The amount of money you spend on advertising can be the difference between tons of new patients and lots of wasted time and money.

I’ve talked to some chiropractors who want to spend so little money that advertising platforms won’t even let them advertise.

I’ve also talked to some chiropractors who have spent thousands of dollars a month when they didn’t even have that much money to spend.

So, how much is the proper amount to spend on advertising? How much should you spend minimum? How much should you spend maximum?

Let’s dive in.

Minimum amount of ad spend

A lot of advertising platforms have minimum amounts that you must spend on advertising.

That being said, if you’re advertising as a local business, you likely have to spend a good bit more than this to get results.

The reason is that local advertising requires more precise targeting on the part of the advertising platform. This means that the advertising platform has to spend more computing power to precisely target the people that will most respond to your ads. This costs them more, and so it will also cost you more.

Why local ads can cost more   Local ads have a higher minimum ad spend, but a lower maximum ad spend. There’s only so many people you can reach, but reaching those people can require more precise targeting from the advertising platform.   To illustrate this, let’s use some simple example numbers.   Let’s say an advertising platform has 1 billion total users, for easy math’s sake. We’ll further say that 10% of those people are looking for a chiropractor. That’s 100 million people. That’s pretty easy to target.   However, since you’re a local business, you’re going to be unable to serve everyone on the ad platform. In fact, you can only serve people in your town. So, let’s say you live in a town with only 1,000 people (again, for easy math). Then let’s say 10% of these people are looking for a chiropractor. That’s 100 people.   If our ad platform has 1 billion people, then those100 people out are 0.00001% of the audience on their platform. That’s smaller than the margin of error on most scientific studies! To target that small of a number compared to the total number of users takes quite a bit of computational power, and thus is pricier for you to advertise.   Your numbers are unlikely to be that small, but you can see why there is a minimum amount of advertising spend and why you’ll want to likely spend more than that.

Some advertising agencies will tell you to spend $1,500-$3,000 per month on ads minimum. Personally, my experience has told me that the minimum you should spend is likely more around the mark of $500/month on ads. The smaller your town is, though, the more you should expect to spend.

You can always scale up from there if needed.

The reason that $500 is the minimum is that it is usually:

1. enough to reach the minimum spend threshold the platforms set, and
2. enough for you to get fast enough results to tell how well your strategy works.

If your strategy doesn’t work, that’s usually a sign that you have to find a new one. Advertising almost always works, it’s just that sometimes your specific advertising strategy doesn’t.

Maximum amount of ad spend/ad budget

Having a maximum amount of ad spend or ad budget is something I’ve always disagreed with when it comes to small businesses.

Why?

Because, as a small business, the goal of your advertising should be to instantly (or almost instantly) get customers. Small businesses almost never have the luxury of huge amounts of cash they can spend on soft advertising campaigns with no clear, fast, direct return on investment.

So, as a small business, you want your advertising to have a very clear return on investment: You put X money in, you get 3X or more back within a reasonable timeframe.

When you have your advertising correctly dialed in, it goes something like this:

• You spend $40 on ads to get a new patient.
• That patient comes in for 4 appointments within the first month at $50 each. You make $200 in revenue, $160 in gross profit.
• You repeat this as many times as you can until your business is as full as you want it, or you’ve reached everyone possible in your local market. (The former is much more likely to happen than the latter.)

In an example like that, you can see how there’s no reason to have an advertising budget: Your advertising pays for itself. There’s no reason to have an advertising budget because the constraint isn’t your cash flow, it’s your desired number of patients.

But for something like that to happen, you have to know your numbers. So, let’s spend the rest of this article figuring out your numbers so you can set something like that up.

How to figure out your numbers

There are 3 numbers we’ll need in order to figure out if your advertising can look like the above example:

• Cost to acquire a customer (CAC)
• Patient visit average (PVA)
• Average revenue per visit

We’ll use two of those to calculate a fourth number, but it’s easy. We’ll need to do a little math here, but it’s all very easy. Here’s how we calculate each of these:

Cost to acquire a customer:

Patient visit average:

For PVA, we will calculate this across two different time periods: Over 6-12 months (your pick) and the last completed month (you can do this for multiple months and take the average for a more accurate view, if you’d like).

We want to calculate this over 6-12 months to figure out what your overall PVA is. We calculate it over a month to figure out how many times a patient usually sees you in a month. We’ll go into why here in a bit.

