Marketing Budgeting: Health Tech Start-ups
Health Tech startups spend between 12-20% of their revenue on marketing. Over 40% of the marketing spend is allocated to digital. The cost of customer acquisition for the health and medical industry is $78.09.
Health Tech Marketing Budget Allocation
- The average health tech company spend a tenth (10%) of their revenue on marketing; however, startups usually need to spend 12-20% to create brand awareness and establish themselves.
- Before allocating a marketing budget, startups need to plan their initial branding, which will include "logo creation, website development, social media, brand messaging, and other promotional materials such as business cards" and take up 5-15% of the annual revenue. This is an upfront expense that is essential to building a brand persona, the foundation for all other marketing activities.
- Allocation of the marketing budget:
- Over 40% of the marketing expense is allocated to digital.
- According to ZS Associates, health tech companies should focus on a customer-centric approach, invest in loyalty programs to build customer lifetime value, and extract insights from data.
Marketing Spend Example (Ancestry.com)
- In 2017, Ancestry.com generated $1 billion in revenue; it spent $133 million (roughly 13%) on advertising (excludes other marketing costs) the same year.
- In 2016, Ancestry.com generated $850 million in revenue; it spent $109 million (roughly 13%) on advertising the same year.
- In 2015, Ancestry.com generated $680 million ($850 million/ 125%) in revenue; it spent $85 million (roughly 13%) on advertising the same year.
- Between 2012, the year of launching home DNA test kits, and Dec 2017, Ancestry.com sold a total of 6 million+ kits; of these, 3.5 million were sold prior to 2017.
- In 2017, Ancestry sold 1.5 million kits between "Black Friday and Cyber Monday". It had sold 560,000 kits in the same period in 2016. The DTC DNA test industry sales doubled in 2017 to 12 million.
- Historically, between 2009 and 2011, Ancestry.com had a subscriber churn rate of 3.5% to 4.5%.
General Healthcare/ Medical Industry Metrics
- The cost per lead for the healthcare industry is $35 and the cost per lead for technology is $45.
- According to ChaterBuzz, the customer acquisition cost for health & medical is $78.09 and $133.52 for technology.
- According to Acquisio, based on "50,000 campaigns, created by 11,000 advertiser accounts inside the Acquisio platform from the United States, Australia and Canada in Q3 2017", the digital marketing metrics for the medical/ dental industry is as follows
- Cost Per Click (CPC): $3.07 (w/o ML); $2.76 (with ML)
- Click Through Rate (CTR): 4.2% (w/o ML); 4.04% (with ML)
- Cost Per Acquisition: $66.79 (w/o ML); $41.49 (with ML)
- Conversion Rate: 5.21% (w/o ML); 7.42% (with ML)
- The cost per acquisition by platform for the medical industry:
- The cost per acquisition by platform for the technology industry:
We searched multiple industry sources, research reports, statistical databases, and marketing and advertising portals but did not find any relevant marketing statistics (except total marketing spend) specific to health tech startups and the health tech industry. Most marketing metrics we found in the public domain were specific to broad industry categories. We did, however, provide potentially useful insights from actual spending of health tech companies and marketing metrics of the health and technology sectors.