Centralization

By Danielle Yuthas as published in Franchising World magazine.

Everywhere you turn there is another digital expert preaching the potential of return on investment (ROI) on digital ad spend, and the secret is ... to spend more money?

The world of digital marketing has its complexities – particularly in the multi-location context of franchising, where owners expect local search results and national brand awareness while accommodating location-specific offers and details on a usually-too-small budget.

With respect for the brilliant agencies we rely on to drive remarkable results, the top-level strategy must lie in the hands of the franchisor. Otherwise seemingly negligible details today, can become tomorrow’s nightmare.

The high-impact decisions you make as a franchisor when you sign on the dotted line are rarely broached in agency pitches. Page 13 in the fine print of the digital contract spells out the fee structure and alludes to future data ownership that can cause problems at the end of the agreement. As tempting as it may be, agency hopping won’t solve a strategy problem at the franchisor level.

Questions to ask vendors:

• What percentage of spend goes directly to media versus management fees?

• Will my company own and retain ownership of my website after our relationship ends?

• Will the landing pages live on my website or on a third-party website?

• How will specific locations receive leads?

• How is a conversion defined? 

• Do I have access to and ownership of my Google

Adwords, Google Analytics, Facebook ads manager and any other accounts associated with this campaign?

• How will you ensure my proprietary customer data is protected?
• Through which channels and at what cadence will you communicate with owners?

The right answers depend on your long and short-term goals and where you are headed as a system. There are various approaches and applications:

Decentralized

Even if your laissez-faire strategy is intentional, it will impact the system. In a decentralized structure, each owner is free to select a vendor and has full control over campaigns and targeting running.

Pros: Owners appreciate choice and may have local success.

Cons: Multiple locations and various vendors will inevitably create rogue assets that can eventually hurt the brand. Cost per click skyrockets when neighboring locations (usually unknowingly) bid against one another on the same keywords. Vendors who haven’t been properly vetted may spread ineffective practices through the system. Vendors who are not under a master service level agreement will not be likely to share data with the franchisor and franchise system which will prevent system wide data-driven improvements. Additionally, prospective owners may be overwhelmed by the need to navigate digital marketing on their own.

Semi-Centralized or Regionally Centralized

Owners choose a digital vendor from select corporate- vetted vendors on a regional or national basis.

Pros: Owners have choice within the frame provided by the franchisor. The franchisor may require the vendors to operate under master service level agreements that require visibility into data and to adhere to brand standards. Owners have a choice and can cancel contracts any time. This approach is often used as a testing period to transition from decentralization to centralization as a means to select the vendor that produces the best results. Owners and prospective owners appreciate the referral to a vendor who has a proven track record and has already been through brand discovery and agreement negotiation.

Cons: Efforts between vendors may not form a cohesive strategy or may prevent the strategy from evolving due to conflicting information.

Centralized Through a Rented Funnel

All franchise locations work with the same vendor through a platform or proprietary system owned by that vendor and rented by the owners and/or brand as opposed to being owned by the franchisor.

Pros: This approach provides a blast of leads and is used when lead volume is the primary objective and the owner is looking for a quick win.

Cons: The management fee is typically higher, which may take away from potential ad spend. Owners and the brand become dependent on a particular vendor, and when the relationship ends, the proprietary tools and campaign data is lost despite the investment made. Think of it the same way as leasing versus owning a car.

Centralized Through a Brand-Owned Funnel

All franchisees work with corporate on the same plan that is optimized over time.

Pros: This is the most effective long-term strategy for driving results. A centralized approach provides consistent brand messaging and promotes brand awareness. The waste in overlapped bidding by location is eliminated and the data is aggregated over time. When properly utilized, it drives significant improvement in results over time, agnostic of a specific vendor. You can be nimble and evolve as the digital landscape and your system’s needs change. This level of sophistication and simplicity is reassuring to potential franchise owners.

Cons: From a communication and expectation management perspective, this is the most difficult approach and can hurt validation if not rolled out properly. Centralization requires a significant commitment from the franchisor to field questions and complaints. You will need to decide if an in-house agency, a white label agency or an agency that communicates with owners directly is the best fit. You must make sure that your franchise agreement is setup to allow you to mandate participation and outlines how the funds will be collected and allocated.

Do Your Homework

Digital marketing is more complicated for franchises than any other business out there, so when you get an agency pitch you are excited about, take the time to thoroughly examine it from all angles – as a marketer, a franchisor and a franchisee – before you ink the deal.