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Different dental practices have different marketing needs. But often a practice will allocate a flat sum to its dental marketing – a monthly budget. This budget is most often set by the dentist himself based on what he feels he can afford and what he feels is “a lot” or “enough”. 

Why A Flat Budget May Not Be Right for Your Dental Marketing

Why Use Percentage of the Gross towards Your Dental Marketing? The best answer to this is marketing momentum. If your marketing is working well and your dental practice has a good month that means marketing gets more money. That money can then cause another even stronger month and marketing gets a little bit more again. What this does is allow you to fan the fire. Good marketing results in more good marketing and you get steady expansion. Steady expansion is good because you can also steadily hire and train new staff and grow in a controlled fashion.  Using a percentage of the gross means that on lean months, when you have to cut back you can. But all this requires that you set your marketing up in such a way that you are not locked into a fixed budget.

Don’t Get Locked In. Companies that offer marketing services normally do so on flat monthly rates.  They also normally insist on longer term contracts. Thus when you set up your marketing you are normally locked into set amounts for your marketing and flexibility is not an option. This is a “fire and forget” approach. You set it up and you can just let it run till next year. It is much harder to find companies that can move your budget around. The problem is that you can get loaded up with ineffective marketing and a complete lack of flexibility. Then you are stuck till the contracts expire. It’s more work to set up flexible marketing and then adjust monthly. However it is also more effective if you have control of your marketing budget and can shift it around. Try to set up flexibility into your marketing efforts right from the start. There are companies that offer this (such as ours). Also internet advertising can be pushed up and down fairly easily. 

Seasonal Factors: December is often a slow month for dentistry. January can be strong as people start taking care of dental issues they put off over the holiday season. Each practice will see its own seasonal factors. If you have flexible marketing you can push harder in the slow months and ease off in the strong months. This helps even out your schedule.

Percentage Based Marketing is the Recommended Standard: The Small Business Association and many other references point to percentage based marketing as the correct method. See below for some quotes regarding this. 

Effective dental marketing must take into account a number of core factors

Numbers vary a lot for marketing. In some case 6% is recommended all the way up to 12%.  Here are the factors you should consider when setting your amount.

Size of existing Client Base.  The larger the client base, the stronger the referral traffic. If you have a small client base you must push your advertising budget up. 

Length of Time in Business. The longer you have been in business the more brand awareness you have. New practices must advertise harder because they have little brand awareness in their communities.

Size of Practice.  This is largely determined by how many dentists you have and how many chairs are available. It can be strongly influenced by how skilled your dental assistants are. A single orthodontist could have thirty chairs and a single family dentist could have three. Your income potential is controlled largely by those two factors. Your marketing should be pushed up or down based on your potential to deliver. 

Competitiveness of Your Area. You have to look at how hard other dental practices in your area are advertising. If you do not have aggressive competition you can keep your percentage low. But if there are other dentists who are marketing very aggressively you must compete or they will capture the area. 

The Profit Margin of Your Speciality. Cosmetic dentists, implant dentists and orthodontists generally have a much larger profit margin and handle larger fees per client. But they have very little repeat business compared to general dentists. Because of this the specialities advertise much harder than general and family dentists. If you are delivering higher fee speciality services, you must push up your advertising percentage. 

Using a Percentage for Your Dental Marketing: References

Small Business Association:

 As a general rule, small businesses with revenues less than $5 million should allocate 7-8 percent of their revenues to marketing. This budget should be split between 1) brand development costs (which includes all the channels you use to promote your brand such as your website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns, advertising, events, etc.).

This percentage also assumes you have margins in the range of 10-12 percent (after you’ve covered your other expenses, including marketing).

If your margins are lower than this, then you might consider eating more of the costs of doing business by lowering your overall margins and allocating additional spending to marketing. It’s a tough call, but your marketing budget should never be based on just what’s left over once all your other business expenses are covered.

 ​From the Small Business Association Website

​EHow

Percentage Spent on Advertising

The most closely followed guideline for large consumer companies is to spend about 7 or 8 percent of their revenue on advertising, with half that devoted to the labor involved in the project.

Consumer focused companies spend larger amounts, up to ten percent, while business focused companies spend around five percent. According to a 2007 IDC survey, companies had an average of one marketing professional for every $16 million in revenue they had.

 ​ – Ehow Article

​Chief Marketing Officer Council Website

Companies who drive more than 10% of total sales from the internet allocate more of their budgets to marketing (16.4%) than companies with less than 10% of their sales coming from the internet (10.2%). August 2012 11

Marketing spend represents 11% of their firms’ revenues, up from 8.5% reported in a similar Duke University study conducted in early 2012. August 201212

From this article

After years of providing marketing services for dental practices as well as other health care professionals, I have seen quite a few ways that they have been lied to and deceived about what they are getting for the hard-earned cash that they are investing in marketing.

