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One of the biggest marketing challenges consistently shared by restaurant franchise brand teams is the potential for ad cannibalization between national and local.
For brands to truly be successful in digital advertising, they must understand the impact that advertising campaigns have on individual locations and the brand as a whole. With 46% of all searches on Google seeking local information, localized advertising matters more than ever.
For franchise brands, the stakes are even higher. Digital ads with up-to-date community messaging and information must be localized. No customer wants to search on a corporate website digging for accurate information pertaining to their community. As we've learned in recent times, communities can change very quickly. With hiring and supply chain shortages, some restaurants alter their operating hours and menus on a daily basis. Due to this dynamic, local and national marketing efforts should adopt different tactics in spite of overlapping goals and campaign settings.
Local vs national budgets: One size doesn't fit all
A common "solution" for cannibalization is consolidating all advertising to one partner. Consolidation in terms of a single ad fund ultimately solves for cannibalization, but only from the brand POV. Single ad funds are beneficial from a national perspective, but that's inherently at odds with local sales
When advertising campaigns leverage a national ad fund budget, budget optimization is based on aggregate national sales. This typically ensures that locations in the largest metro areas will receive the lion's share of the budget. When budgets tilt toward areas of higher population density and restaurant concentration, many locations are left behind. National ad funds have no motivation to preserve the budget for locations that don't perform as well as others, even if location owners and staff hold insights that can be used to improve performance.
As a result, nationally funded campaigns ignore many factors that can impact sales for a location such as whether content and messaging are resonating with the community and ensuring that ads are being served in the optimal neighborhoods near the location. In these situations, it is common for campaigns to reduce the budget that supports such locations instead of leveraging local insights to make changes to campaigns that benefit locations in smaller or underperforming markets. It also causes many franchisees to go rouge with their own local advertising, which then opens the door for cannibalization.
Preventing a bidding war
When franchisees don't see results of national or regional marketing efforts, they're likely to try to do it on their own or hire a local agency to help.
The cannibalization problem only worsens when there are dozens of franchisees working autonomously and not integrating with corporate marketing efforts. If there isn't a single agency or multi-location marketing platform leveraged to execute local advertising in collaboration with national campaigns, they will start competing against each other for the same terms.
If local campaigns are overlapping with national keyword targeting, the cost of clicks will become inflated. Furthermore, many marketers may additionally increase bids thinking that the increased cost is organic. Individual locations may be paying a premium for paid search if corporate is running an ad in the same place for the same terms. That creates a no-win — and potentially high-cost — situation for everyone.
If locations are spread far enough apart, geographic areas can be more easily owned and separated by carving out local territories as part of a paid search strategy. While time-consuming to set up and manage, it is possible to distinguish when you're only dealing with a handful of locations.
The problem becomes tricky when a brand has hundreds or thousands of locations, many within a close geographic area. Previously, Google ads allowed bidding to optimize for keyword position in search results. Unfortunately, this is no longer an option.
Due to these constraints, it is even more important to coordinate keyword selection between Local and National. However, with advancements in automated bidding, marketers are freer to reduce the time investment on modifying keyword bids and allocate that time towards the overall keyword strategy.
4 ways to avoid cannibalization and create the most effective campaigns
While digital ad cannibalization has plagued franchise and multi-location brands for years, there are now some simple and effective strategies and technologies to create less stress with greater impact. Following this guidance will not only deliver more measurable results and insights per community but create a stronger and more consistent brand experience overall.
Patrick Pleiss is the co-founder of Hyperlocology, a multi-location marketing platform that enables brands to centrally control local advertising, across the most powerful digital channels, for their hundreds or thousands of restaurants. Hyperlocology’s best-in-class technology includes automated local advertising campaign builder, restaurant-level analytics, community data, and per-restaurant insights to drive meaningful business outcomes.