Any organization needs effective marketing strategies to thrive, and the healthcare industry is no exception. However, determining how much to budget and allocate can be challenging. This article will explore spending expectations, the factors influencing healthcare marketing budgets, and the increasing significance of healthcare digital marketing.
How Much Should an Organization Spend on Healthcare Marketing?
When setting a budget, healthcare organization leaders should ask themselves one vital question: How much do I want my practice or business to grow? As per Gartner’s report, “The State of Marketing Budget and Strategy in 2023,” the average enterprise allocates 9.1% of its total revenue to marketing expenses.
From our extensive experience working with over 60 clients, here is a breakdown of what percentage of total revenue healthcare B2C and B2C organizations should expect to spend depending on their growth goals:
- Maintain current growth: 3-5%
- Grow steadily: 8-10%
- Grow aggressively: 10 -14%
Numerous factors may affect where an organization falls on this scale, such as:
- Competitive Landscape: In highly competitive markets, healthcare leaders may need to invest more in marketing to win patients over the competition.
- Nature of Referring Physicians: Doctor.com’s report, Customer Experience Trends in Healthcare 2020, found there’d been a 44% decline in the usage of provider referrals since 2018. A practice’s marketing needs will vary depending on the sustainability of its referral system.
- Growth Necessities: If there is outside pressure to expand (perhaps a practice is private equity backed and must meet expectations quickly), that may necessitate a higher budget.
Regardless, healthcare leaders looking to grow should be prepared to allocate around 8-12% of their annual revenue toward healthcare marketing. It’s important to note that this figure includes both traditional and digital strategies.
How Should an Organization Allocate Its Marketing Budget (Traditional vs. Digital)?
We recommend budgeting 8-12% of your organization’s overall revenue to marketing, with at least 50% of that spend going towards digital.
The industry has recently witnessed a significant shift toward healthcare digital marketing. The aforementioned Customer Experience Trends in Healthcare 2020 report by Doctor.com states that 61% of patients rely on online resources vs. word-of-mouth referrals. The shift towards digital is not unique to the healthcare industry. For example, streaming services drew more viewers than cable TV for the first time in July 2022, according to a report by media firm Nielsen Holdings.
The world is going digital, so allocating a significant portion of your marketing budget to online strategies is essential. The Healthcare Adspend Forecasts report by ROI agency Zenith reveals that 2021 is the first year digital marketing spend surpassed television spending in healthcare marketing.
By allocating around 50% of that budget towards healthcare digital marketing, you can take advantage of the online landscape’s opportunities and remain competitive, such as:
- Wider Reach: Healthcare organizations can extend their reach beyond local boundaries through online platforms.
- Targeted Campaigns: Digital marketing enables precise targeting of quality patients by their demographics, behaviors, and interests.
- Cost-Effectiveness: Healthcare leaders can optimize spending by leveraging cost-effective digital tools like pay-per-click advertising.
- Real-Time Analytics: Digital marketing provides data and analytics that allow healthcare organizations to measure their efforts accurately.
How Should an Organization Map Out Its Healthcare Marketing Budget?
Healthcare is specialized, and so is healthcare marketing. Our biggest advice is to hire either in-house or find an agency to entrust your marketing needs.
Reputable healthcare marketing experts can take a huge load off your back by helping you determine your audience, find out how to reach them, and assess your marketing campaigns to find improvements. Within the digital marketing realm alone, there are a lot of avenues to consider, including:
Marketing experts can closely monitor which methods drive the most revenue and engagement and determine the underperforming methods to reduce spending on those channels.
As the healthcare industry becomes more competitive and patients rely heavily on digital channels, healthcare leaders should prepare to allocate an appropriate budget for marketing. A general benchmark for a healthcare marketing budget is 8-12% of annual revenue, and we recommended dedicating at least 50% of that to digital marketing. By setting growth objectives and utilizing digital marketing tools effectively, healthcare organizations can make the best use of their time and money to drive business success.