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Healthcare: you make your appointment, and you head to the doctor. Right? 

Right. However, before you decide to make that appointment, you weigh your choice based on a large number of available options in the local area. Marketing for healthcare companies is on the rise, creating stiff competition. The total expenditure for global healthcare marketing for 2019 was $36 billion, a number that’s projected to increase by 3.6 percent in 2020. 

With marketing expanding at a steady rate, to remain competitive, healthcare providers must broaden their reach. How do you create a budget that will target relevant individuals? With decades of insight in the industry, Orange Label takes an inside look into crafting a strategic plan for your healthcare marketing budget.

What Qualifies as Healthcare Marketing?

On average, healthcare and pharmaceutical companies spend 10% of their overall budget on marketing. This percentage includes medical device makers, healthcare software companies and pharmaceutical companies, all of which have much larger budgets than hospitals. In contrast, hospitals tend to dedicate less than 1% of their overall budget on marketing. As this percentage begins to grow, it’s important for healthcare marketers to strategically analyze where those funds will be placed.

“Healthcare brands are often vying for both brand awareness and direct response results, so that dynamic can require more resources than a brand focused on simply one or the other,” says Client Success Director Michelle Torr.

The Healthcare sector is an umbrella term for a massive industry containing several different subsets:

  1. Hospitals
  2. Medical Devices
  3. Pharmaceuticals
  4. Biotech

Successful healthcare marketing reaches the audience of these industries using scientific research to prove positive results, all the while reaching patients on a human level. “Hospitals and hospital systems in large markets have significant resources allocated to marketing, and healthcare is constantly becoming more and more competitive. It requires dollars to receive a fair share of voice. Medical device companies are facing this as well. In both areas, the industry is continuing to consolidate which allows resources to be leveraged exponentially further than a single, stand-alone brand can achieve. If a healthcare brand truly wishes to lead the market, they have to compete,” Torr explains. “Hospitals are consolidating to system-based ownership as are medical devices — with large companies owning multiple brands of devices for a variety of healthcare applications. In both instances, the larger companies/systems can pool their resources so that investments in technology and marketing resources can be leveraged across sub-brands.”

To maintain a detailed focus, we will address hospital and medical device marketing in this blog.

A Closer Look at Hospital Marketing Budgets

Unlike most other industries, traditional media (television, billboards, radio) is still the dominant form of advertising in the hospital sector. Many different factors play into why digital media marketing receives less focus. The medicare population is heavily impacted by traditional forms of media. In certain areas, local hospitals can create a substantial amount of reach by placing their ads in front of an audience with billboards, direct mail, commercials, and more. 

FDA regulations tend to restrict advertising in healthcare, along with data privacy compliance laws which can make targeted digital ads complicated. Because of HIPAA, any healthcare marketing is required to adhere to HIPAA marketing practices. This intersects through social media, email marketing, ad targeting, and the vast majority of digital advertising efforts. Data gathered from websites must be encrypted, patients have to authorize any emails being sent to them, and procedures for using photographs on social media must strictly follow guidelines.

Hospitals also are experiencing a large uptick in marketing only in more recent years, where other industries, like retail, have been competing with marketing campaigns within their industry for a longer period of time. TV, newspaper, and outdoor ads are the top three avenues marketers have been choosing to enter into the race. The chart below details the amounts spent per medium on advertising in 2018, on average and by median. 

 

                       Median Annual U.S. Spend (in thousands)                 Average Annual U.S. Spend (in thousands)
TV$90,000$270,859
Newspaper$84,500$143,810
Outdoor$70,000$153,278
Electronic ads$56,000$185,095
Pay-per-click$51,050$316,112
Radio$50,000$114,261
Content marketing$33,500$72,675
Magazines$30,000$55,227
Direct Mail$30,000$98,237
Brochures/print collateral                       $30,000$73,809
Search engine marketing$22,000$101,495
Mobile ads$20,000$108,846
Email$18,500$21,468
Social media$15,000$54,584
Location-based ad$15,000$21,289

Healthcareittoday.com

Despite this clear focus on traditional ads, digital spend is growing. In 2019, healthcare and pharmaceutical marketers increased their digital ad spend by 20.1%, expected to grow again in 2020 by 17%.

Marketers will need to employ a mix of different methods in order to remain in view of their audience. “For hospitals with a patient and physician focus, this often includes a variety of activities such as advertising (TV, OOH, digital, print, radio, etc..), digital marketing (SEM, social media marketing), website maintenance, communications (PR, crisis communications), event marketing (seminars, community outreach), direct marketing (direct mailers, email marketing), sponsorships and activations, and creative production (design, printing, imagery, video, content),” Torr says.

In-Depth: Marketing Budgeting for Medical Devices

A medical device can range from an artificial heart to an insulin pump. Marketing for these devices still falls into the healthcare field, but the budget and strategy for marketing will change according to each device.

“Medical devices will have similar line items [to hospitals], but depending on their business model, advertising, marketing and event marketing may focus more towards B2B channels to target physicians and healthcare facilities. Medical device firms may also include industry trade shows and sales expenses within their overall marketing spend,” Torr says.

The medical device market is an industry expected to grow to $364.28 billion by 2023. Healthcare marketers can expect to come across tight competition in terms of advertising, making the need for a detailed budget even greater. 

Marketers also should keep in mind the increasing regulations on the sale of their products. The Affordable Care Act passed in 2018 will make it less likely for insurance companies to reimburse healthcare providers when they purchase from a medical device manufacturer. This, in turn, lowers incentive to purchase. Other factors include a growing scrutiny of sales representatives entering hospitals and an increase in FDA inspections on devices. These roadblocks add another dimension to the marketing puzzle. 

Does your organization have a thoughtfully planned out marketing budget that maximizes ROI? “Marketing must always support a brand’s core business objectives and vision – that’s what makes results meaningful and it’s where Orange Label begins the conversation. With clear expectations and measurable indicators in place where possible, our team tracks immediate results and monitors the industry’s evolution so that macro and micro adjustments achieve both short and long term gain,” concludes Torr.

The numbers don’t lie. Healthcare marketing is a key investment that takes careful planning and strategic thinking. With an Orange Label approach, you’re getting exclusive access to experts in healthcare marketing who are poised to take your brand to the next level. Get in contact with us today.

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Founded in 1972

As Orange County’s longest-standing, privately held response marketing agency, we have witnessed dynamic shifts in the world of marketing. Through it all, we have ensured our clients stay at the forefront of communication and technology, driving response and value with every new endeavor.