How Pharmacies Can Compete Against The ‘Discount’ Model Using Digital Marketing
The local pharmacy is an iconic feature in Australian communities.
White coats, low key marketing tactics and scripts filled out with a smile.
Well, at least that’s the way it used to be. In the last 15 years the introduction of the ‘discount’ business model has shaken up the pharmacy industry and changed how the game is played.
Since this introduction of extreme discounts, huge stores and in your face marketing, old school pharmacies have had a fight on their hands.
But now things are getting really interesting.
We’ve entered a second industry shakeup as pharmacies take their battle for customers online.
Luckily, this is a fight that businesses of any size can enter and win.
To give you an idea of how this battle is being played out, I’m going to take a look at two big players in the industry as they try to entice customers on Google through pay per click ads (PPC).
We’ll see what they are doing right and where they can make improvements.
After this comparison I’ll give you a detailed breakdown of how I would compete in this competitive space if I owned a pharmacy. From stretching your ad budget to tips for making your business appear larger than it actually is, I’ll give you a step by step guide.
Remember it’s not always about having the biggest marketing budget. It’s how you use it that counts.
The two businesses we’ll take a look at are Chemist Warehouse and Pharmacy Direct, two big players in the online space who are putting a strong emphasis on their digital presence. Let’s take a look at how they are targeting customers with paid ads on Google and what’s happening once they send these visitors to their websites.
If you’re not familiar with Google Adwords ads, these are the paid listings that show up at the top of Google search results. Businesses bid on the keywords you search for in Google so that they can have their ads displayed for relevant searches. If you want to brush up on your Adwords knowledge, check out our article on how you can use the platform to your advantage.
Also before I start, let me state that I have no affiliation with Chemist Warehouse or Pharmacy Direct. I don’t have access to their marketing campaigns, so the information I’ve used is from Google searches I’ve performed myself. I’ve audited these ads at a snapshot in time. Digital marketing is a fast changing business, so there’s no guarantee that these are the ads Chemist Warehouse or Pharmacy Direct usually run or will continue to run on Google.
If you’re not familiar with Chemist Warehouse’s bright colours and huge discounts it’s unlikely you’ve switched on the TV or picked up a newspaper in the last decade.
They came in strong in the year 2000 and have built an empire which now turns over $4 billion a year.
They’re now using this same gusto as they target the online space.
Google Adwords Ads
Keyword typed into Google: ‘discount chemist’
Ad variation 1:
Ad variation 2:
Both of these ads focus on the same unique selling propositions – price and shipping.
In the first variation they focus on price in the headline and in the second they focus on shipping in the headline. As a rule of thumb, you want to focus on your main selling point in your headline.
It’s likely that Chemist Warehouse are performing a split test here to find out which benefits lead to the best click through rates in their ads.
As an aside, when split testing ads in Adwords, having two variations is the best way to determine a winner. I’m surprised how often I’ll take over an Adwords account and there are 5 or more ad variations in the same ad group. To declare a realistic winner (one that is statistically significant) in a split test between 5 ads, you are going to need a hell of a lot of data or time.
Let’s now take a look at the ad extensions Chemist Warehouse use in their ads. If you’re not familiar with Adwords ad extensions, they’re additional pieces of information your ad can display such as phone numbers and links to pages on your website.
Seller Ratings Extension
The first thing I notice about Chemist Warehouse’s ads is the 4.9 out of 5 stars rating which shows up in bright orange. This is called the seller ratings extension.
The seller ratings extension is a great way to show social proof and add legitimacy to your ad. Google have recently changed the rules for showing Seller Rating extensions and now require 150 unique reviews over 3.5 stars before you can start showing this extension. It can be hard for new businesses to achieve this many reviews quickly, but it’s worthwhile if you can.
Note that since first researching this article Chemist Warehouse’s Seller Rating has risen to 5 stars. Congratulations on achieving perfection!
Chemist Warehouse have also linked their Adwords account to their Google My Business account, so that the location extension (the address showing at the bottom of the ad) shows the address of the store closest to where the Google search was performed.
This is a great way for businesses with a physical shopfront to entice foot traffic into their stores. Note that the location extension is showing in the first ad variation, but not the second. Just because you have set up ad extensions in Adwords, doesn’t mean that Google will show them all of the time.
