does the skin look dark and dirty? it may be demodectic mange.
If it is, the location is unusual.
The first summer with my female I used one of those squirt-on-the-shoulder fleas/tick medications. A day later all her hair was gone in that same spot - the Rx burned it off and it never really grew back completely. Since then I've only used herbal sprays (like citronella) and have had no problems. Until this weekend - the "burn spot" is once again looking like it's balding. Could she be developing a resistence to the citronella?
Was the original medication herbal too? I'd try a garlic spray rather than citronella which I would think might be a bit too fierce.
Some dogs do react to the meds that apply to the skin. Perhaps her response to it just indicates very sensitive skin and she is getting a reaction to the other stuff. If so, she might react to almost anything. I would consider going with the pill flea meds for a dog like that. I don't say that lightly– I really do not like giving my dogs internal meds to stop external issues-- but then mine have never had any issue with frontline spray.
I found a new brand made locally with rosemary and garlic and something else (and no the original flea medicine was not herbal0. I'll let you all know if that helps.
Yes, please do let us know. Personally I never have to deal with fleas but use a product called 'Billy No Mates' which is a herbal mix obtainable from www.csjk9.com I'm not sure whether they ship abroad but do have a look at the details on their site.