How to Create a Marketing Budget for Your Practice

One of the most frequently asked questions in today’s medical clinic marketing is “How do I determine a digital marketing budget for my practice?” It’s a question we’ve been asked by at least half of the 16,000+ healthcare practitioners we’ve worked with since we pioneered healthcare marketing back in 1979, long before digital marketing became a reality. As you might imagine, the answer to that question has evolved over time as we learned best practices and gained experience.

Over the years, there have been three primary methods used by healthcare practices and medical clinic marketing specialists to establish how to plan a digital marketing budget

  • Based on how much the practice is willing to spend
  • Based on a percentage of the practice’s sales revenue
  • Based on the practice’s current marketing objectives

Based on how much the practice is willing to spend

Unless you’re buying groceries or a new TV, this is absolutely the wrong way to budget. This type of budgeting was often practiced by amateur marketers who didn’t have the experience to provide a better answer. Pulling an arbitrary, baseless budget number out of thin air can have serious consequences and likely offers no benefit for a healthcare practice.

You should never budget by picking a random number based on no more than a guess, a personal preference, or a gut feeling, yet that’s precisely how 4 out of 5 private practitioners did it and many are still doing it today. This method was and is doomed to fail.

How to Create a Marketing Budget for Your Practice

Based on a percentage of the practice’s sales revenue

While a percentage of sales revenue seems far less arbitrary and more scientific, it is still less than ideal. Practices and marketers who budget this way believe they should base their budgets on their sales volume. As they grow and can afford to spend more, they spend more. This method was abandoned by corporate America in the 1950s, though it is still recommended by inexperienced marketing consultants, and about 15% of healthcare practices still use it.

Unfortunately, there is no single percentage that will work in every situation. For example, if two doctors own comparably sized practices, they should both allocate exactly the same amount for marketing using the percentage of sales revenue method. But, what if one practice is located in a small town with very little competition and wants to grow by 10 percent, while the other practice is in a big-city high-rent district with major competition and wants to double its size?

These two practice situations are very different because their needs are very different. It should be readily apparent that their respective marketing budgets cannot possibly be calculated using the same percentage of sales method.

How to Create a Marketing Budget for Your Practice

Based on the practice’s current marketing objectives

Now that we’re in the age of digital marketing, this is the only proper method for calculating a digital marketing budget allocation. The first step is determining your marketing objectives based on a conservative 12-month collection trend if you do no additional marketing. Remember, only actual collections (not charges) count.

Your next step is estimating where your practice will end up if you don’t change anything. Your revenue might stay flat, gain some natural growth, or decline. Next, you should establish a collections goal based on your practice capacity, your willingness to increase capacity, and your lifestyle goals. Then subtract your trend to determine a collections goal. The result will represent actual growth, which is harder to achieve than the natural growth you may have experienced up until now.

At this point, you should determine a reasonable return-on-investment goal for your marketing program budget. This should be based on your relative level of competition, your profession and specialty, the possibility for professional referrals, any digital marketing media costs, your own marketing experience, the size of your practice, the number of practitioners you have, and their social skills.

How to Create a Marketing Budget for Your Practice

It is usually best to establish a conservative ROI goal. If, for example, you are looking for an ROI of 4:1, then your marketing goal should be to generate $4 for every dollar you invest in marketing. Once you arrive at a total budget number, divide your total budget by 12 to come up with an average monthly marketing budget.

Remember that great marketing generates great ROI and poor marketing generates no ROI.

Create a Marketing Plan for a Healthcare Clinic Using Digital Marketing Budget Allocation

When you create a marketing plan for a healthcare clinic, you should understand certain rules of thumb such as marketing budget vs. gross revenue and patient acquisition cost vs. average case value. You should also understand that you need digital or online marketing. What is involved in digital marketing and how it is different from traditional marketing?

How to Create a Marketing Budget for Your Practice

First, understand that not all marketing is created equal. In basic terms, digital marketing is essentially any type of marketing that is done online. It includes everything from your website content to your social media posts and blogs, and the emails you send to your patients. Traditional marketing, on the other hand, typically includes tactics like newspaper and TV advertising, printed collateral materials, radio spots, billboards, and direct mail.

Also, unlike traditional marketing, where it is often difficult to accurately track results, digital marketing offers you precision results tracking and lots of helpful data that you can use for future planning and budget allocations. What kind of data should you look at when allocating a budget? For starters, you should always be aware of your:

  • New patient acquisition costs
  • Patient retention rate
  • Average case dollar value

Knowing these numbers can give you better control over your marketing activities. For example, the lower your new patient acquisition costs are, the better off your marketing dollars usually are. If your acquisition costs remain lower than your average case value, you can consider your digital marketing budget allocation strategy as successful.

Your new digital marketing campaign should provide you with clear data you can accurately track to determine your ROI. This is critical because it takes the guesswork out of knowing whether your marketing plan for a healthcare clinic is working. To determine your acquisition costs, just take the total dollar amount you’ve spent on your latest marketing campaign and divide it by the number of new patients you acquired. Then compare the result to your average case dollar value. For example, if it costs you $100 to acquire a new patient with an average case value of $1,500, then you know you’re on the right track.

If you need more information about how to plan a digital marketing budget or about digital marketing budget allocation, consider partnering with a healthcare marketing company such as Practice Builders. To learn more, visit or call 855-898-2710.