Is addiction-treatment marketing scalable?

But is it true?

Here at Circle Social, we have over 100 times the amount of data that they do and what translates into over 500 years of experience if combining all the years our clients have been in business.

It’s definitely a question worth exploring. The answer is, of course, like anything in business, “it depends”. So let’s take a look at what that depends on and if we can’t get closer to a definitive truth.

The executive certainly has a point. As I’ve stated numerous times before, we’ve seen many companies pop up, expand nationally, and then collapse under their high overhead costs coupled with a lack of enough admissions to sustain them. While, at their peaks, these organizations looked widely successful and everyone thought it would be a good idea to emulate them, we’ve seen that this wasn’t the case with so many providers who flared up, then disappeared or went bankrupt in less than a decade.

This will be easiest to examine on a channel by channel basis and then I’ll synthesize all the information in the end to answer the question. Let’s also quickly define the way I’ll use scale.

1. Scalable: a repeatable process, but one that requires additional investment as more outcomes are needed from the same process. Once there is expertise in an area, can the same or similar process be used with additional locations? 
2. Economies of scale: Using the same process at a fixed cost while still increasing outcomes. For example, a SaaS firm needs the same number of developers whether they’ve sold 100 or 1 million copies of the software. 

Let’s start with the perennial favorite: Google Ads

Google Ads can be optimized and is scalable geographically, though not locally. As we’ve covered in-depth before, Google Ads CPAs can range from $3,500 to $7,000 per admission depending on geography, number of competitors bidding on similar terms, quality of facility reputation, campaign optimization, insurances accepted, total spend, skill of the admissions team on the phone, etc. 

Let’s simplify and assume a facility has a high-performing admissions team, a moderate spend that has not yet hit diminishing returns, well-optimized campaigns, and that they accept most commercial insurance policies in their catchment area. At this point, the only remaining significant factors are number of competitors bidding on similar terms and facility quality. In that case, their CPA should range from $3,500 to $5,000.

So is that scalable? Locally, the answer is no. This is due to total patient search volume. Let’s use IOPs to work with smaller numbers. Most IOPs pull from a 30-mile radius. How many patients are searching for addiction treatment and will call from a Google Ad in any given month within that radius? 

Obviously, this depends on population size and density, but a good conservative estimate is 100 calls per month. We know that 90% of those calls will be Medicaid/no resource, so that leaves us with 10 calls per month that qualify to come into the facility. If the call team converts at 30% of qualified calls, that’s 3 admissions per month from that channel. No matter how much money the facility spends, that’s going to be the average number of admissions they get from Google Ads campaigns. (For the ads experts out there, there is more volume. We can spend more to get a couple additional admissions, but it’s going to come at a much higher cost that is generally unsustainable for the facility, so we recommend against it).

However, while Google Ads are not scalable locally, they are scalable across non-overlapping geographies. This doesn’t mean it’s plug-and-play. The same campaigns CAN’T be run across geographies. Search trends and campaign optimizations vary widely across geographies, but more or less similar strategies enable campaigns to be optimized in different locations within 1-2 months as long as the team knows what they’re doing. 

Because Google Ads are scalable when expanding the geography of the catchment area, many programs used to (and some still do try) to expand their campaigns to regions further and further from their facility. Ultimately, this does not work. The farther the patient is from the facility, the more difficult it is to get them in. It’s more difficult to get them to make a commitment on the phone and it’s more expensive in terms of transport to get them to the facility or send staff to guide them in and ensure they arrive. With today’s reimbursements, those two additional expenses are not sustainable. 

Also, keep in mind that Google Ads require daily updates and optimizations on top of regular split tests for new ad copy. As geographies and spends increase, more staff are needed, so labor costs increase with increased spend, preventing economies of scale.

Verdict: Google Ads can be optimized locally within a facility’s catchment area and the strategy is repeatable in new locations as long as the program has facilities in that location. However, more campaigns requiring more daily optimizations require additional staff, so, while the strategy is repeatable, it does not benefit from economies of scale.

Is Search Engine Optimization (SEO) Scalable?

Search engine optimization is a very labor-intensive strategy. SEO can appear to have economies of scale with certain roles spread out across multiple programs. However, as we’ll see, this doesn’t end up being the case.

As a program adds on more locations, they need more content along with ongoing technical optimizations of said content. However, more content is not always better. In fact, as we’ve seen with Google algorithm updates over the past few years, too much content or content that’s not focused enough can actually hurt a website’s rankings.

What this means is that a single facility would not want a full-time content writer. At most, four new pieces of content should be added to a website in any given month to not raise flags with Google. Since content writers do not need even close to an entire week to write a single piece of content, they would end up getting paid to sit around and twiddle their thumbs. This is why outsourcing to an agency makes the most sense since they can cost effectively provide an entire team for the same cost of a single hire’s salary without wasted labor spend on the facility’s part. 

