Physical Therapy Marketing – Is Yelp Advertising Worth It?

Yelp - is it worth it?
Yelp – is it worth it?

I get calls from my clients almost every week – “These Yelp sales people are hammering me,” is what I heard yesterday.  They share numbers that aren’t likely to be accurate (e.g., number of leads & page views) and try to convince them them they are missing out.

I thought I would share my perspective on their advertising program.

Here’s what Yelp offered one of my PT clients:

“We offer 6 programs that vary based on how aggressively you want to advertise your business on Yelp. All packages include the mentioned* features and are based on an annual agreement.

  • Ultra Premium- $2,200/mo – includes 6,500 targeted ads per month
  • Super Premium- $1,600/mo – includes 4,650 targeted ads per month
  • Premium- $1,050/mo – includes 3,000 targeted ads per month
  • Standard- $800/mo – includes 2,100 targeted ads per month
  • Basic- $550/mo – includes 1,200 targeted ads per month
  • Intro- $350/mo – includes 500 targeted ads per month

*Mentioned features include: video production, video hosting, picture slideshow, Call to Action button, competitors ad removal, tracking in your business owners account, and an Account Manager.”
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Most of these things aren’t clear.

  • Video production – who produces the content for the video? Who owns the video? Can the video be used on your website?
  • Call to action button – what is that?
  • Competitor ad removal – does that mean that others that are advertising on Yelp, will be removed? I bet not.
  • Tracking – how is this accomplished to demonstrate if a patient truly came into the practice?

These are not easy questions to answer.

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Will Yelp Pay for Itself…Probably Not

Financially, there are 3 ways that I see you can analyze this opportunity and see if it makes sense for you.

A. Straight Profit and Loss Analysis

  1. Remember, you have costs to treat/run your business (i.e,. salary & overhead) for every patient and what you have left over is profit of course.
  2. Each one of you is different but the typical profit on a patient case is 10-20% and average revenue per patient about $800 (so, profit per patient case is $80).
  3. If you aren’t getting a minimum of 4 patients from your Yelp advertising, you are losing money.

Conclusion: No one I have spoken with (well over PT practice owners about this) has used Yelp’s paid advertising and made a profit. Note: 1-3 patient per month, for most PT clinics, even if they advertise at the cheapest level, will not result in a break even ROI.

B. Lifetime Market Value Analysis

  1. In this analysis you take into account the number of patients (generated from your advertising campaign) that will return when calculating ROI.
  2. For example. Let’s say you spent $550/mo on Yelp ads (the basic package noted above). You have a year contract as well so your annual expense is $6600. Applying the rationale from Straight Profit and Loss Analysis, you need to generate at least $6600 in new patient revenue to break even.
  3. Let’s say you generate 5 patients/mo (this is very aggressive and unlikely but let’s use this number). That is 60 patients per year. Your profit is $80/patient and your ROI from your Yelp advertising is 60 x $80 or $4800.
  4. Now, let’s consider that 30% of those patients will come back (that’s 18 total over the course of the year). The number of new patients you generated from your Yelp campaign might be considered to be 60+18 returning or 78.
  5. Now multiply 78 x $80 and you get $6240 of profit.
  6. You still don’t break even.

Obviously, this analysis depends on a number of factors. The total number of patients you get per month, your profit margin, and the percentage of patients that return to you (i.e., Lifetime Market Value of your patient).

Conclusion: Looking at ROI over the long haul. This is a reasonable way to analyze your ROI for an ad campaign but your ROI is recovered over a longer period of time (i.e., the time it takes for the patients to come back a second time, or even a third time).

C. Gross Revenue Out and In Model

In this analysis of your campaign spend, you aren’t concerned about profit. Rather, your objective is just to cover your costs, pay your salary, your staff and your overhead. In other words, you want to keep your doors open It looks something like this.

  1. You generate 60 patients (5 per month) in one year from your Yelp advertising at a cost of $6600.
  2. Your gross income generated from the advertising campaign is 60 new patients created from Yelp ads x $800 of revenue/case = $48,000 of gross revenue from Yelp Ads.
  3. Assuming a 10% profit per case, your profit is $4800 (i.e., 10% of $48,000 gross revenue).
  4. Your cost to do the Yelp ads, again is $6600.
  5. Your total $4800 in profit – $6600 in Yelp ad costs = ($1800) loss.

NOTE: if you consider Lifetime market value (i.e., your ads generated 78 patients), your profit is $6240-$6600 in ad costs and you still lose $360.

Conclusion: If you are more interested in getting people in the door, then this might be a way to analyze your advertising costs. In the end, you are still losing money and most practices can’t afford to do that anymore.

Things to Consider

These analyses heavily depend on the number of patients you get from the Yelp advertising. Five new patients per month, that would have NOT come to you anyway, is a large number. I don’t think this is possible except in the largest markets like San Francisco and NYC.

Opportunity Costs: Finally, you need to ask yourself, if I am committing to spend this kind of money (i.e., $350/mo+) on marketing, is there a better use of this money doing something else? For example, Google Ads, Doctor Lunches, Novelty Items like shirts, postcards mailing, patient follow up campaigns, etc., etc. I think there might be some better options. What do you think?

[colored_box variation=”deepblue”]Take Home Message: I don’t believe, based on the input of many others that have advertised, and the financial analysis, that Yelp advertising is a good use of your dollars. However, you have to plug in your own values (percentage of profit margin/case, number of patients you get from Yelp ads, lifetime market value, and the number of months you are committing to run the Yelp ads) to arrive at your own conclusions.[/colored_box]

Please share your thoughts too and help your colleagues and help your colleagues make good decisions about how they spend their ad dollars.