Yes, marketers know the importance of both paid advertising and organic strategies. However, they may not fully grasp the magnitude of how these elements interact, particularly at the local level. Hyperlocology's recent study on digital advertising for a franchised health and fitness brand with over 1,000 locations sheds light on a powerful relationship between Google Reviews and paid advertising costs. The findings reveal that organic marketing, specifically Google Reviews, significantly influences paid advertising efficiency, underscoring the need for brands and franchisees to focus on both to drive optimal results.
The Data: How Reviews Affect Advertising Costs
Hyperlocology, a platform that streamlines location-level advertising for enterprise franchise brands, analyzed thousands of individual locations. Looking at locations leveraging the same base brand creative assets and targeting parameters revealed a consistent trend: locations with better Google Reviews (4.0 or higher) tend to see lower cost-per-lead (CPL) in their paid advertising campaigns. Specifically:
- A Half-Star Improvement Equals Big Savings: For the health and fitness brand, a half-star increase in Google Reviews was linked to a 33% reduction in search CPL. For the health and fitness industry, this means that locations averaging a 4.0-star rating may see dramatically lower costs compared to those hovering around 3.5 or below. Thresholds vary by industry. For instance with QSR, the star rating threshold is lower.
- Consistent Trends Across Channels: The correlation between Google Reviews and advertising costs isn’t limited to search ads. When blended across both search and social channels, locations with higher ratings also enjoyed a 21% reduction in CPL. This suggests that the halo effect of positive reviews extends beyond any single advertising platform.
- The Cost of Poor Ratings: Conversely, locations with lower ratings (below 4.0) tend to pay a premium for their leads, highlighting that poor online reputation doesn't just deter organic traffic—it also drives up the cost of acquiring new customers through paid channels.
Why Reviews Matter More Than Ever in Paid Digital Advertising
Marketers have long known that reviews are crucial for building trust and credibility. However, the direct impact on paid advertising costs, especially at the local level, is often underestimated. Here’s why Google Reviews play such a significant role:
- Consumer Trust and Click-Through Rates (CTR): Positive reviews serve as a form of social proof, making your ads more appealing to potential customers. Higher CTRs can lead to better ad placements and lower costs.
- Quality Scores and Ad Relevance: Google’s ad algorithm rewards ads that provide a positive user experience. Ads associated with businesses that have high ratings are often seen as more relevant, which can improve Quality Scores and reduce CPL.
- Local Relevance: Reviews provide localized feedback that is incredibly valuable for franchise brands. They help pinpoint which locations are thriving and which need improvement, allowing marketers to tailor advertising messages that resonate on a local level.
What Can Marketers Do? Combining Organic and Paid Efforts for Success
Given the strong relationship between organic reviews and paid advertising costs, it’s essential for franchise marketers to adopt a holistic approach that elevates both elements. Here’s how:
- Educate Franchisees on the Power of Reviews: Franchisees should understand the tangible impact that reviews have on their advertising performance. Teach them the importance of maintaining a high review rating, taking care of operational issues leading to poor reviews and leveraging platforms like SOCi, Yext, or Uberall to actively manage, seek, and respond to reviews and improve their online reputation.
- Use Hyperlocology + Reputation Management Integration: By integrating Hyperlocology’s advertising platform with your reputation management tools, brands can spot trends, identify locations that need attention, and take corrective action quickly. This integrated approach ensures that reviews and advertising efforts are always in sync.
- Tailor Paid Messaging Based on Consumer Sentiment: Use insights from Google Reviews to adjust ad messaging per location. Highlight strengths in your ads where consumer sentiment is positive and address perceived weaknesses to build trust and drive more engagement.
- Shift Budgets to Support Consideration: Don't just focus on the lower funnel; invest in driving awareness and consideration. If reviews indicate a high level of consumer interest, consider increasing budgets in channels that promote broader brand messaging, not just direct response ads.
- Invest in Long-Term Marketing Strategies: Franchisees should be encouraged to see marketing as an ongoing investment, not just a quick fix. Emphasizing your brand’s best practices and showing the long-term lift that comes from strong organic and paid marketing efforts can lead to sustained growth over time.
The Bottom Line: Organic and Paid Must Work Together
The relationship between Google Reviews and paid advertising costs is a powerful reminder that organic and paid marketing cannot operate in silos. The data shows that improving your location's online reputation can lead to substantial savings in paid media, making it crucial for marketers to take a holistic approach that leverages both.
Franchisees need to be educated on the value of their marketing investments and the cumulative impact of maintaining high standards across all aspects of their business, including customer experience and review management. By focusing on both organic and paid strategies, brands can unlock a more efficient and impactful marketing engine that drives real results at the local level.
Experience the new Hyperlocology today and see how we can make brand-powered local advertising accessible, and actionable.