Solve the ad fund problem for restaurant franchises

A hot franchise issue has stood out for decades. When it comes to advertising funds for franchises, every franchisee wants to know, “How does my advertising cost benefit my location?”

For brand marketers, providing the answer has often been difficult. Reporting on actual ad spend and ROI for an individual placement is usually a no-start. This lack of accountability and transparency creates unnecessary tension between franchisee and franchisor at best, and costly legal battles at worst. However, this is a problem that can be solved.

What’s Stopping Franchise Brands from Solving the Ad Funds Problem?

When franchise brands establish an advertising fund, advertising is traditionally purchased at the national, regional, cooperative or DMA level in order to reduce costs and make purchases efficient. In other words, it was cheaper and easier to manage an advertising fund this way. It is understood, however, that targeting a DMA leaves many locations behind as spend is optimized to achieve online marketing metrics regardless of which franchisee it benefits.

Today, local matters more than ever. The DMA data does not accurately reflect every market area within this DMA. Each location has a unique market area with unique customers that need to be addressed with personalized messaging and specific targeting while maintaining a dedicated budget. In order to win the local battle for customers, brands must fight the urge to chase performance metrics online.

Technology has automated much of the manual work that had increased costs and created ad buying inefficiencies in the past. Today, many brands are looking at a location-based advertising approach for their ad dollars, which translates to lower costs, better local customer engagements, and as a result, building trust with their customers. franchisees.

How can solving the problem of advertising funds build franchisee confidence?

Potential franchisees most often refer to Franchise Disclosure Document Item 19, Unit Financial Performance, when deciding whether to invest in a brand. What’s the next item they look at? Costs.

Potential franchisees want to understand what royalties they will pay and what they will get in return. Advertising costs are usually the most painful. Indeed, franchisees cannot identify what they get in exchange for their contribution to the advertising fund.

Brands are now able to provide accountability and transparency by location and can be more specific in the franchise disclosure document. The expertise of the brand marketing team can benefit any effort and any location, and franchisees can invest with confidence so they can focus on their business. This is a big step towards building trust with current franchisees and attracting more valuable potential franchisees.

What does a location-based approach mean for a local consumer advertising fund?

Building trust and easing tension between franchisee and franchisor is reason enough to change targeting at the DMA level, but there are also clear benefits to a brand’s advertising results.

The ability to modify the brand message to meet the needs of local communities in each market area creates a competitive advantage. Are supply chain issues affecting chicken sandwiches in specific locations? Redeem a burger creation for these stores. Is a new competition open next door? Edit the messaging to answer it, just for this store. With a location-based approach, brands can be nimble to ensure the most relevant message is in each market sector.

By taking a location-based approach, brands are able to manage local advertising funds and marketing budgets, in addition to each other. This prevents cannibalization of efforts and increased advertising costs in national and local efforts while ensuring a consistent (yet unique) message for local customers.

Why switch to a location-based approach now?

Digital advertising has changed forever. New privacy measures on Apple, Android and Google make it harder for marketers to assign often-vaunted online success metrics when reviewing ad performance at the DMA level. With stricter privacy measures released by Apple and Android, as well as the deprecation of third-party cookies, targeting audiences with relevant messaging and measuring success through traditional attribution models is becoming increasingly difficult.

Brands that take a location-based approach will be well positioned to overcome these challenges. No longer reliant on pixel fires and digital performance, these smart brands will thrive. They will own first-party data by location and, most importantly, be able to measure results based on actual business results, by location, and not rely solely on online attribution models.

Whether a brand is launching an ad fund or looking to strengthen relationships with its franchisees, now is the time to address the ad fund issue. It is possible to adopt a location-based approach, generating a better return on investment, without increasing costs. Franchise brands can be positioned to win local customers with greater accountability and transparency by location. Franchisees and franchisors can build trust, which is probably the best reason of all.

Michael Morris is the co-founder of Hyperlocology. Hyperlocology allows multi-site and franchise restaurant brands to centrally control local advertising, across the most powerful digital channels, for hundreds or thousands of sites. Hyperlocology’s industry-leading technology includes an automated local ad campaign builder, location-level analytics, community data, and location-based insights to drive meaningful business results


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Cecil N. Messick