As the program increases in size to 3 facilities or more, then it can make sense to hire a full-time content writer across all 3 facilities. However, the management across facilities starts to require more strategic oversight and project management. So then the same problem arises where the program isn’t big enough to require full-time project managers or marketing directors, but the facility has to hire them full-time anyway since it’s hard to find project managers and marketing directors willing to work part-time. 

Additionally, the second a 4th facility is added, then another content writer is needed and the problem repeats itself. Some facilities try to solve this by hiring a single Marketing Director or Project Manager who then hires freelancers on a project basis. Everyone is familiar with the problems there. The freelancers have no sector expertise in behavioral health, do not attend trainings, can often disappear if they get more consistent work from another client, struggle to copy edit their own work so another freelancer is needed for that, and generally need a lot of oversight in order to ensure quality work. 

While the labor cost associated with SEO does not ultimately benefit from economies of scale, there are exponential benefits to investing in it. SEO is problematic in that it takes a long time to start working. Pages ranking on page 2 or after receive almost no traffic and almost never receive calls. However, consistent SEO work that finally gets pages onto page 1 can suddenly drive massive amounts of traffic and call volume. A single page ranking at the top of page 1 for high-intent terms can drive 50 calls a month. Since organic SEO calls generally have higher rates of commercially insured calls compared to Google Ads, this is extremely beneficial. A single page generating 50 calls a month can drive 4 admissions a month. Get four pages ranking with similar metrics and that’s 16 admissions a month. Even spending $10,000 a month on SEO, that’s a CPA of only $625, which is a CPA even an IOP taking mostly Medicaid would be happy with.

Over time, we can run into the same volume problem as we did with Google Ads though this is rare. It’s not that there is only a limited volume, but the intense competition in SEO means that it’s rare for a program to ever dominate the search engine results page (SERPs) for every term. Once page 1 rankings are obtained, ongoing work has to be done to maintain those rankings or competitors will come in and take them out from under the current winners. 

Verdict: No economies of scale with labor, but potential exponential returns over time as pages move to Page 1 rankings on Google for high-intent terms. 

Are Outbound/Display Spends (Google Display, Facebook, TV, Radio, Billboards, etc.) Scalable?

Rather than being dependent on search volume, these channels are dependent on total population seeking care in a catchment area. The math on this is easy. 10% of the population is likely to struggle with an SUD in a given year. 11% of those will seek care. 60% of those will have commercial insurance. So that equation is: Population X 10% X 11% X 60%=Annual potential patient volume. In a catchment area with a population of 1,000,000 people, that’s 6,600 patients per year or 550 per month (Keep in mind this is total patients across all levels of care, including standard outpatient/individual therapy). 

The challenge from a marketing perspective is that there is no way to narrow audience targeting down to just focus on those 6,600. Additionally, most patients are referred into treatment through family and loved ones, the healthcare system, the judicial system, etc. This means that, even if we could target just those in need of treatment, we’d actually be targeting the wrong audience. 

So in order to target these 6,600 people, we effectively have to expand our campaigns to something close to the entire population of 1 million in the catchment area. Let’s assume a $20 CPM on Facebook. To reach 1 million people would cost $20,000 per month for every person to see an ad once. Since seeing an ad once will do nothing (7-12 touches across channels before a patient takes action is the norm), this gets expensive fast. The solution here is simply to restrict targeting to smaller geographies or narrower segments, which works just as well.

It’s very interesting to look at this. Let’s compare two programs that started in the same region of the country: Ashley Addiction Treatment and Recovery Centers of America. Ashley is a venerable program with a 40-year history who everyone in the treatment space knows. Recovery Centers of America just opened 8 years ago. Ashley doesn’t spend much on display marketing channels. According to their 990, Ashley spends $440,000 a year on marketing. Alex Denstman, their CEO, was kind enough to break that down further in an email exchange and stated that around $120,000 of that was dedicated to multi-channel display marketing. Recovery Centers of America has 18 locations when you include outpatient facilities. As a private for-profit company, they do not have publicly available spend data, but we can be confident it’s several multiples above Ashley’s based on the sheer volume of their media buys on TV, radio, billboard and digital platforms.

Here’s the national search volume for the term “Ashley Addiction”.

As we can see, in January of 2020, they had about 130 searches per month, down to only 70 in May of 2022. The search volume for their founder, Father Martin Ashley is 8 times higher than the search volume for their programming!

Now let’s look at Recovery Centers of America.

They get 18,000 searches per month for their name alone plus thousands of additional for specific locations!

So, while most industry professionals know who Ashley is, your average person on the street has never heard of them, even though they’ve been around for decades. Recovery Centers of America, on the other hand, with only 8 years in existence, is clearly known by a very large number of people.

Unlike Google Ads, there are scalable, cumulative advantages here with outbound display advertising. (Of course, this is assuming that what people have heard about your program is good. Name recognition can also work against an organization if the reputation isn’t strong.) 

