calls can not be regulated as traditional phone traffic is a tremendous boost to what is still a technology in its infancy: VOIP. The Federal Communications Commission last month had issued its own rules favoring VOIP, saying that Internet phone services should not be governed by the same state regulations as traditional telephone companies. Fortune Magazine calls VOIP the technology of 2004. And here at iProceed , we believe that the way cell phones have replaced traditional phone lines, the day is not far off when most of the voice data will be transmitted over the Internet. It may take some time though since VOIP is not yet ready for prime time. Being a Vonage customer for over a year now, I am very satisfied with domestic phone quality but forget about a management consultant doing a conference call with his overseas clients. Not only is the sound quality bad, you can be disconnected any time. So I sti

Since the recall of Vioxx , advertising for prescription drugs (and more specifically, direct-to-consumer advertising) has come under attack from doctors, experts, lawyers, ethicists, and management consultants like me. The only two groups that love direct-to-consumer advertising are the drug firms themselves and the consumers. In fact, it is reported that the ROI is extremely high on direct-to-consumer advertising with every dollar invested in advertising producing four dollars in additional drug sales. No wonder it makes so many of us so uncomfortable. This is also attributed to one out of two Americans taking at least one prescription drug at any given time. Even worse, direct-to-consumer advertising may also be responsible for more deaths and injuries because Americans go to their doctors with imaginary illnesses and ask for drugs that were advertised directly to them. Role of direct-to-consumer advertising in the recent Vioxx controversy With the big controversy related to Vioxx a

The rapidly falling dollar (and overall currency fluctuations) are causing a lot of pain to businesses (and to consumers to a smaller extent). I dealt with this issue yesterday and provided tips on how to protect your business from currency fluctuations . But a falling dollar also creates interesting business opportunities for businesses of all sizes. In fact, that is one reason the US Government is letting the dollar fall in the first place. New business opportunities from a weak dollar If you have seen your business mature in the United States with a 1.0-2.0X GDP growth, then this may be the perfect time to explore entry/expansion into high-growth markets, particularly in BRIC (Brazil, Russia, India, and China) countries. A weak dollar means that you will be at a disadvantage when buying products/services overseas, and at a even greater disadvantage if your customers are in the United States. A weak dollar makes your products and services cheaper in the global market. Thus, businesse

At the ebusiness blog , like to talk about Amazon.com because it is a company that has created the perfect marriage between e-business and content. Not only does Amazon has some interesting content on its websites, its affiliates use content as a tool to create demand for almost everything that it sells. No surprise that the model works. Amazon.com has announced it has finished its busiest holiday season ever during which time it set a single-day record with more than 2.8 million units ordered, or 32 items per second, worldwide. Additionally, even while its books business set a new Thanksgiving Weekend record, consumer electronics sales surpassed book sales and was Amazon's largest sales category for the first time. Below are some interesting facts that we are using to develop strategy in the eCreativa network of online media properties (which includes, among others, MYNIPPON Lifestyle , LuvCube: Find, live, and enjoy love , Lindisima Latina Lifestyle , Vioxx recall , and iProceed

As a management consultant , I often get asked questions related to currency fluctuations that drive business leaders nuts. Several executives that I have spoken to recently are very concerned about the falling dollar. While some businesses and the US economy are getting some help from a falling dollar, it is playing havoc with other businesses. If you want to believe the iProceed forecast, then be prepared for currency fluctuations on a global basis (while the Bush Administration quietly prefers a weak dollar, other governments are not going to sit idle as they get hurt) during 2005. The current account deficit and budget deficits in the United States are out of control and most economists are very skeptical of the long-term health of the US economy. That is the major reason why dollar is falling. As the growth opportunities emerge in Brazil, Russia, India, and China (BRIC), investors are less interested in the United States. As a short-term solution to what is a long-term problem, th

This is the best time to be in the content management business and as a nano-publisher we can see that things couldn't have been better. Thanks in particular to Google that has not only redefined the advertising landscape but also the publishing business. And as a nano-publisher it is nice to feel wanted again by the advertisers. As anyone who has noticed, Google is still adding publishers to its already large and powerful army and is treating publishers like us extremely well, including Christmas cards and gifts (We love you, Google!). Why will Google continue to be a great company (even if it does not remain the greatest search engine)? Because it values its customers and partners. Both Amazon and eBay became great companies by developing armies of partners and Google is doing the same. It is the little guy that makes the big difference on the Internet. And that is a classic example of how the Internet is about empowerment and democratization. We have come across publishers in re

It is not rocket science for any business executive to know that if your business model is not based on customer-centric strategies, it will soon be made obsolete by market forces. The pharmaceutical sector in the United States, has however, opted to move its strategy in a direction that it is based primarily on doing almost everything against the interests of its customers. The recent revelations about Merck and Pfizer have further shown that the drugmakers really don't understand what it means to develop a customer-centric strategy. As I have argued in the past, the business model of drug industry is failing . It is relying too much on regulatory changes and government support to sustain its business model rather than refining its business model to match the new realities. The import of prescription drugs from Canada is a classic example of how the drug industry wants to alienate its customer base with the help of the government. The report submitted to Congress by the Health &am

