Most franchise brands and retailers with hundreds of locations still manage advertising via an old-fashioned, hierarchical strategy. In-house marketing teams or agencies manage campaigns nationally or regionally on the basis of ad funds that, at best, divide and orchestrate spend by designated market area. The franchisee has little visibility into how marketing works for their individual store.
No one gets fired for maintaining the status quo, so it’s no surprise that this strategy has persisted, even as marketing has become far more data driven and the ability to target marketing spend per location has developed. But brands who want to get the most out of their marketing dollars cannot settle any longer for regional targeting, which underserves corporate, franchisees, and customers alike.
Each stakeholder in the multi-location or franchise advertising equation loses when ad fund contributions cannot be targeted or understood in terms of individual physical locations. Franchisees cannot understand what’s working, brands waste their spend through poor targeting, and shoppers get exasperated with irrelevant messages.
Let’s break down how DMA-level targeting affects each of these groups so that brands can better understand why they need to bring franchisees into the golden age of data-driven marketing.
Picture this — you’re a local entrepreneur hustling to run a profitable business. You have to generate results against the headwinds of inflation, staff turnover, and limited resources. On top of that, you’re seeing profits eaten away by contributions to a national ad fund. You don’t understand how or whether those dollars are generating returns. Plus, you have no control over the creative or channel allocation, so you don’t even know where the money is going or if the ads will speak to your customers.
This is how marketing divided up by ad funds with no per-location transparency feels to franchisees. It seems like another headwind when it should feel like wind in their sails. This system diminishes morale and creates tension between corporate and franchisees. It also prevents franchisees from gaining valuable insights into their audiences, who, data will reveal, are not merely the shoppers they see in store.
But that’s not all. The status quo also leaves marketing dollars — and return on ad spend — on the table. Because when franchisees gain visibility and a say into how their advertising dollars are spent, they discover what they all want to believe — that marketing can be strategic, and it can have a positive impact on their profits.
As a result, franchisees are likely to lean in with more marketing dollars and participate in marketing for their store by choosing campaigns, weighing in on when they should run, and infusing local specificity into messaging. This added transparency and resulting collaboration between corporate and franchisees drives greater trust and helps each party, local and national, foster shared success.
Franchisees are not the only parties that lose when ad spend is not calibrated on the level of individual locations. Corporate is the biggest loser, as they are not only underserving the local operators who forge direct relationships with customers but also undercutting their own ability to drive efficiencies and incremental sales with location-based targeting.
As for the relationships between corporate and franchisees, a lack of trust regarding marketing bleeds into every aspect of the business. Without local data, corporate cannot convince franchisees that marketing is a worthy expense. Franchisees feel unequipped to drive growth, especially in tough times, and corporate cannot act quickly or effectively to help them. Low trust erodes confidence from the bottom up.
By gaining visibility into per-location marketing results and targeting possibilities, national can more effectively identify why in-need locations are struggling. For example, they might figure out that a quick-serve restaurant is struggling because it is targeting prospects 15 miles away when shoppers in that community typically travel no farther than 10 miles for a QSR. Or it might come to light that a new burger joint has popped up in town and that, to steal back market share, the QSR needs to cut back on oversaturated burger ads and shift attention to a different product. Either way, these insights are impossible to glean regionally; they must be analyzed and operationalized on the level of individual locations.
Similarly, DMA-level targeting tends to incentivize marketers to chase vanity metrics that do not neatly reflect the performance of actual physical locations. For example, it’s great if social ads are driving more impressions. But can marketers link that KPI in the digital world back to a green dollar? By tying campaigns to locations, brands can ensure their ads are producing a real-world impact. This synergy between national marketing teams and franchisees creates a virtuous cycle in which franchisees pour more money into marketing and national profits show the benefits.
If hyperlocal or per-location marketing is successful, that’s because it resonates with customers. Nationally or regionally calibrated messaging is likely to come off to shoppers as inauthentic, irrelevant, and even inaccurate. It can also be inconvenient, for example by driving shoppers to a national website where they then need to locate their local store via a location finder that belongs back in 2010.
With localized marketing, franchisees can advertise the specific items that resonate with their shoppers, create local experiences that reduce friction by bringing shoppers directly to their individual store pages, and adopt cultural affinities to capitalize on the location-specific connections between the local franchise and their customers. This specificity makes local marketing feel more like it’s coming from a small business, not a chain, which drives deeper connections between shoppers and their favorite brands.
Go to an event featuring national marketers, and they’ll tout the latest advances in data-driven targeting and measurement. These innovations have created a golden age of marketing wherein spend can be finely calibrated and optimized to drive results in which marketers have confidence.
But franchisees have largely been shut out of the light. By providing franchisees greater visibility into marketing and empowering them to enrich national strategy with local insights, corporate marketers can boost morale and deliver more compelling customer experiences, which will make for stronger profits.
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