と EXHIBIT 7 A STUDY OF MEDICAL ADVERTISING AND THE AERICAN PHYSICIAN An Opinion Survey ilade for the American Medical Association * RECOMENDATIONS TO THE AMERICAN MEDICAL ASSOCIATION The two main purposes of this study were to learn why JAMA advertising space sales have fallen behind those of ¡EDICAL ECONOMICS and ODER MEDICINE and how to reverse this trend; and to gather information which will be useful in promoting JAIA. The facts uncovered have pertinence in varying degrees to various departments within the AA organization. This section of the report attempts to summarize the significance of the findings to the Councils, the Business Office, and the Editorial Department. A. RECOMMENDATIONS TO THE COUNCILS The findings indicate that the crux of the problem of selling advertising space in AA publications lies in the fundamental relationship between medical manufacturers and the Councils. The solution of this problem involves much more for the AA than just advertising revenue: it involves as well the future strength of the leadership which the A'A can exert directly through the Councils on medical products, nomenclature, and medical advertising. The medical manufacturer is torn two ways: he realizes that the AMA's restraining influence on medical marketing and medical advertising claims, through the Council Seals of Acceptance, is beneficial for the industry over the long term, and therefore tends to want to support it; but on the other hand, he rebels against the restraint in specific instances, knows from experience that he can sell the physician on the product without having the Seal, and can advertise it as he wishes through non-Council-supervised publications. The question of whether or not to submit a particular product for Council Acceptance then becomes a problem of weighing the advantages of having the Seal against the disadvantages of requirements for Acceptance and the limitation of claims in advertising, in the specific instance. The current trend seems to be for the medical manufacturer to circumvent the AA by taking his product directly to the physician without submitting it to the Councils. Because of this fact, the AA publications are to an increasingly large extent barred to him as advertising media, and therefore, he is necessarily relying more and more on E and M' advertising pages to tell his product story. * by Ben Gaffin & Associates, Chicago, Illinois, August 31, 1953. The main reason for this trend is that the manufacturer knows from experience that he can successfully advertise and market non-Council Accented products as long as the product is not a controversial one, and his firm name is well-established. To get Council Acceptance in such a case is to bind himself to the limitation of claims allowed by the Council, submit to that he considers may be long-drawn-out and excessively formalistic negotiations, and get in return an approval which he believes has little or no practical value. The solution to this problem facing the AMA seems to be four-fold: B. 1. 2. 3. 4. Review the Council rules, make them as simple and clear-cut Streamline the administrative procedures involved in getting Undertake a broad educational program to inform the American Have Council or other top AA staff members explain to the medical manufacturers why the Councils exist and how they operate, what is involved in getting Council Acceptance for a product, and why it is to the manufacturers' long-term advantage to getCouncil Acceptance whenever possible. This can be done through speeches at meetings of medical manufacturers and advertisers, through direct mail, through exhibits at medical conventions, and through presentations made to the manufacturers and advertising agencies by the AMA service representatives. In view of the fact that the personnel of the manufacturers and agencies are continually changing, it must be a continuous and never-ending process. UNLESS THE AMA TAKES POSITIVE STEPS TO REVERSE THE PRESENT TREND, THE INFLUENCE OF THE COUNCILS WILL CONTINUE TO LESSEN AND THE MEDICAL PROFESSION WILL SUFFER THROUGH LO ER STANDARDS OF MEDICAL MARKETING AND ADVERTISING. ADDITIONALLY, THE AMA WILL FIND THAT ITS PUBLICATIONS WILL ATTRACT A CONTINUOUSLY DECREASING AMOUNT OF ADVERTISING. RECOMMENDATIONS TO THE BUSINESS OFFICE The survey of advertisers reveals an underlying belief on the part of the majority of advertisers that AA space-selling and promotion methods have not kept up with the changing times and the changed competitive conditions introduced by the growth of ME and MM. The advertisers generally feel that the underlying philosophy of selling of the AMA is outmoded: that advertisers no longer consider that the AA is doing them a favor by allowing them to buy space in the pages of its publications. They feel, moreover, that the AMA, to get their business, must present evidence of the value of its publications as advertising media, that the advertising representatives should make a positive effort to convince them of the value of advertising in AMA publications, and that the representatives should also give a level of service comparable to that given by the representatives of the competitive publications. Translating this into action, it means that the survey findings reveal the need for four areas of increased activity on the part of the business office: Do considerably more, and better, direct mail promotion. 1. 2. 3. 