Callout extensions are a great way to promote the unique benefits of your business. They display as non clickable sections of text below your ad. There are no callout extensions in the above ads, but after more investigation I was able to find a Chemist Warehouse ad with callout extensions.
Note they’ve only used 2 callout extensions (Free Shipping* and Low Price Guarantee). Google displays up to 4 callout extensions, so I’d suggest that Chemist Warehouse add some more callout extensions here.
Their ad copy first appears slightly spammy with its strong claims of ‘Up to 80% Off’, however keep in mind that this is for the search query ‘discount chemist’. When someone is searching for queries including words like ‘discount’ or ‘lowest price’ it’s ok to be dramatic with your ad copy.
Let’s take a look at more specific searches to see if Chemist Warehouse are targeting their ads appropriately to their product categories.
Google search: Discount Vitamins
Google search: Krill oil
It’s good to see that Chemist Warehouse have created ad copy for the specific categories being searched. Even taking this to the level of using specific sitelinks for the Krill oil ad:
It would be beneficial if they audited their sitelink extensions. As you can see for the ‘Discounted Vitamins’ ad (shown above), their sitelinks include information on fragrances and prescriptions and not just vitamins. It’s likely that this particular ad group is using account wide sitelink extensions.
It’s also confusing to have ‘Up to 60% Off’ in the main ad copy and then have ‘Fragrances Up To 85% Off’ in a sitelink for an ad about vitamins.
Once again no callout extensions are displayed, but this may be due to Google choosing not to show them.
After searching for all of Chemist Warehouse’s top selling products, it doesn’t look like they are using Search ads to target their individual products (search ads are the text based ads which show up in Google searches).
Instead they are using Google Shopping ads to target people searching for individual products. For example David Beckham’s Instinct cologne:
I would recommend that Chemist Warehouse review their results and experiment with using search campaigns for specific products. Just because you are running Shopping Ads doesn’t mean you shouldn’t run search ads simultaneously.
They could start off with their best selling products and monitor the effects of running the Shopping ads and Search ads at the same time.
Landing page experience
Now we’ve got a feeling for their ad strategy, let’s look at where Chemist Warehouse are sending their traffic to.
The ads targeting their categories are sent to the relevant category pages (which is good) and the majority of general searches are sent to the homepage.
Homepage on Desktop
The first thing I felt when I saw this page was confused. There are so many banners promoting offers that it’s hard to navigate to the categories you’re interested in.
I get the feeling that Chemist Warehouse used the same design principles for their website as they did for their paper catalogues.
Advertising to people online is completely different from print media. Ecommerce websites need to clearly show the path from the homepage to the category and product pages and entice customers to click through to these internal pages.
A website is not as intuitive as a physical paper catalogue. Everyone knows that with a catalogue you simply turn the pages and view the products until you find something that interests you. With a website, you have to find the link for the products you’re interested in amongst a lot of other information. This might sound silly or obvious, but if it’s the first time you visit a new website, it can be really hard to find what you are looking for.
The job of marketers and web designers is to make this process as easy as possible by showing a clear path to sale, enticing customers to click through to internal pages and removing distracting elements.
For Chemist Warehouse I would look at having only one banner section promoting one specific sale at a time. This would allow them to show the image links to their categories above the fold and make it easier for people to navigate the site.
I like the way they clearly display their USP’s (unique selling benefits):
Chemist Warehouse have these USP’s set up as clickable links, so people can find out more about shipping, their #1 online pharmacy claim and lowest price guarantee.
Although this might seem helpful, I’d recommend they remove the links so they are not clickable images. They are self explanatory and likely to distract people away from the sales funnel if clicked on. I’d have links to these pages in the footer section instead.
Let’s take a look at their homepage viewed on mobile devices.
Homepage on Mobile
I prefer the layout of the site on mobile devices. There are less distracting elements and the main calls to action are clearer. It would be great if they simplified the desktop design like they have for the mobile version.
Overall, I’d say that Chemist Warehouse are doing a good job but there are always areas for improvement. I’d recommend they start with the following actions:
- Add more callout extensions – these can be added at the adgroup level if they want to be more specific with the benefits they mention.
- Audit all sitelink extensions to assure they are aligned with the categories they are promoting.
- Experiment with promoting individual products with text ads (as well as Shopping ads).
- Simplify the design of the website for desktop computers.
