The Expensive Economics of Adwords for Addiction Treatment

How much do you have to spend on Google Adwords to get an admission? This is a question we get asked constantly. Like anything in business, there are a ton of variables here that influence outcomes, but we’ll run you through the basics.

Adwords admissions can range consistently from as low as $3,500 to as high as $15,000. That variance makes it hard for treatment center owners and marketing departments to determine spend or even if the ROI is worth it. Here’s the breakdown.

What Are the Primary Adwords KPIs?

Technically, the primary Adwords metric is cost per click. Within Adwords, the only things you can influence that affect cost are:

-     Ads (particularly their quality scores)

-     Keywords

-     Bidding strategies

Things like cost per call or cost per form fill include website design factors, so exist outside of Adwords. Cost per admission add the variable of the capability of your call team to the mix.

Cost per clicks range from $3 to over $60, with most falling in the range of $5-$15.

If cost per click is falling within the $5-$15 range, the next metric we’re looking at is cost per call. As mentioned above, after cost per click is optimized, cost per call will be a function of the website as well as your online reputation. The majority of those who click on an ad will do an organic search for online reviews of the facility they plan to call before doing so. So if online reviews are under 4, you’ll see a higher cost per call due to fewer people calling.

Cost per calls can range from $35 to $600. Generally, we like to see an average around $150.

This is where we really start getting into the economics of Adwords (and just how incredibly expensive they can be).

Let’s say that our cost per call is at $150. That means that, if a treatment provider is spending $500 a day ($15,000 a month), they can expect around 3 calls a day.

Most Adwords Calls Are Medicaid or No Resources. Why Is That?

9 out of 10 of those calls will always be Medicaid or no resources. This frustrates treatment centers and most will go through a series of phases. They’ll try to target upper-income zip codes or put “No Medicaid” in their ads. Neither tactic is effective. Why is that?

• Zip code targeting is simply not nearly as accurate as we’d like it to be. Additionally, most programs make the mistake of targeting upper-income zip codes. Those in the real upper classes do not use Adwords or Google searches to find treatment that often, they use referral networks. There are exceptions of course, but the real target of Adwords is actually the middle class where zip codes often mix middle and lower class. 
• The majority of people searching for treatment are low-income. Despite the often-heard “addiction doesn’t discriminate,” this is misleading. Even though, technically, anyone can struggle with addiction, lower-income populations are much more likely to do so. For this reason, a majority of calls will ALWAYS be Medicaid because that’s the group of people most likely to be needing help. 
• There is a direct relationship between price and amount of trust needed to be built with a potential patient before they call. Those on Medicaid expect to pay nothing, so they need almost no convincing to pick up the phone. Middle and upper-class individuals know they will have a deductible. Also, as a healthcare consumer group, they are always much more likely to do research before calling. They need much more convincing than a single ad and a landing page. The exception is an individual or family member in immediate emotional crisis, which is the group most treatment centers have relied on for a long, long time.
• However, the individuals calling in crisis are a small minority of all those struggling with addiction. Most that are researching are doing just that, researching. They’ll collect information on a handful of programs, try to figure out which ones are best, then call the ones they feel are best. 
•  Putting "No Medicaid" in ad copy ends up turning away those that did have private insurance. Most people don't understand insurance and we've seen consistently that ads with "no Medicaid" or "private insurance only" get fewer VOBs and admissions overall.

Figuring Out the Budget and Expense for Adwords

Ok, so 9 out of 10 calls will be Medicaid/no resources. This means that your minimum call cost is going to be $1,500 just to get a VOB. There is not a single program out there that converts every VOB for a myriad of reasons we’re all familiar with. The best are usually around 50%, most are lower.

So let’s say we convert every 2 or 3 VOBs into an admission, that means that we need to spend a minimum of $3,000 to $4,500 just from a strict numbers perspective. Of course, the insurances you can accept also factor very strongly into this. If you’re not in-network these days, you’ll be turning away most of your VOBs. So the cost per admission on an Adwords campaign is much, much lower when run for a program that’s in-network. For many programs, it’s around 10%.

This means that they need 10 VOBs before they have someone on the line they can possibly admit. At $1,500 a VOB, that’s a cost of $15,000 per admit.

