One hot-button franchise issue has stood out for decades. When it comes to franchise ad funds, every franchisee wants to know: “How are my advertising fees benefitting my location?"
For brand marketers, providing the answer has often been challenging. Reporting on actual ad spend and ROI for an individual location is typically a non-starter. This lack of accountability and transparency creates unneeded tension between franchisee and franchisor at best, and expensive legal battles at worst. However, it's a problem that can be fixed.
What’s keeping franchise brands from solving the ad fund problem?
When franchise brands create an ad fund, advertising is traditionally purchased on a national, regional, co-op, or DMA level in order to create lower costs and efficient buying. In other words, it’s been cheaper and easier to manage an ad fund this way. It’s understood, however, that targeting a DMA leaves many locations behind as spend is optimized towards achieving online marketing metrics, regardless of the franchisee it benefits.
Today, local matters more than ever. DMA data is not an accurate reflection of every market area within that DMA. Every location has a unique market area with unique customers that must be addressed with custom 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 online performance metrics.
Technology has automated much of the manual labor that had raised costs and created ad-buying inefficiencies in the past. Today, many brands are examining a per-location advertising approach for their ad funds—resulting in lower costs, better local customer engagements, and building trust with their franchisees as a result.
How can solving the ad fund problem build trust with franchisees?
Prospective franchisees most often look at item 19 in the Franchise Disclosure Document, unit financial performance, when deciding to invest in a brand. What’s the next item they look at? Fees.
Prospective franchisees want to understand what royalties they will be paying, and what they will get in return. The Advertising Fees are generally the most painful. This is because franchisees cannot identify what they are getting in return for their Ad Fund contribution.
Brands are now able to provide accountability and transparency on a per-location basis and can be more specific in the Franchise Disclosure Document. The expertise of the brand marketing team can benefit all efforts and all locations, and franchisees can invest confidently so they can focus on their business. This is a huge step towards building trust with current franchisees and attracting more valuable prospective franchisees.
What does a per-location approach for an ad fund mean for local consumers?
Building trust and alleviating the tension between franchisee and franchisor is enough reason to change from DMA level targeting, but there are also clear benefits for a brand’s advertising results as well.
The ability to change the brand message to meet the needs of local communities in every market area creates a competitive advantage. Are supply chain issues affecting chicken sandwiches at specific locations? Swap a burger creative for those stores. Has a new competition opened next door? Change messaging to address it, just for that store. With a per-location approach, brands can be agile to ensure the most relevant message is in every market area.
When taking a per-location approach brands are able to manage ad funds and local marketing budgets, complementing each other. This prevents cannibalization of efforts and increased ad cost across both national and local efforts while ensuring a consistent (but unique) message for local customers.
Why change to a per-location approach now?
Digital advertising has forever been changed. New privacy measures across Apple, Android, and Google make it more difficult for marketers to attribute online success metrics often touted while examining DMA level ad performance. With stricter consumer privacy measures released by Apple, and soon-to-come Android, as well as the deprecation of 3rd party cookies, targeting audiences with a relevant message and measuring success via traditional attribution models is getting more and more difficult.
Brands that take a per-location approach will be well-positioned to overcome these challenges. No longer reliant on pixel fires and digital performance, these smart brands will thrive. They’ll own 1st party data per location and most importantly will be able to measure results by real business outcomes, per-location, and not rely solely on online attribution models.
Whether a brand is starting an ad fund or looking to strengthen franchisee relationships, the time to solve the ad fund problem is now. It’s possible to take a per-location approach, driving better ROI, without raising costs. Franchise brands can be positioned to win local customers with greater per-location accountability and transparency. Franchisees and franchisors can build trust, which is quite possibly the best reason of all.
Michael Morris is the co-founder of Hyperlocology. Hyperlocology enables multi-location and franchise restaurant brands to centrally control local advertising, across the most powerful digital channels, for hundreds or thousands of locations. Hyperlocology’s best-in-class technology includes an automated local advertising campaign builder, location-level analytics, community data, and per-location insights to drive meaningful business outcomes