Restaurants Need More Local Spot In Ad Diet

Retail advertising legend John Wanamaker once famously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” With all the advertising he was using to support his Philadelphia department store, some things were clearly working while others were not. Recognizing what was making a difference was too nebulous to clearly identify.

In this day and age with the proliferation of the Internet and connectivity the choices for advertising mediums has increased exponentially for advertisers. This has opened up new areas of opportunities for marketers that did not exist even just a few years ago. The marketing and media options are even more complex today than in the time of Wanamaker, making his 100-year-old statement even more profound now.

So what should today’s Wanamakers think? Let’s step away from retail, and take a look at QSR (quick service restaurants).

Given our current state of connectivity, present-day advertisers have more geographic opportunities to market their products and services than ever before. But what many have lost sight of is where consumers purchase those products and services … locally.

Although there are some industries for which this advanced connectivity brings with it new areas of opportunity, there are others that cannot leverage it the same way by the very nature of their business. One of these is the restaurant industry. Customers in this sector can’t order a meal over the Internet and have it shipped to their home, so these consumer transactions are as local is it gets.

However, there are still many national QSR and casual dining chains that treat marketing and advertising as if there were no differentiating one area or market from another. Any savvy marketer will tell you that the country is certainly not one uniform area of opportunity and treating it as if it were is surely not the most strategic way to optimize advertising effectiveness to produce the greatest ROI.

In 2011, television was the overwhelming medium of choice in the restaurant category, with Kantar Media showing almost 85% of all media allocations to television. A deeper look shows that almost 75% of television dollars were allocated to national television efforts. What’s most surprising about this statistic is that outside of the top ranked restaurant chains for number of locations (Subway,– 24,722; McDonalds, 14,098; Pizza Hut, 7,600, etc.), even the restaurant chains with several hundred locations — not reflecting a truly national footprint — are still allocating most of their budgets to network broadcast and cable television.

Although certainly not an isolated case in this category, one particular restaurant chain in 2011 allocated over 90% of their media budget to network television. As mentioned, this is not unusual for this category. But what is unusual is their geographic profile. This particular corporate chain has no locations in 15 states and has less than five locations in 11 other states. On a market level this translates to 83 of 210 total DMAs — or 40% of the US — that have no restaurant locations in them. Looking at this from a media delivery standpoint, that 40% of all DMAs represents 25% of all U.S. adults 18-49, their target demographic. This means 25% of all national ratings and impressions delivered by the media plan are wasted against delivering return on investment. They are essentially empty calories.

It would be far better to take this wasted delivery and put it toward those markets with lots of restaurant locations or that show high indices for customer visits and revenue. How could a more targeted strategy not deliver better ROI, considering how much media weight that is going to support areas with no store locations?

If franchisees ever knew that 83 markets with no locations were getting the same media support that their markets with actual locations, it’s inconceivable they would be happy with that corporate decision. What it comes down to is a non-strategic, easy media plan implemented under the guise of perceived efficiency.

Often media efficiencies are predicated on total delivery, heedless of geographic coverage deficiencies. Where an advertiser’s business is coming from is not equally distributed with population. Therefore, geographic consumption index differences must be taken into consideration in order to optimize advertising effectiveness. It all comes down to a simple question: Is your client’s budget being distributed most effectively against their geography and revenue distinctiveness?

From a consumer standpoint, restaurant chains that advertise in markets with no locations can be doing more harm than good in these areas. As marketers know especially in this category (and hence why 85% of budgets follow suit) if done correctly television advertising can be a very powerful and persuasive medium. Restaurant commercials create a desire for the particular cuisine or meal. With no locations to patronize, that desire can be easily transferred to the competition with locations in market helping to build competitive brand loyalty, strength and market share.

Additionally, restaurant brands run the risk of alienating potential customers in the future. If you’ve ever seen a restaurant commercial and then searched to find the closest location only to discover no locations within your market you’ll know what I mean.

Even beyond the national restaurant advertisers who are devoid of locations in some markets, there are still others who have larger footprints and do have locations in most, if not all markets. Similarly many have implemented the same national television “one size fits all” strategy to their marketing plans. This idea suggests that every media impression delivered is created equally across the country.

The more strategic approach would be to value the media impressions delivered into markets that have higher indices for store visits, customer sales or competitive market share more than homogenized national impressions. If an advertiser can identify a geographic market that has consumption indices twice that of the national average, how could this market not be valued as having greater ROI potential?

Television is far and away the most important medium in the restaurant category as is evidenced by a quick scan of advertising budget allocations. Often times, appropriating the correct way is not the easiest way. Advertisers “shiny new toys” in today’s media landscape belong to the digital and mobile options, but are far from the ones doing the heavy lifting in driving results.

The truth is that more strategically local geographic efforts must be supported by restaurant advertisers. It’s up to agencies and venders to dispel the belief that maximizing advertising budgets does not mean simply maximizing geographic coverage. In an industry in which all sales transactions take place locally the “where” an advertisers message goes makes all the difference. Helping to redirect clients to omit empty areas where sales can’t take place and instead re-express budgets into their own active sales areas will effectively deliver the best media ROI.

In the restaurant industry, reminding clients to “fish where the fish are” will give their inner Wanamaker a fighting chance for eliminating those wasted ad dollars.

Michael Bollo is VP of business development and marketing at TVB. You can read other Sales Office columns here.