You'd be better off getting rid of the smell. Wash the dog's bedding regularly and wash the dog when it starts to smell. Insence sticks are the least offensive way of making a room smell nice, imho.
Agree with sooty, wash all doggy stuff as much as poss eg bedding and coats, blankets on car seats and sofas etc. I also febreeze (tescos own brand is just as good but cheaper!!) all the sofas and any where doggies go a lot!! You can also get special doggy spray from dog groomers to refresh them inbetween baths!!!
short oily types such as Labs are the worst and difficult to mask - try grooming sprays or dry shampoo - rub well in and leave -don't bathe your dog too often as it's not good for his skin or coat .