Average revenue per visit:

Putting it all together

Once you have those 3 numbers, we’ll calculate lifetime value (LTV):

More specifically, we want to calculate the LTV for a patient over the first month (your monthly PVA), and then over 6-12 months (whichever you chose).

The goal of this is to figure out how much a patient spends with you (on average) over the first month, and then over a longer period of time. We want to figure this out so we know how soon you will make money back after investing in advertising.

For example, if people only see you once in the first month at $50, but 10 times over the first year (for $500 total), then it might take a bit to make your money back.

Ideally, your first-month LTV is at a 3:1 ratio to your CAC (or more).

So, if your first-month LTV is, say, $150, we want our CAC to be at most $50. This allows enough cash flow to scale ads as far as we want, as fast as we want.

Why do we want this?   If your first-month LTV-to-CAC ratio is lower than 3:1, but your 6-month or 12-month LTV is at 3:1 or above, this means you can scale, but you can’t do it as fast. The reason is that cash now becomes a constraint.   Let’s take a basic example: A patient costs $50 in advertising. They come in for one appointment per month. In the first month, you make $50. You broke even. The next month, you make a profit of $50.And so on.   This may seem perfectly fine—you just wait a bit—but the problem is that you have to watch your advertising and cash very carefully. After all, you have other expenses to pay—rent, software, any materials you use, etc. If you break even from your advertising expenses, then you don’t have any extra cash to pay for those other expenses. Your returning patients are what has to bring in enough revenue for you to pay your expenses.   If you don’t have enough returning patients or you go negative (you don’t break even) on advertising expenses in the first month, then you can see how this can be a tough challenge to navigate.

So, the goal is to get your first-month LTV:CAC ratio at 3:1 or higher. This will allow your advertising to be so efficient that you can throw away your advertising budget. Instead, you can just choose how many patients you want and advertise until you get to that point.

But what do you do if your ratio isn’t at 3:1 or higher?

How to improve your numbers

If your first-month LTV:CAC ratio is lower than 3:1, and you want to improve it, there are 3 things we can do:

1. Decrease your CAC
2. Increase your PVA within the first month
3. Increase your average revenue per appointment

Here are some suggestions and things to think about for each:

Decrease your CAC

This is most easily improved by testing your ads. Create 2 different ads (or more) and test each of them against each other. Over time, you’ll create better, more efficient ads that decrease your CAC.

If you use Google Ads, this article I wrote on tips to improve Google Ads results may be helpful.

This one’s pretty basic, and there’s also only so low you can go. If you have an extremely high CAC, then it’s definitely worth focusing on decreasing it. But most of the time, the better thing to do is to focus on increasing your first-month LTV. To do that, we look at our other ideas:

Increase your PVA within the first month

If your PVA is fine within a 6–12-month time period, you may not need to worry about this. You may just have to scale your ads slowly.

However, if you want to improve your first-month PVA, then you might want to consider booking all more appointments in the first month.

For example, if you have someone come in for back pain and you know that it usually takes, say, 5 appointments for most people to feel better, tell the patient that and get them booked ahead of time across a shorter time frame.

Let’s look at the alternative: They come in the first month. You tell them to come back when they feel like it. They come back after a month. They repeat this until eventually they hit the example 5-appointment mark that makes them feel a lot better, then that’s it.

You’ll know if this would work for you and your patients. But if you already are fairly confident that in 5 appointments (or whatever your number is), most people feel a lot better, why wait? Just communicate this and schedule the appointments as soon as possible. It gives everyone a clear timeline and makes things happen faster.

If you’d like some tips on increasing overall PVA (usually over a longer period of time), then check out this article on some ways to do that. Hopefully it’s helpful.

Increase average revenue per appointment

If you have extra time, then you can add additional services to your appointments to make them worth more. For example, you could add acupuncture to an adjustment.

If you don’t have much time to do stuff like that, then you’ll want stuff with minimal time from you. Here are some ideas/options:

• Add in supplements (they require no time to deliver).
• Sell time on something like a decompression table (the setup is minimal and doesn’t require extra time from you afterwards).
• Increase price (an obvious one, but worth mentioning—especially if your prices have not kept up with inflation).

To summarize: There’s a minimum amount you should spend on advertising, but after that, you should focus on your metrics. The goal should be to get your advertising to the point that cash isn’t the constraint. Instead, the constraint should be how many patients you can handle.

If you want help with the business side of things and implementing something like this, just book a free call and let’s see how we can work together.