Nearly Three-Quarters Of U.S. Franchisees Use Digital Marketing Services

That’s up from 50 percent of local SMBs who said the same last year, says BIA Kelsey.

The race among ad platforms and interactive agencies to tap local marketing dollars the last few years has convinced most franchisee owners and managers to use their wares, as tools from native placements on social media and the rise of digital video has appeared to make a difference in generating new leads, according to a report by BIA/Kelsey.

“Franchisees are not only testing the waters with these new formats, they are reporting good returns on their investments,” said Celine Matthiessen, VP, analytics and insights for BIA/Kelsey, whose report, Advertising and Marketing Trends of Franchisees, is the latest in a series based on data from the researcher’s ongoing Local Commerce Monitor Wave 19 survey of small and medium-sized businesses.

Details of the report, which found that 70.6 percent of franchisees surveyed work with a digital ad agency and/or “platform company,” will be discussed at BIA/Kelsey’s one-day BRANDS summit on March 22 in New York.

In terms of breaking down that 70.6 percent of franchisees who were asked whether or not they have “engaged” with an agency or platform provider’s services:

  • 28 percent they’ve worked with such an entity for more than two years
  • 27.5 percent have contracted with an agency/platform for between one-to-two years
  • 15.1 percent have employed interactive assistance for less than a year
  • 7.5 percent currently don’t work with digital marketing services player — but they expect that to change in the next 12 months
  • 21.4 percent do not and have no plans to use a online marketing services provider, while 0.4 percent identify as “unsure.”

The survey of 119  (11.8 percent of the full LCM sample of 1,010 SMBs) franchisees bears out the spending patterns and marketing interests that have been building at the local business level for several years (Matthiessen did point out that the LCM sample size last year was around 600 SMBs). In particular, social media commands more of SMBs’ marketing spend, while ad tech companies like have staked their business on the idea of local publishers and advertisers being ready to embrace native advertising and programmatic/automation.

“Franchisees’ spending increasingly is going to marketing automation and similar services,” Matthiessen said. “If it’s social media, it’s going to be for the specific purpose of driving leads. The bottom line is that these SMBs — which we define as companies with less than 99 employee — cannot be regarded as unsophisticated.”

Despite their collective confidence with interactive advertising in its various forms, franchisees are still not quite accepting of self-serve formats. As Matthiessen indicated, SMBs still require some degree of hand-holding by ad companies, which is one reason why most say they favor local agency services versus larger interactive players.

The second major reason the majority of SMBs prefer to deal with local ad services providers is a simple matter of keeping costs low. Besides, larger national agencies are primarily concerned with scale and brand awareness instead of maintaining a laser-focus on performance metrics.

“Franchisees are not only testing the waters with these new formats, they are reporting good returns on their investments,” said Celine Matthiessen

BIA Kelsey's Celine Matthiessen
BIA Kelsey’s Celine Matthiessen

When asked about ROI performance, 87.2 percent of franchisees surveyed ranked sponsored content as a top performer, followed by native ads (76 percent), specialty print directories (70.5 percent), video display ads (70.3 percent), out of home ads (68.6 percent), online deals (66.7 percent), online display (65.4 percent), Facebook news ads (65.3 percent), print coupons (62.8 percent) and online coupons (62.5 percent).

As we noted above, the appeal of native advertising and Facebook have much to do with marketers rushing to follow their consumers to mobile and social apps. Plus, online video advertising has been consistently growing by double digits for the past decade, companies like eMarketer have pointed out.

But the one surprise is the durability of “specialty print directories” as a big driver of revenue and business leads for ad companies. Still, it’s not that legacy print listings have discovered a rebirth in the marketplace — quite the contrary.

It’s simply that the competition among heavy listings books that are still dropped on average doorsteps has diminished considerably, leaving fewer and fewer players.

“Think about a Yellow Page directory or newspaper: circulation is down, distribution is down, so the cost for a print ad is a lot cheaper than it ever was before,” Matthiessen noted, adding that specialty print directories such as golf guides, travel publications have been also capitalizing on their respective niche strategies. Plus, when it comes to considered purchases, professional services like doctors and attorneys still get most new business from formal or informal referrals.

“Not everyone uses ZocDoc, so the tried and true methods of finding a doctor still apply,” Matthiessen said. “But as we’ve seen, things can change very quickly in the local marketplace.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.