Online Drugstores Gear Up for Ad War

Mar 03 1999

The opening salvo among the dot-com drugstores is expected to be fired later this month when Seattle-based Soma.com unveils the first phase in what will be a year-long ad campaign.

With four high-profile online pharmacies expected to be operating by the end of the quarter, a marketing skirmish of sorts is a good bet as the players try to stake a claim in the $150 billion retail pharmacy business.

Tom Pigott, Soma.com's founder and chief executive officer, says an advertising effort will kick off around the time the company is given clearance to operate in all 50 states, which he says should be in a matter of weeks. Currently, Soma.com has been granted an operating license by pharmacy boards in 41 states.

Soma.com's campaign, handled by Goldberg Moser O'Neill in San Francisco, will launch in select cities such as Boston, Seattle and Austin; other major cities will be added in the coming months. The campaign initially will include ads in radio and print media, and eventually will jump to television, according to Pigott. Total advertising expenditures over the next 12 months could exceed $10 million, he says.

Pigott won't divulge what the ad message will be, but he says the company will play up the fact that it's always open for business, features prescription-reminder capabilities and employs a staff of pharmacists who are on call 24 hours a day.

Soma.com has also struck online marketing pacts with Excite , Netscape and InteliHealth. But the brunt of the awareness-building advertising will happen offline. "That's just as important, if not more important, than a couple of portal deals," Pigott says.

In contrast to Drugstore.com's more varied product selection, Soma.com intends to focus on prescriptions and vitamins with a limited selection of health and beauty aids and groceries. "We're a Nordstrom , not a Wal-Mart," Pigott says. The so-called "back of store," or business of fulfilling prescriptions, is a $118 billion market, he adds.

Drugstore.com and PlanetRx have also been busy inking Web marketing deals to drive traffic to their sites. They've invested heavily in public relations to educate the public about the emerging online pharmacy market and will soon also embark on heavy brand advertising offline. All this to lure the aging baby-boomer crowd - one of the largest growing segments of Internet users.

Austin-based Rx.com is expected to launch later this month with a site offering over-the-counter goods. Its planned May ad blitz will coincide with the opening of its prescription business. The company consciously has remained quiet on the PR front and has steered clear of striking any online marketing pacts. "We think the best way to build a brand is in broadcast and print media," Rx.com CEO Joe Roson says. He notes that Rx.com's ad spending for the remainder of 1999 is expected to run near $11 million. Next year, the advertising budget will be increased to $25.6 million.

Rx.com, which will sell only drugs and health care-related items, employs a staff of six writers to produce articles on health care for the site. Another point of differentiation is the company's automated order-fulfillment capabilities, which will permit it to handle up to 40,000 orders daily.

At the Jupiter Communications' conference this week, Peter Neupert, CEO of Drugstore.com, which launched last week, said the company's first priority is ensuring that the site's order-fulfillment capabilities are satisfactory. Afterward that, Drugstore.com will invest in advertising, presumably both online and offline. Neupert added that any multiyear, multimillion-dollar online marketing alliance it strikes will seek to achieve "brand building, brand awareness and brand promise."

Meanwhile, PlanetRx is expected to launch sometime this quarter. The company has been quiet since an initial announcement earlier this year regarding its launch.