The world of online advertising has seen immense evolution in recent years, with significant improvements in the functionality and efficiency of ad platforms.
In 2023, modern ad platform algorithms have become more adept at optimizing at the account and campaign levels, as we see clearly exemplified in Google Ads.
The larger the conversion action data available, the more effectively the platform performs. Yet, an issue arises when it comes to franchise advertising.
Franchise organizations wield significant control over the majority of their advertising operations, from in-store merchandising and product offerings to television commercials.
However, a less centralized approach is often taken when it comes to digital advertising.
Having worked with countless franchises on digital advertising strategies, I’ve identified a prevailing issue — many franchises permit their individual outlets to manage digital advertising funds.
Current Ad Platform Functionality: Optimizing for Efficiency
Most modern ad platforms prioritize optimization at the account and campaign levels.
Google Ads, for example, optimizes a the account level, one conversion action is optimized across all campaigns using it.
They are designed to be more effective with a greater amount of conversion action data.
However, despite the multiple locations that a franchise might have in an account, the ad accounts are typically tied to a single billing source.
This “one account, one credit card” system can present unique challenges for franchises.
The Intricacies of Franchise Models:
Franchises are business models that focus on maximizing the efficiency of ad spending within their specific regions.
Most franchise agreements usually stipulate a mandatory marketing spend, which puts pressure on franchises to get the most bang for their buck.
However, franchises often don’t have full control over various marketing aspects and therefore aim to exert control wherever possible.
Why Individual Franchise Advertising Fails to Leverage Big Data
The problem arises when franchise groups fail to combine their marketing resources into a single ad account.
As a result, they are unable to fully take advantage of large datasets for performance enhancement.
This is a significant issue because leveraging big data is a key benefit of digital advertising.
In our consulting work we recently spoke with an agency managing hundreds of accounts for the same franchise.
One digital advertiser for franchises expressed his frustration…
We have to keep everything separate as franchisees fund the ads themselves
The Accounting Issue That Morphed into a Marketing Problem
The main reason franchises segregate their digital advertising budgets across different ad accounts is to enable each franchise to be billed separately.
This practice allows each franchise to use their individual credit cards and ad accounts.
However, what begins as an accounting issue can quickly become a marketing problem, as franchises fail to leverage the benefits of pooling marketing resources into a single account.
Overcoming These Concerns
Allocate Ad Dollars Regionally
Franchises can overcome the issue of regional allocation of ad dollars by utilizing software and custom scripts.
These tools monitor budgets based on region and ensure each region gets its fair share, even when grouped under the same campaign.
At XAQ10, we utilize custom scripts to ensure advertising dollars are allocated effectively and reported on separately.
Billing Franchises Separately
While franchises may prefer to be billed separately, it’s worth noting that national franchises commonly bill their franchises for a shared advertising cooperative.
This is an accounting hurdle, rather than a marketing obstacle.
Do you want to get left behind because of an accounting complication? (Get better accountants)
Franchises with less expenditure have fewer optimization opportunities and risk falling behind competitors who pool their resources at a national level.
By addressing these digital advertising issues, franchises can maximize the potential of their collective spending and data. This will lead to more optimized and successful advertising campaigns, ensuring each franchise gets the most out of their mandatory marketing spend.