Digital advertising lingo introduces us to a whole new lexicon. There’s KPI, CPC, CPA, CTR, impressions, and reach. It can be a confusing alphabet soup of acronyms to wrap your head around. Added to that confusion is the pressure you might feel to spend your precious marketing dollars on digital advertising because you see other medical practices doing it—right? Well, WRONG.
When you don’t understand your KPIs (key performance indicators) and continue to invest hard-earned resources into it—only because your competition is doing it—you set yourself up to be like 95% of small business practices that fail. You become tangled up in a mess of conversion data and information you don’t understand, only to keep funneling resources towards it.
Understanding the basics of digital advertising and how your marketing budget correlates to your overall business success should be the primary driver behind your strategic marketing decisions. Let’s examine how it works effectively.
Determining An Ad Budget
When determining a budget for your ad campaign, there are a few basics to consider. First, understand how to pace your budget so your resources don’t run out before the campaign is over. For example, in an ad campaign costing $5K over six weeks, you can calculate your pace of spend per day to see if that specific dollar amount is worth getting a prospective patient to walk through your doors.
For example, there are 42 days in a six-week ad run; divide that by the total ad spend budget of $5K, and you have roughly $119 per day to spend every day for six weeks to get a conversion. Imagine using an NYC-sized budget.
Is It Worth It?
Determine if your campaign is worth it by running your ads for six weeks and measuring the number of leads (MQLs, marketing qualified leads) that come into the site versus how many of those leads eventually converted into new patients. Based on this, you can calculate the cost per acquisition (CPA) to determine if the revenue you earned from the new patient outweighs the investment to bring that patient to your website, contact form, and eventually through your practice doors.
Determining Your Marketing Budget
To estimate a quarterly media budget, start by taking the total budget you plan to spend on media and divide it by four. The rule of thumb is to take 15-20% of your total annual revenue and invest it in your practice’s marketing initiatives. From this, you can approximate how much you should be spending on marketing each year. Take 15-20% of that marketing budget and allocate that for your social media ad budgets that will run on Facebook, Instagram, Google Search, and other social platforms. Optimal ad campaigns run between 4-6 weeks in length.
Divide your media budget accordingly per quarter.
- Total Revenue x .20 = Annual Marketing Budget
- Annual Marketing Budget x .20 = Annual Media Spend Budget
- Annual Media Spend Budget / 4 = Quarterly Media Spend Budget
- Use your Quarterly Media Spend budget to run 4- to 6-week ad campaign
Why Your Marketing Budget Is Important
Obviously, your goal is to convert a web visitor into scheduling a consultation with your medical practice. One of the best pieces of information you can gather to do this is understanding behavior. We can track psychosocial, behavioral data using website analytics to understand your consumer better. The more we understand your patients, the better we can tailor your marketing budgets to help bring more intrinsic value to potential and future patients. Additionally, your marketing budget allows you to gauge how many new patients you need to continue growing your practice. The more budget you have, the better conversion data you can collect to make more robust and better marketing decisions moving forward. It’s a win, win for everyone.
By Rob Roach AMA, DMI Certified Digital Strategist