Dermatologists: Are you spending too much for online advertising?

Advertising online can be mentally and financially overwhelming for a dermatology practice. With so many search engines, websites and online directories, how can you generate the most new patients without exhausting your ad budget?

The answer is easy: knowing the average lifetime value (ALV) of a new patient.

Marketing your dermatology practice only adds value when it generates a positive ROI; that is, when the cost of the advertisement over a given time period is less than the total ALV of new patients gained. Once you calculate the amount of expected revenue from that new patient, it will make it easy to determine how much you are willing to spend to get them in the door for the first time.

For example, let’s say you know that the average new patient will generate $100 in revenue per office visit. If he or she is projected to pay a repeat visit an average of fifteen times in a lifetime, the average new patient value would be $1,500. Overall, your goal should be to find ways to advertise online where the amount you are paying each month per new patient should be well under the $1,500 magic number.

Now that you have an idea of how much you typically make from a new patient, let’s take a look at ways to keep cost down. In my career, I have had the pleasure of assisting hundreds of doctors in attracting new patients to their practice while at the same time decreasing their ad budget. My first job out of college was with an online advertising startup that offers performance-based advertising to local businesses by industry. Their product is based on paying for relevant phone calls from potential customers inquiring about services offered at the business. I developed a passion for the concept of pay-for-performance because it’s genius: you only pay when your advertising actually works.

Does your practice currently have a website? If so, you have probably considered integrating a Pay-Per-Click (PPC) campaign so that patients can find your site quickly when searching for a dermatologist in their local area. PPC is a search engine marketing model of placing an ad for your website on the “sponsored” sections of search results on a search engine like Google, Bing or Yahoo!. The benefit of implementing a PPC campaign is that you only pay if someone clicks on your sponsored ad, which is optimized based on keywords relevant to the content on your website (dermatology, dermatologists, acne treatment, etc.).

One of the downsides is that there is no way of determining who is clicking on your website link. Was it a potential patient, an existing patient or an accidental click? Furthermore, it often takes multiple clicks before a new patient connects with the practice, which, of course, is the desired result. Furthermore, there is no way to determine whether that phone call was from an existing patient, a new patient, or none of the above. It is difficult to monitor the conversion rate of phone calls to new patient appointments without an advertising product that includes a call tracking feature. Do not make the mistake of assuming every click you receive translates as a new patient showing up at your door.

Aside from search engines, a 2010 Nielsen study confirmed that 49% of internet searchers use Internet Yellow Pages (IYPs) to find local businesses online. Sites like YP.com and Superpages.com fall under this category. The benefit of paying to advertise on an IYP is the volume of search traffic and the conversion of searches to relevant phone calls. According to the same study, 65 million people use IYPs every month, and around 84% of users actually pick up the phone and contact the business they were looking for. When you advertise your practice on an IYP, your office and phone number are listed on the top of search results in your local area. That means when Johnny is searching on Superpages.com for a dermatologist in his zip code, he will more than likely call your practice first.

The largest downside with advertising on an IYP is the high monthly rate and the long-term contract required. When signing a written time commitment with an IYP, the publisher knows they are guaranteed to receive around $200-$1000 per month for the entire length of your contract. Unless the company is able to guarantee a specific number of new patients per month, you cannot calculate an accurate ROI. Before you sign, make certain that the advertising you are buying will generate enough new patients to yield a valuable return.

So what is the magic formula? Frankly, it is different for every practice. However, there are three questions I ask my clients when they are new to the online world of advertising: