Case Study: WebMD

Responding to Barriers to Growth by Morphing the Business Model


A Limited Business Model?

When WebMD launched, there was intense competition from other providers of online health information. But based on the quality of its content and investment in branding, WebMD emerged as the leader for online health only to face another even more significant growth challenge. As an online publisher, WebMD’s sold advertising (banner ads) was on a CPM basis just like other publishers. This meant that WebMD’s revenues were limited to the number of visitors and page views per day. Even as traffic grew, this model limited growth.


From Eyeballs to Qualified Leads

  • Working closely with senior management and sales, Grace developed deeper insights into the needs of its advertisers including Pharmaceutical and Medical Device Companies. While advertisers were all interested in getting their messages presented to WebMD’s visitors (eyeballs), what they really needed was action that would result in growth in new prescriptions (leads) to move their respective market shares.
  • The solution that Grace developed was a plan to offer WebMD visitors a chance to register for newsletters across every important health condition. With this strategy, WebMD was able to register over 25 million health conscious consumers in less than 2 years. With this database, WebMD could then offer its advertisers a targeted medium that they could also track to reach their audience by health condition with offers that grew new prescriptions.
  • Pharmaceutical and Medical Device companies were willing to pay premiums to reach WebMD’s registered members including lead generation fees for members who took action on their behalf.


Dominance and Accelerated Growth

Grace's enormous changes yielded enormous results:

  • Within 2 years, WebMD rapidly grew to become the largest and most profitable health portal
  • WebMD was established as the #1 destination for health conscious consumers and healthcare advertisers
  • WebMD’s share price grew 400% in a down market