Now, all these numbers are assuming you’ve been running campaigns for quite some time and have optimized various stages of the admissions process – ads, website, call team training, in-network contracts, online reviews, etc.

Let’s say you have 0 data and are starting brand new campaigns. Well, to even determine if a particular keyword has potential for you, you need to spend at least $150 because that’s our bare minimum threshold for a call. But does that mean every $150, you’ll get a call? Absolutely not. That’s in the aggregate. You could get 3 calls spending $30, then only 1 call spending another $1,000.

Statistically Significant Data Is Needed to Optimize Campaigns

So we now need data, and lots of it. Ideally, to see if a keyword has legs at a reasonable cost, we’d like to see 10 calls come through to make the data statistically significant. However, that means spending $1,500 per keyword just to determine viability. When you’ve got 50 keywords minimum in a campaign, that means you’d need to spend $150,000 at the outset to get the data you need to optimize campaigns.

Most programs don’t have that kind of money for Adwords anymore, so we’ll often settle for 3-5 calls to validate a keyword. That’s still costing us $450 to $750 to validate a keyword. Note that this doesn’t mean we’re getting calls. $750 spent and no call simply tells us that that keyword is not going to get us traction.

We’re not done yet. We don’t have to just optimize keywords, we have to optimize ads, landing pages, and relational structures of all 3. So that means another $450-$750 per ad, and another $450-$750 per landing page.

To top this all off, Adwords is not static. You can’t just set it and forget it. Search habits change over time, what people engage with changes over time. So the data you have now is generally only valid for 3-6 months. AND it only applies to specific geographies and programs.

Every $600 spent will only give you information on a single keyword. For those programs only spending $10,000-$20,000 a month, it can take 4 months just to determine which keywords are going to be effective for your program.

If we go back to our cost per call, it’s reasonable to estimate initial cost per calls at $400 until optimizations are figured out. At $20,000 in spend, that’s only 50 calls a month, or less than 1.5 per day.

And, if you’re an out-of-network program, that may not even be enough to get you a single admission. Remember, 1 in 10 calls tend to be a VOB (so every $4,000 at this point) and 1 in 10 VOBs is an OON admission, so that’d be $40,000 per admission. Even if a program is in-network with almost everyone, they still probably only convert 1 in 3 VOBs, so that’s still $12,000 an admission.

Once we spend about $100,000, we’re really getting somewhere from an optimization standpoint, but it’s pretty hard for many programs to spend that much money before they start seeing the campaigns pay for themselves. Programs with historical data are much easier. Of course, if you know what you’re doing, you can optimize faster and use industry knowledge about what works and doesn’t work.

With Adwords, Strategy Is Still Key

But, Adwords campaigns are not plug and play. We’ve seen again and again some marketing director switch facilities and try to copy/paste their old campaigns for their new treatment program. To their surprise, it doesn’t work. Just like other marketing channels, Adwords requires as much strategy and industry knowledge as it does tactics around keyword choice or ad creation.

Certain programs appeal to certain people, so what worked at one program will rarely work at a different one. Looking across all of our client campaigns and millions of dollars in Adwords spend, no two client campaigns look the same. Each gets optimized differently based on what works for that program.

Final Takeaways

What are the takeaways from all of this:

• Within Adwords, you can only optimize cost per click. Optimizing cost per call and cost per admit requires work on the website, online reviews, admissions team, and in-network contracts.
• Unless you’re willing to commit $100,000 before seeing a return, Adwords may not be the best choice for your program. 
• Adwords admissions are always one of the most expensive on a cost per admit (CPA) basis. More problematically, they have no long tail advantage. You just have to keep spending the money every month without any down-line brand or momentum effect. 
• Due to their expense, you never want more than 10% of your admissions coming from Adwords. The cost per admit is so high, that margins are severely affected, which affects cash flow and other important metrics around program solvency. 
• Adwords are not plug n play. While industry knowledge will speed up the optimization process, avoid costly mistakes, and make bench-marking easier, you can't copy/paste from another program.

Nick Jaworski is the owner of Circle Social Inc, a growth consulting & marketing agency that helps recovery centers and other healthcare organizations connect with patients and their communities to grow their census. He is also an advocate for a more human-centered, individualized and evidence-based approach to addiction treatment due to having gone through his own addiction issues as a youth. When he's not online, he can be found spending time with his favorite person in the whole world, his daughter.