Most dental practices know that some form of marketing and promotion is necessary to be able to fill the schedule and truly be successful, even if only done during slow periods. Most dental and health practices are contacted by a wide array of marketing companies trying to sell them on all manner of marketing ideas – from billboards to yellowpages, postcard mailings, coupon mailings, radio and tv ads, websites, internet advertising and more. Some offer bundles, such as if you advertise in their hardcopy directory, they will also do internet advertising for you, and, and, and…

Since we have tested pretty much every type of marketing a dental practice might do, I can tell you what ones truly give the best return on investment. (This is something I will cover in more detail in another article.) But I can tell you right now that the #1 form of marketing that will get you the best ROI is most definitely through the INTERNET. Though there is a downside.

With the world going more and more internet, including through mobile devices (phones and tablets), your internet presence is most important because when it is done right, it performs head and shoulders above any other form of marketing you can do. If it is NOT performing, it is simply not being done, regardless of what you are being told.

The downside of the internet world is that this is where the greatest rip-off occurs – because it’s not something that is as easily tracked as a postcard, a billboard or a Yellowpages ad.

Here are the most common services where practices get ripped off and lied to:

1. Internet Advertising: only a percentage of what you think you are paying for internet advertising actually goes to Google. This percentage can range anywhere from 80% (unusually high) to as little as 10 or 15%.

For example, if you pay a company for $1000 per month for internet advertising, most likely anywhere from $500 or maybe as much as $900 of that money is going in their pockets and only a percentage gets paid out for the actual advertising on Google and other providers. Most companies will not disclose to you how much that percentage is. And often any numbers they do give are not specific breakdowns. An ad on Google is worth more than an ad on Yahoo. Knowing exactly what you are buying is vital. 

2. Package “deals”: Some companies will offer you a package deal of a listing in their hardcopy directory and then also offer online listings, plus internet advertising, plus lead tracking. These can also be deceptive because no breakdown is given of how much of your fee actually pays for internet ads. Another problem can be that the internet advertising goes to some sort of mirrored website for you (so they can track the traffic that they generate for you). The problem is that traffic on your website increases the overall search value of your site- so you end up paying to push lots of traffic to a website that you don’t own. That could be adding to the power and performance of your own website.

3. Cookie-cutter content used in websites and blog posts. When getting a website built or expanded this is deadly. What I mean by this is that the same text used on your website and blog posts has been used on numerous other similar websites – it’s not unique. When this is done it looks like honest good work has been done, but actually it is doing more harm than good as your website will be penalized in its ranking for using copy from other websites. Your website and any blog posts must be unique.

4. Search Engine Optimization (SEO) services: Because the work that is done to optimize a website (for improved performance in search engines and better visibility of your website) is technical and generally you have no idea what actual work is being done, very often you can pay thousands of dollars for this service and only get a few hundred dollars worth of actual work done. You have no way of telling really unless you know how to check this.

How to get past the “smoke and mirrors”:

1.  What you want is full disclosure and transparency. Demand to know upfront what exact percentage of the money you pay for advertising will actually go to Google, or if not Google, which advertiser you are paying for. If they won’t tell you and put it in writing or if this figure is less than 70%, don’t hire them.
2.  Find out from your marketing company what key search terms they are targeting in the advertising that they are doing for you. Then you can search those key terms to see if your ads show up on the first page. Do any such search in the afternoon or evening as low budget advertising might be running in the morning but will disappear once the daily budget is used up.
3.  Demand reports of the exact work that has been done each month for SEO services. It takes 10 minutes for them to detail out what unique content was added to your site, what valuable links to your website on other websites have been set up, what unique blog posts were done, etc. These can all be checked to see if the reporting is true.
4.  Don’t let advertisers speak to you in terms you can’t understand. A true professional can explain things to you in a way that you can understand, and would do so out of courtesy. If you are getting a lot of technical babble – realize that someone is hiding behind a smoke-screen of “this is too technical for you to understand” – and take it as a red flag that you are likely being ripped off.
5.  Periodically check your website in the search engines by searching key terms for your practice to see where your website comes up. Make sure to use a different browser than you normally use as likely you have logged on to your website from your normal browser and your browser will not show give you the same results that everyone else sees. If you use Chrome, then look it up in Firefox or Safari, etc.

Marketing dollars can build your practice up or drain it down. We offer free website analysis and internet advertising reviews. If you are concerned that your advertising dollars have not bought you what you were promised, I strongly recommend getting a free review as a second opinion. We will provide you with an unbiased report with specific issues that you can see yourself.

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