By Patrick Pleiss, co-founder and head of operations at Hyperlocology
Brand marketers are staring down a recession and know that when the economy contracts, sales often go down and ad funds along with them. The usual response to declining ad budgets is to get more efficient by manipulating the budget to chase lower CPMs or optimizing channels for national or regional media buys.
But as we face a new downturn, marketers should reevaluate their typical playbook. Instead of chasing lower CPMs, which come with lower-quality audiences, or channel optimization at the national or regional level, which can undercut individual locations that are performing well on channels that aren’t working more broadly, franchise brands should tailor ads to the communities where their stores are located.
By localizing advertising spend, national marketing teams can drive higher ROAS by adapting marketing programs to their communities and streamline marketing operations to boost margins, an especially urgent goal in a downturn.
Tailor Marketing to Each Community
During a downturn, marketers face pressure to ensure each dollar is reaching a relevant consumer. But when brands optimize spend based on regions instead of communities, they risk pouring money into channels that don’t work for many of their locations and sending ads to consumers who are too far away to be in their target market. So, why are franchise marketers still calibrating marketing campaigns on the DMA level?
By tailoring marketing based on the communities in which each one of a brand’s stores is located, marketers can ensure their messaging corresponds to the preferences of customers in those communities. For example, data can show how far people in a given area are willing to travel for, say, a gym. The data might show that South Indiana consumers will not travel more than 7 miles for a fitness center. With location-based marketing, a gym chain can ensure it is not placing advertisements for its gyms more than 7 miles away from its locations, limiting wasted spend.
The same applies to a vertical like restaurants. Restaurants often struggle to act on local data to improve marketing and sales. For example, a fast food chain may see that performance is dipping in the Midwest but struggle to spot that the expansion of a chicken-focused competitor is driving that dip. With per-location insights, the restaurant can see the variable that is truly causing certain stores’ performance to dip, be it a result of a new competitor, failure to reach a certain demographic, or geographic similarities. And with the right location-based tools, the fast food restaurant can make marketing changes to address the gaps in underperforming locations — for example, advertising a chicken option to beat that chicken-focused competitor. These are the results that per-location analytics and marketing unlock.
Streamline Operations to Save Costs
The default mode of advertising for enterprise franchise brands with, say, more than 1,000 locations is to outsource it to tier-one agencies, who then split up spend by DMAs. This strategy underserves in-house national marketing teams, who want to prove their value and will struggle to do that if they do not have the tools to capitalize on the localized data at their disposal and tailor campaigns to the communities where their business is located. It also risks discouraging franchisees and local operators, who know their marketing contributions are going to support other stores in a DMA and that 30% of their spend is going to agency fees.
Perhaps most importantly, marketing teams without per-location insights cannot effectively spot problems, devise solutions, and implement them. Consider a marketing organization that looks at social performance across a dozen locations in Florida and finds that Facebook is, on the whole, an ineffective channel in that market. That may be true for eight of those locations, but for the other four (maybe those in communities with age cohorts among whom the app remains popular), the big blue app may drive results.
With per-location targeting and measurement, marketers can quickly figure out what works for each of their stores, doubling down on channels that drive high ROI and pulling back where results prove elusive. This per-location strategy, if enabled without extraordinary feats of human labor, is likely to be more effective than DMA-level strategizing. It puts the power in the hands of corporate marketing teams, who can capitalize on community-level data to get more efficient, while improving morale among franchisees, who will see the benefits of localized spend.
National marketing teams for enterprise franchise brands are sophisticated. They often include data scientists and are aware of the latest marketing technologies and strategies. But if they do not have the tools to visualize the nuances affecting the performance of their underperforming locations, they cannot best optimize for stronger results. And they’ll almost certainly never get around to the work of especially high-performing marketing teams — not just helping underserved stores but boosting already well-performing ones to drive a competitive edge.
Many strong businesses come out of recessions, which reward resilience. For enterprise franchise brands, the current downturn could turn into a period of reinvention. Don’t seek efficiency in the typical places by lowering the quality of your marketing. Boost it by going local. Your stores, franchisees, and shoppers will thank you.
About the Author
Patrick Pleiss is the co-founder and head of operations of the multi-location advertising platform Hyperlocology. His career is a greatest hits of local marketing obsession. Before starting Hyperlocology, he was VP of national sales at the programmatic DOOH company Vistar Media, director of East Coast at the search retargeting company Magnetic, and an account executive overseeing digital for hundreds of local publications at USA Today. Before then, he grew up in the restaurant space working at Firehouse Subs, Newks, and Shoney’s.