4. Train service representatives better on knowledge of the Give service representatives more and better presentation Exercise more sales-management control over the activities Sections I through X of the physician survey findings will lend themselves for use by the business office both in the preparation of nersonal presentations by the advertising representatives, and for mailing as service pieces to advertisers. Moreover, there is considerable information which will furnish ammunition to the advertising representatives when competing against representatives of other publications for the advertiser's business. The JAMA readers strongly approve of the editorial changes made in JAA in the last three or four years. This fact should encourage the present editors to continue their program of JA A improvement. - One suggestion offered for the consideration of the readers was strongly approved: that of organizing the original articles in the Journal into sections for example, pediatrics, surgery, etc. This is an editorial policy decision involving considerations of which the average reader is unaware and therefor the editors may be quite justified in not following the suggestion. If, however, there are no reasons militating against it, the adoption of this change would be approved by two-thirds of the readers. Most of the pressure to take the Saunders' ad off the cover and to expand the index revealsed in the 1950 survey, was relieved by cutting down the size of the ad. There is evidence, however, that the majority of readers would be pleased if the ad were entirely removed, and the space used for even further expansion of the Index. One last suggestion involves basic advertising policy. It is obvious that there necessarily exists a basic conflict of interests between the business office, whose pricary interest is increasing advertising revenue and the editorial office, whose primary interest is in turning out as professional a publication as possible. Often, what will increase advertising revenue will decrease professional standing. It is probable that at present, the AIA cannot afford to remove the Saunders' ad from the cover, even though a more detailed index would be welcomed by the readers. Even less, at present, can the AILA probably afford to exclude non-professional advertising, even though nearly two-thirds of the readers would prefer it. Even excluding cigarette advertising, which is heartily damned by a third of the readers and substantially all of the professional advertisers, will involve giving up sizable revenue. It is possible that raising professional advertising standards in the Journal may result in some compensating increase from the professional firms. It seems to us that the change should be a gradual one, the timing of which will be determined largely by the rate of advertising revenue increase from the increased sales efforts of the business office. The steps to be followed, as we see them, are: Concentrate sales and promotion efforts on professional As soon as financially possible, exclude cigarette adver- Remove the Saunders' ad entirely from the JAA cover, and 4. If and when the professional advertising revenues have been the policy of carrying only professional medical advertising. These steps, premised as they are on increased advertising revenue from professional firms, will probably require some years before complete adoption. EXHIBIT 8 THE CND DU LAC STUDY: An Intensive Study of the Marketing of Five New Ethical Pharmaceutical Products in a Single Market, Resulting in Some Theory of Scientific Marketing and Service Programs for Action A Basic Marketing Study made for the AMERICAN MEDICAL ASSOCIATION* 1956 CHAPTER 1. OBJECTIVES The Fond du Lac Study Is Part of a Series In 1950, Ben Gaffin & Associates made its first study for the American Medical Association on Attitudes and Practices of U. S. Physicians Toward the Journal of the American Medical Association. This study revealed to the JAMA editors both the reading habits, and the favorable and unfavorable attitudes toward the Journal held by the various types of physician audiences constituting the overall JAMA circulation. The 1953 Survey of Advertisers In the fall of 1952, Mr. Thomas Gardiner and Mr. Robert Lyon of the AMA Business Office invited us to apply survey research methods to uncovering ways in which the sale of advertising space in JAMA and other AMA publications could be increased. We outlined for them a two-step study: A Study of Advertising and the American Physician, Part I The Advertisers' Viewpoint, and Part II The Physicians' Viewpoint. The utilization of the study findings netted the AMA a return of 3600% in increased pharmaceutical advertising for each dollar spent on the research. - The survey of pharmaceutical advertisers played a part in bringing about & number of policy changes: the institution of an index of advertisers, the exclusion of cigarette advertising, and the eventual dropping of the 58-year old Council Seal of Acceptance Program. The 1953 Survey of Physicians The survey of advertisers also served as a pilot study in orienting the general survey of physicians on the channels of product information, which comprised the second part of the study. This Physician Survey furnished the information released by the AMA Business Office to the pharmaceutical industry in a series of 20 mailing pieces, the last of which was sent out the end of 1955. This survey was designed to give information on: the U. S. physician market; how physicians learn about new products; comparable information p. 1 *by Ben Gaffin & Associates, Inc., Chicago, Illinois |