Is Your Pharmacy Investing Enough in Marketing to Attract New Customers?


Align your marketing budget with business goals

By Michelle Gilliam, Director of Health Mart Marketing

For any small business owner, marketing is an investment in your current and future success. And as an independent pharmacy, you are often competing against the massive advertising budgets of national retailers. Among the 25 largest U.S. retail advertisers in 2012:

  • Walgreen Co. ranked No. 11, spending $311 million
  • CVS Caremark Corp. ranked No. 22,1 spending $119 million

These national pharmacy retailers are aggressively advertising and obviously see investments in marketing as essential to their sustained success. Therefore, it may be time to reevaluate your marketing budget to ensure you are capturing the hearts and minds of your local community – and getting the right return on investment.

What’s the Right Marketing Budget?

Calculating how much to invest in marketing is a complex task, yet some experts suggest allocating 5% of total revenue to marketing to maintain the business, and more if the goal is to grow or increase market share.2 One small business consultant goes further, recommending that businesses of less than $5 million allocate 7% to 8% of their revenues to marketing.3

For retail pharmacies, one pharmacy marketing consultant recommends spending 1.5% to 2.5% of gross sales on marketing.4

What Are Pharmacy Owners Actually Spending?

The 2013 NCPA Financial Digest shows that pharmacies spend on average just 0.4% of sales on advertising, which is a major component of marketing.5 And another survey of independent pharmacy owners (by Health Mart), found that half of independent pharmacies invest less than $5,000 a year on marketing.6 Since, according to the 2013 NCPA Financial Digest, the average annual revenue for an independent pharmacy is $3.8 million,7 that makes the marketing budget just 0.13% of revenue.

Of course, the amount you should invest depends on a number of factors, including your type of pharmacy, market, competitive environment, and business’s growth stage. By almost any measure, however, few independent pharmacy owners invest enough in marketing their business.

How Marketing Investments Pay Off for Retailers

Calculating a small business’s return on investment (ROI) from marketing can be difficult.8 Here are a few general examples to consider:

  • Newspaper advertising campaigns return an average of 120% when they run, meaning a business earns back what it costs plus 20% more.9
  • A dollar spent on radio advertising results in an average of $6 in sales within a month.10
  • Marketing via live events—which might include a grand opening or health screenings—can generate a 3:1 return on investment, and some marketers see a 5:1 return.11

Since multiple marketing activities can work together and advertising impact varies based on the type of business, it can be hard to tease out the impact of each effort separately. For example, a potential customer may be exposed to multiple types of marketing before initially shopping at a business and becoming a return customer.

It’s important to track results from your marketing as much as possible to ensure that you are investing in the best activities. One simple way to gauge the effectiveness of various types of marketing, while reinforcing your personalized service, is to ask new customers how they heard about your pharmacy.

How to Divide the Dollars

To decide how to best invest your marketing dollars, first set specific marketing goals. For example, do you want to focus on bringing new patients into your store or sell more to your current customers? Are you opening a new DME section? Do you want to attract younger customers? Mothers? Caregivers? Set specific, measurable goals, and then develop a marketing plan and budget designed to reach them.12 (Read “Map Out Your Pharmacy Marketing Plan for the Year Ahead”)

When to Invest More

Smart marketing requires more than the right budget. Thinking strategically about when and how to market can pay huge dividends. (See “Bold Marketing Pays Off for One Independent Pharmacy.”) And the reach of social media allows small businesses to gain significant attention with minimal spending.13 (Read “14 Great Facebook Posts from Community Pharmacies” and “One Monster Success.”)

Increasing your marketing budget can be important when:

  • Building your business. When opening a new pharmacy or taking over an existing operation, allocate extra money for marketing your grand-opening activities and educating the community about your business.
  • Facing fierce competition. If a new pharmacy is opening nearby, particularly a chain, don’t just rely on your existing reputation; step up your marketing activities in a way that differentiates your pharmacy.
  • Preparing to sell. The stronger your brand, the more valuable your pharmacy will be to a buyer.

Reap a Bigger Return with Fewer Dollars

Ensure you spend your marketing budget wisely by testing different approaches and measuring the results. Stretch the impact of your marketing dollars by:

  • Expanding what works. For example, if a listing in your town’s business directory for newcomers is bringing in new customers, consider buying an even larger advertisement instead of a separate advertisement elsewhere.
  • Experimenting with lower-cost options, such as opt-in emails instead of mailed flyers.
  • Piggybacking on other activities. Participate in community events and “buy local” promotions.
  • Taking advantage of marketing programs. Ask what your buying group, wholesaler, or business partners and affiliations can do for you. For example, Health Mart’s Local Marketing Support program gives pharmacy owners matching funds for marketing and advertising, plus many turnkey templates and tools for print materials, ads, social media, public relations, and more, allowing you to do more with less money.14

The advice, “You have to spend money to make money,” goes way back to ancient times, coined by Titus Maccius Plautus, a roman poet/philosopher who lived from 254 BC to 184 BC. Using the information from this article, take a new look at your marketing budget and consider whether you need to invest more in promoting your business to attract new customers, create repeat business, and encourage referrals.


Check out other popular Marketing & Promotions posts:

“Get Customers to Switch to Your Pharmacy”

“Marketing Your Pharmacy to Younger Generations”

“Create Buzz for Your Pharmacy”


1. “Retail Marketing,” Advertising Age,, Sept. 30, 2013
2. “How Much Should Companies Budget for Marketing?” FrogDog,
3. “How to Set a Marketing Budget that Fits your Business Goals and Provides a High Return on Investment,” Caron Beesley, The U.S. Small Business Administration, Jan. 9, 2013,
4. “Establishing A Pharmacy Marketing Budget,” Liz Tiefenthaler, Pharm Fresh Media,
5. 2013 NCPA Financial Digest,
6. Health Marts and Marketing: 2014 Survey Results
7. 2013 NCPA Financial Digest,
8. “Why ROI Is Often Wrong For Measuring Marketing Impact,” Daniel Kehrer, Forbes Insights,, and Return on Investment–ROI–Formula and Use,” Marketing MO,
9. “Cross-media study shows print advertising has Highest ROI,” Erik Grimm, International News Media Association, Feb. 4, 2014,
10. “For Advertisers, Radio Is Worth Listening To,” Nielsen Catalina Solutions, April 29, 2014,
11. “New Research Finds 93% of Consumers Say Event Marketing Is More Effective Than Advertising,” PR Newswire, June 9, 2014,
12. “Marketing Budgets: How Much Should My Small Business Spend on Marketing,” Erica Nicole, YFS Magazine, Dec. 19, 2012,
13. “6 Small Businesses That Are Doing Social Media Right,” Colleen Debaise, Entrepreneur, July 22, 2013,, and “How Pharmacies & Drug Stores Can Convert Facebook Fans to Customers,” Jeff Molander, Make,
14. “Health Mart rolls out new marketing tools for its owners,” Mark Lowery, Drug Topics, Nov. 14, 2013,