Display campaigns work on any channel where an organization’s audience is. For addiction, that’s basically every channel used by individuals over 18. Display ads can do three things:

1. Build awareness and interest for a service the individual wasn’t previously aware of.
2. Help individuals arrive at decisions faster. For example, the average number of years someone struggles with depression before seeking help is 8 years. Ads helping them identify the problem as well as potential solutions speed up that decision-making process.
3. Keep the organization top of mind. Perhaps the person knows they need treatment, but they’ve been putting it off because of work, family, “the problem isn’t bad enough yet,” etc. Individuals are up to 10 times more likely to choose a provider they’re already familiar with through advertising or community word of mouth than one they never heard of before. More importantly here, it drives word of mouth and community referral. Maybe Joan has no need for addiction treatment. But her friend Sally comes to her about Sally’s son, who is struggling with heroin addiction. Joan mentions the organization she keeps seeing on Facebook.

It’s number 3 that’s really important. This is where the cumulative advantage really comes in. Over time, more and more people, both those who will never have a need to search for treatment and those who will need to at some point in the future, are aware of the provider in question. Sally’s son had a good experience in treatment and she thanks Joan profusely for the recommendation. 

Over the next year, Joan ends up recommending the provider to 2 more people. Sally, who now attends Al-anon groups, recommends it to over 50 people in the course of a year. Sally’s son, who now attends AA, also recommends the program to everyone he meets. On top of this, all of the individuals to whom Joan, Sally, and Sally’s son make a recommendation to keep the provider top of mind as they see their ads on Facebook, TV, and billboards.

Despite the ad spend being fixed, the cumulative reputation of the organization grows over time. Display marketing combines with positive word of mouth, which drives down cost per inquiry and cost per acquisition utilizing no additional spend. 

Another cumulative aspect of display marketing is the number of touches. As mentioned, most people need 7-12 touches before they take action. At first, ad spend is hitting touch 1 and 2. Nobody’s taking action. But as the ad spend continues to push out and starts to reach touch 11-12, suddenly people are taking action. The ad spend goes from having almost zero effect, to suddenly additional calls every day. The display spend also continuously reaches new people. So, over time, more and more people will fall into the 11-12 touch bucket. This is especially true once the word-of-mouth engine builds. Now, the provider isn’t dependent on ad spend alone, but many of the touches that begin to happen are through others talking about their program in addition to the ad campaigns. That’s how we keep a fixed spend, but achieve increasingly better results.

Verdict: Display spends do not provide economies of scale over new geographies. Each new facility will need to build up its own spend and reputation as it opens. However, the spend is highly scalable within the same geography. Even as spend stays the same, it becomes more and more effective over time, significantly reducing cost per admission.

Is Business Development Scalable?

Business development works very similar to outbound display spends in that they require multiple touches over time, but they are more difficult to maintain. Many business development reps build personal relationships that help facilitate referrals. Unlike a display spend that has positive cumulative effects over time, a business development relationship can reset to square one when a rep leaves and is replaced by a new one.

However, if the rep stays in the role long-term, then they tend to build more and more relationships and increase trust with the relationships they have, driving some cumulative advantages the longer they are in-role. 

The challenge with business development is always the balance between maintaining existing relationships and building new ones. Some facilities stretch their reps out too thin over too wide of a territory, so they rarely touch base with existing relationships. Other times, the reps only maintain existing relationships and don’t branch out to new ones. For a deeper dive on this, see our post on business development strategy here.

Business development does have repeatable strategies that can be built up in the relevant service areas. However, as we’ve discussed before, the farther a rep is away from the facility, the harder it is for them to generate referrals. This means there is a limit to how many reps a facility can have before dealing with diminishing returns. 

Display ads do come into play here again. We regularly hear from reps that they found it was easier to get a foot in the door or that they get more referrals when display spends are in place in the communities they operate in, so there is a synergy there. 

Reps are limited to touching base one on one. It’s a very labor-intensive strategy that doesn’t scale well. As we’ve seen, if the territory is too big, one person can’t possibly make the appropriate number of touches with all community referral partners in their area. Display spends help fill in those gaps when done well.

Verdict: Individual business development rep efforts are not very scalable due to the one-on-one nature of their touches and diminishing returns from distance or overlapping territories. However, long-term reps can build up stronger partnerships over time that increase the number of referrals per rep. There are no real economies of scale.

Putting It All Together: Scaling Treatment Marketing

Do most marketing efforts create economies of scale? The answer is no. Instead, as programs grow in size, either adding capacity to existing locations or expanding into new ones, additional labor and ad spends are required. While providers may have a temporary economy of scale such as one Business Development Director managing 8 reps instead of 3, or one PPC specialist managing $40,000 in spend rather than $10,000, once those thresholds are crossed, they have to hire again and are then overpaying for roles.