Sample Marketing Budget

A Sample 6-Year Dental Marketing Budget

Low, moderate, high—putting it all together and finding the right mix

Finding the balance between mediums with different risk levels and knowing when to pull each one into your marketing mix can be confusing. So, we wanted to give you a concrete example that shows you exactly how the principles of diversifying risks look like when applied to a dentist’s long-term marketing activities. We’ll use “Dr. Smith” as our example, and show you how we would determine and allocate her marketing budget.

Dr. Smith is your basic, average dentist. Her practice is general, she practices in an average market, and she is average in terms of her competitiveness with other dentists in her area. Dr. Smith has owned her practice for five years, and has invested very little in promoting her practice during this time. Here is how we would counsel Dr. Smith to set and allocate her marketing budget over the next six years to support very healthy growth.

Dental marketing budget—year 1 Proposed budget allocation
Actual revenues = $600,000 5% – Internal projects (referrals)
Goal revenues = $800,000 15% – Website/Internet marketing
Budget range = $30,000 to $40,000 80% – External projects (targeted direct mail)

Rationale: In the early years of Dr. Smith’s new marketing campaign, she needs to focus on low-risk mediums … while taking advantage of marketing mediums whose potential she hasn’t even begun to explore. Mass media is not an option because it’s too high risk, and because the budget won’t stretch to cover both mass media and the supportive mediums—referrals, direct mail and web marketing—she would need to see good results from her mass media marketing efforts.

For the next three years, Dr. Smith would recalculate the budget based on the formula described earlier, and would allocate the budget the same way. Now we’ll flash forward three years to the next phase:

Dental marketing budget—year 3 Proposed budget allocation
Actual revenues = $900,000 5% – Internal projects (referrals)
Goal revenues = $1.1M 15% – Website/Internet marketing
Budget range = $45,000 to $55,000 50% – External projects (targeted direct mail) 30% – Print media

Rationale: Dr. Smith’s practice has grown over the past three years, and although her marketing tactics are still working for her, there is more room in the annual budget to diversify into the next logical medium—moderate-risk print media. This, of course, assumes that her website and her continual direct mail campaign are still providing positive return. If she is doing it appropriately, it will be.

Now, let’s flash forward another three years:

Dental marketing budget—year 6 Proposed budget allocation
Actual revenues = $1.3M 5% – Internal projects (referrals)
Goal revenues = $1.6M 10% – Website/Internet marketing
Budget range = $65,000 to $80,000 30% – External projects (targeted direct mail) 20% – Print media 35% – Mass media

Rationale: Dr. Smith’s practice has grown even more as her marketing efforts have paid off. She will still funnel a portion of her marketing budget into the low- risk mediums that continue to perform well for her, but now that her revenues have increased and she has a bigger overall marketing budget, she can afford to diversify into higher-risk mass mediums. In the coming years, she will have the luxury of taking slightly bigger risks with her marketing budget without cutting into her bottom line, allowing her to experiment in these mediums to find a formula that offers higher ROI than the lower-risk mediums.

SUMMARY: Throughout these first six years, Dr. Smith relied on reliable, low-risk marketing fundamentals to increase her practice. Tactics such as referral campaigns, web marketing and direct mail gave her solid returns and helped her grow her revenue and her marketing budget. As her marketing mix evolved to make the most of a growing marketing budget and a maturing strategy, she started allocating an increasing portion of the budget to higher-risk mediums.

Being covered in a wider range of mediums allows her to benefit from the synergy that happens when wider coverage increases and focuses consumer awareness. Participating in higher-risk mediums also allows her to benefit from potentially higher returns on her marketing dollars—without exposing her to unacceptable risk.

Every practice and practice area present their own unique marketing challenges, so no two marketing strategies will be identical. However, the example above illustrates the fundamental principles of marketing budget allocation, and provides a good general guideline in helping you minimize risk and make the best use of your marketing dollars.

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