Wal-Mart is now offering a laptop that is less than $500, a first of its kind. While it may mean that profit margins for PC companies will go down but in this article I want to discuss the new business opportunities that are going to emerge because of this. As we have seen over the years, a personal computer is no longer an IT piece of equipment. It has transformed itself into a consumer electronics device, particularly now that even business people use instant messenger programs to chat with business associates (and often friends and family members), watch DVDs, and even management consultants like me, when we are really bored, play a game. No wonder then that the Comdex is over and is replaced by the Consumer Electronics Show, where PCs and other peripherals will now be displayed. It is also important to note that America is now a laggard when it comes to what is happening in the world of Internet. Only in October of this year, we finally have more broadband users than dial-up. In fa

In response to my article on the management consultant blog arguing why expensing options is good for business , I have received dozens of emails asking for my thoughts on how to attract and retain the best and the brightest, particularly in startups and rapidly growing organizations. There is no argument that money attracts good employees, particularly in the current system in which neither the employers nor the employees have any sense of loyalty to each other. In a recent study by the Society of Human Resource Management found that not only are three out of four American employees looking for another job, most people say that they want a new job for more money. The second highest reason, though, for seeking new opportunities was lack of opportunities in their existing jobs. Tips on attracting and retaining good employees Create an environment which attracts good people . Bo Peabody talks about companies that are fundamentally innovative, morally compelling, and philosophically posit

In this article I would like to discuss how an enterprise needs to manage its appetite for risk. Risk management is part of business and those leaders that do a great job at managing risk create enormous shareholder value but it is important to put some boundaries around risk management so that you do not destroy the enterprise. Merck is one example where poor risk management may mean that Merck may not exist any more. The second example could be that of Pfizer, where in my opinion, risk appetite is out of control. The day Vioxx was recalled by Merck, Pfizer reaffirmed the safety of its two drugs (Celebrex and Bextra) that compete with Vioxx and belong to the same Cox-2 inhibitors category. During the following weeks, Pfizer embarked on an aggressive marketing campaign for Celebrex. Then came the first setback in early December. The Food & Drug Administration (FDA) asked that Bextra carry a stronger warning. Before we could even digest the new information, came another study that e

When we launched the Vioxx recall blog we were hoping to benefit from the advertising revenue that it would generate (we were closely monitoring how fast the rates were rising at Overture), what we did not know was if we would be successful in having the blog pop up in search results. And then as soon as we launched and made some progress and declared that the Vioxx recall blog was a success , we were attacked by spammers and crooks, hired by Vioxx attorneys (Related article: Vioxx recall battle in cyber-space ). Of course, we were discouraged but we have never given up on the strong connection between ebusiness and content management since it is a model that we have tested dozens of times in the eCreativa network of online media properties . Since we used a blog instead of a website , success at Yahoo and MSN was immediate. In fact, within a matter of days, Vioxx recall blog was on page one. But the really depressing news was that we were on page 13 in Google. Now like every other c

As a management consultant , it is very painful for me to see a company's strategy driven by its legal department rather than the vision put forward by the CEO such that strategic growth is its foundation. I saw this happening with Merck that has followed a totally flawed Vioxx recall strategy and now I see the same happening at Pfizer though I expected that several very powerful lessons for business leaders in the Vioxx recall example . So what is Pfizer CEO Hank McKinnell thinking when they admit that Celebrex increases the risk of heart attacks but they will not withdraw the drug. I would not be surprised if such discussions were held at Merck for years and that is exactly what McKinnell is thinking. To see how long they can keep Celebrex on the market and extract whatever value they can from the drug. Most doctors are not buying into the logic of McKinnell though I would not be surprised if the Pfizer lobbyists in Washington are successful in preventing the FDA from banning th

At the Pfizer annual analyst meeting on November 30, 2004, Joseph Feczko, Chief Medical Officer, is reported to have said that while both Celebrex and Bextra are similar to Vioxx (they all belong to the category Cox-2 inhibitors), Pfizer drugs are different from Vioxx on a chemical level. Additionally, while other arthritis drugs can increase blood pressure, Celebrex seems not to, he added. Since then, it has been found that Bextra is actually quite a dangerous drug and a new warning has been added. And in less than two weeks of that November 30 meeting, Pfizer is now reporting that Celebrex increases risk of heart disease as well. So either Feczko was totally clueless about what was going on at Pfizer or else he was simply trying to what most executives do at analyst meetings - tell them what they want to hear. As a management consultant , I know this really well. The authorities in Germany have gotten so concerned about the safety of Cox-2 inhibitor drugs that they have severely rest

The good old days of providing misleading information on your financial statements are probably over. Today the Financial Accounting Standards Board (FASB) published its new rule that will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements (this is simply a very complicated way of saying that options need to be expensed, but the FASB is referring to other similar compensation arrangements including restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans). That cost will be measured based on the fair value of the equity or liability instruments issued. This Statement is the result of a two-year effort to respond to requests from investors and many others that the FASB improve the accounting for share-based payment arrangements with employees. The techno

While I was convinced that the merger of Sears and Kmart may create shareholder value , I am getting somewhat concerned that the merger mania is back in the United States. Symantec/Veritas, Oracle/PeopleSoft, Nextel/Sprint, etc. are a few names to mention. It is no secret among strategists that mergers and acquisitions destroy value. The only exception is when a merger enables you to rapidly enter a new market/geography. Why are mergers still popular? Allows the top management to have a sense of accomplishment and gives them something to do when business is otherwise dull. And by the way, it is the easiest way to improve the income statement, when things are otherwise not working. Enables companies to eliminate competition and gain market share. Consolidation in a sector may give short-term boost to the participants, it does not help anyone in the long run. Fewer players and less competition generally means less value created for customers and shareholders and innovation drops sharply.

The launch of the Vioxx/Celebrex/Bextra news blog has been validation of the fact that consumers appreciate content that is written in a language that they can understand and appreciate. News stories related to drug recalls can be either too legal or too medical or both. And if you add a bit of legal/medical jargon, you can turn it into a really dull story. So is there an opportunity to provide easy-to-understand content for readers by keeping the complexity out? Absolutely. The finall result: our news website is at the top simply on the basis of high-quality content. We have made this section as one place that has all the news. The stories are not written for lawyers of medical professionals (there are special websites for them), but for an average consumer who wants to make sense of the current news without getting a headache. Another important point to note is that you cannot win by simply copying search results in your website or republishing press releases or using any oth

When Congress passed the Sarbanes Oxley Act , it was expecting that board members would make sure that the corporations complied with all the legal/tax/accounting requirements. But directors of companies should not forget the spirit of SOX - better governance, and eventually, protection of the interests of the shareholders. So what does Merck's board do in the wake of the Vioxx recall scandal? It approves a severance package that has been a public relations disaster for the firm and has sent a totally wrong message to Merck employees. As iProceed's analysis has shown, Merck is doing everything that it can to destroy shareholder value . In our opinion, Merck's Vioxx recall strategy is flawed and it will do nothing more than expedite its end (be it in form of an acquisition or liquidation). So what are Merck's options? We are convinced that Merck was a great company with an excellent portfolio of products and a very rich pipeline. It also has tremendous intellectual and

Let us go back to the Tylenol case. Only 7 people died and it seems that Johnson & Johnson , the manufacturer, had nothing to do with it. What did the firm do? It was honest, direct, apologetic, and definitely not in denial. The result: Johnson & Johnson is still around and so is Tylenol. We Americans love people who are ready to admit their mistakes. We truly forgive and forget. Why will there be no Merck or no Merck as we know it left in a few years time? By not following the example of Johnson & Johnson, Merck is essentially destroying shareholder value each day. At some point, shareholders will simply abandon the stock. According to David Schwab and Ed Silverman of the Star Ledger, "...a growing number of its 60,000 employees, including about 8,000 in New Jersey, are worried enough to rethink their future." And finally the customers of Merck - How many people will be willing to risk their lives for too long by consuming Merck products? In summary, customers, e

If you see domain several names like this (www.scgrassroots.org, www.nychildrenschorus.org, www.palermoconference2002.org, www.peruusany.org, www.gunnm-seraphim.org, www.improvinbiz.org) what will you think? You might think that these are not-for-profit websites. But when these websites show up right on page one in a search for information on Vioxx recall, you start to wonder why the Children's Chorus in New York will be writing about Vioxx. The reality is that all these are fake websites run by two law firms: The Peterson Firm and Waters & Kraus. No matter which website you click on you end up on a website (www.cc2000.org) owned by these two law firms where they are trying to find clients for Vioxx related lawsuits. Why would two respected law firms use such trickery to drive traffic to their websites? No one knows but it does not speak very highly of them. There is nothing wrong or illegal with using the Internet to find new clients particularly if you can do that through org

Summary: This article will take the example of the pharmaceutical industry in the United States and discuss (1) What has it done wrong? (2) What are its option to get back on track? (3) What can other industries learn from this experience? Problems afflicting the US pharmaceutical industry Disconnect with its core customer base. In a recent Gallup poll, not only was the pharmaceutical industry at the bottom of the pile, it was in the company of other hated businesses like oil/gas and attorneys. No industry has ever prospered by alienating its core customer. Working against the interests of its customers and that too very openly. By its strong opposition to lowering drug prices in America (by strongly opposing drug imports from Canada), no one wants to do business with a pharmaceutical firm unless they have to. Use of unethical business practices and abusing the drug approval process (of course, with the connivance of its friends at the FDA ) How can the pharmaceutical industry achieve