- Remove the links from their unique selling benefits.
Now let’s move onto the next competitor.
They’ve been in the game for a while but only have one physical store (located in Sydney). I assume this store acts as their warehouse too.
Interestingly after searching multiple combinations of related keywords on Google, I could only find a handful of very similar ads:
Ad variation 1:
Keyword typed into Google: ‘discount chemist’
Ad variation 2:
Keyword typed into Google: ‘discount chemist’
Ad variation 3:
Keyword typed into Google: ‘online pharmacy’
Note the url which is appended to the headline on the second ad variation was automatically added by Google. Therefore these three ad variations are basically the same (apart from some minor word changes).
Out of all the searches I performed I only saw sitelink extensions being used:
Keyword typed into Google: ‘cheap chemist’
As I mentioned previously sometimes Google chooses to withhold displaying ad extensions, but I think in this situation extensions like the callout extension or call extension haven’t been set up.
At a minimum I’d recommend Pharmacy Direct also use callout extensions to give them more space to talk about their benefits.
The ad copy is ok, but it doesn’t really jump out at customers. The combination of generic ad copy and not using enough ad extensions will make it hard for Pharmacy Direct to compete with businesses like Chemist Warehouse for clicks.
I’d recommend Pharmacy Direct play around with their ad copy to promote some of their unique benefits. They should focus on benefits that Chemist Warehouse don’t have.
- Australia’s first online pharmacy
- Selling direct since 1996
Branded campaigns were the first point we discussed in our ‘26 of the biggest online marketing mistakes businesses are making in 2017’ ebook.
It’s a touchy subject because many businesses don’t want to ‘waste’ money on PPC campaigns targeting their branded keywords if they are ranking organically in position 1 for those keywords.
Pharmacy Direct is a perfect example of where I would absolutely recommend bidding on branded keywords:
You can see above, even though Pharmacy Direct have the first organic position for the search ‘Pharmacy Direct’, competitors Pharmacy Online and Amcal are showing above them with paid ads.
This could mean that Pharmacy Online and Amcal are targeting the keywords ‘pharmacy direct’ or it might just be that they are targeting the keyword ‘pharmacy’.
This is probably costing Pharmacy Direct a lot of money in lost sales. For most established brands, the bulk of revenue comes in from branded keywords.
Specific Categories or products
As I mentioned I was only served a few variations of text ads for Pharmacy Direct and all were very similar. To show why this isn’t the best practice let’s take a look at the following search results:
When I searched for ‘discount chemist vitamins’ Chemist Warehouse show an ad targeted to my query, while Pharmacy Direct show a generic ad.
The targeted copy and the use of ad extensions in the Chemist Warehouse ad make it a much more enticing prospect to customers.
Landing page experience
All of the Pharmacy Direct ads I saw, directed customers to their homepage. This makes sense considering they weren’t running category or product specific ads.
Homepage on Desktop
The Pharmacy Direct homepage is not as confusing as the Chemist Warehouse homepage, which is good. Because they don’t have as many banners as Chemist Warehouse, you can just see the top of Pharmacy Direct’s categories without scrolling down the page (in the image above you can just see ‘Hayfever’, ‘Vitamins’ and ‘Baby & Children). This gives the user a hint to scroll down the page and view other categories.
Let’s take a look at their homepage viewed on a mobile device.
Homepage on Mobile
I had to check this a few times, thinking there was something wrong with my phone. I couldn’t believe it. They don’t have a responsive version of their site for mobile devices.
Having a responsive website that displays nicely on all devices is crucial. People rely on their phones for researching products and even purchasing products. If you don’t have a website which is easy to navigate on a mobile device you will lose money.
I would urge Pharmacy Direct to review their Adwords Traffic and Analytics traffic, segmented by device type, and look at the bounce rate and conversion rates for mobile devices. This alone should be proof that they need a responsive website.
So overall, although Pharmacy Direct are doing some things well, they have a lot of room for improvement with their online strategy.
I’d recommend they start with the following items:
- Make sure the site is responsive and easy to view on mobile devices.
- Create a branded campaign which targets all variations of ‘Pharmacy Direct’ and has a large enough budget to keep the ads always running.
- Use a granular Adwords account structure. Group together similar keywords into adgroups and create specific ads for each adgroup.
- Create callout extensions at a minimum.
