Align Technology (ALGN) increased its expenditure toward consumer marketing by 60% in 2017. The company believes that the investment is yielding strong growth and market expansion.
The increase in Invisalign treatment adoption rates across the teen and adult segments are driven by the company’s consumer marketing and sales initiatives.
Peers Dentsply Sirona (XRAY), Zimmer Biomet Holdings (ZBH), and Henry Schein (HSIC) expect to post SG&A (selling, general, and administrative) expenses of 37.0%, 38.0%, and 20.0%, respectively, in their recent fiscal years.
For diversified exposure to Align Technology, investors can consider the Vanguard Growth ETF (VUG), which holds ~0.14% of its total holdings in ALGN.
Align Technology’s sales and marketing initiatives
Align Technology (ALGN) is focused on expanding its footprint around the world and undertakes a number of key strategic initiatives to accelerate its growth. The company spends significantly on its marketing programs such as consumer advertising, social media and media campaigns, partnerships, and collaborations.
In January 2017, Align Technology launched a new program for capturing consumers. The program includes a Smile concierge team, which provides a one-to-one experience from start to finish.
This service includes educating consumers on Invisalign treatment benefits, addressing their questions, and scheduling appointments. After the appointment, the team follows up with the customers. The company has noted positive outcomes from this program.
Since the launch of this program, 50,000 consumers have been contacted, and 20,000 consultations were scheduled with about 800 Invisalign practices across the United States.
In 3Q17, Align Technology trained nearly 1,000 doctors in China. The company estimates a rise in orders in these geographies as a result of the training program, increasing the penetration levels of Invisalign technology in the region.
Impact on operating margin
In 3Q17, Align Technology (ALGN) registered an operating margin of 25.6% of the company’s total sales, which represented year-over-year growth of 3.3 points. The sequential improvement in operating margin came in at 2.2 points, related to the increased volume of clear aligners. Despite increasing marketing expenses, the company reported improvement in operating margins.