- Get more creative with ad copy and promote unique features.
Now we’ve looked at Chemist Warehouse and Pharmacy Direct, it’s time to think about how other pharmacies can succeed online.
How can smaller pharmacies compete?
If you have a pharmacy and are looking to run Adwords, you might be wondering how you can compete.
Hopefully the above analysis has given you some ideas of your own. Remember, there are opportunities even when big players enter a space.
Like in most business niches, there are so many opportunities that competitors overlook. If you intelligently execute a targeted digital strategy you can take advantage of opportunities and get a strong return on investment.
To give you some more ideas on how to compete, here’s my top tips for people who are running PPC campaigns for their own pharmacies. This is what I’d do if I had a pharmacy and wanted to attract new business.
If you have a physical store and want to drive foot traffic into your shop, you need to be very targeted with your keywords. Otherwise, you’ll be outbid by competitors with larger budgets.
Try setting up a campaign targeting a 2-5 km radius around your store and bid hard on keywords which indicate in-store purchase potential.
- Local pharmacy
- Local chemist
- [suburb] pharmacy
- [suburb] chemist
Set up your campaigns on a granular level, so that you aren’t mixing different types of keywords. This allows you to show ads which are highly related to the keywords that trigger them. I take this as far as having some ad groups with only 1 keyword in them. This ensures there is strong alignment between what customers are searching for and the ad I show them.
You saw with Chemist Warehouse and Pharmacy Direct, there isn’t much competition if you target very specific searches. If you target specific products and searches instead of just general pharmacy keywords, you won’t have to bid against as much competition.
Promote your businesses unique benefits in your ads. Are you open on Sundays when your competitors aren’t? Make an ad which only shows on Sundays and promote this. Do you carry a brand that no one else in your neighbourhood does? Create ads which let people know this.
You might not be able to compete on price, but if you show unique benefits you can still entice customers.
Link your Google My Business account to your Adwords account and confirm your location. This allows you to display the location extension on your Adwords ads. To confirm your location Google will post you a letter in the mail with a confirmation code.
It’s easy to implement, and you’ll likely see a jump in your click through rates.
Make sure you are running ad extensions on your Adwords ads. As you saw from comparing Chemist Warehouse and Pharmacy Direct, ad extensions make a big difference. They allow you to display more information and make your ads look more impressive.
I’d recommend at least running callout extensions, sitelink extensions and call extensions. The call extension displays your phone number on your ad and is ‘click to call’ for mobile devices. It’s a great way to drive lots of phone calls from mobile devices.
Make sure your website has the following features:
- A ‘click to call’ phone number which is easily visible at the top of each page
- A live chat program so you can chat with customers who have questions. A free version like Tawk.to will do the job for you.
- A ‘Contact Us’ page and clear links to the contact page on all other pages.
- Copy and images which show the personality of your business (if you are a smaller business this is really important).
You need to record when someone contacts you or purchases from you so that you can find out which keywords and ads generated the conversions. This allows you to constantly learn and improve your campaigns. Conversions come in multiple forms, so make sure you are tracking the following:
- Online purchases – Be sure the revenue from online purchases is being measured and fed back into Google Analytics and Adwords. If you have trouble setting this up, hire a developer from a job site like Upwork to do it.
- Phone calls – Track calls directly from your ads and from your website. If someone visits your site from Adwords, you can set up call tracking for free using a Google forwarding number. This generates a random number on your website, so that if someone writes down your number and calls it a few days later you will still track it as a conversion in Adwords.
- Online enquiries – It’s valuable when someone visits your ‘contact us’ page and fills out your contact form. It’s likely they’ll become your customer if you handle the reply professionally. Make sure you have your Adwords conversion pixel on the thanks page (the page your form redirects to after an enquiry) so you can measure the enquiry as a conversion in Adwords.
Wrapping it all up
If you implement these ideas, you’ll be surprised at the results you get. I’m not talking about ad impressions or branding either. I mean legitimate customers who visit your store and purchase from you.
Remember, PPC is only one component of your online marketing strategy. There are lots more opportunities through Social Media, Email Marketing, Conversion Rate Optimisation and other areas. However PPC is a great place to start if you want to get customers fast.
If you’ve got any questions about how to implement a PPC strategy for your business, get in touch with me and we can spitball some ideas.
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