Episode 8: State of the State - Franchise Marketing

Join hosts Alex Porter and Josh Allen as they dive into the state of the state in franchise marketing, including:

• the economics around franchising
• digital media trends 
• video marketing (invest in YouTube!)
• reflections on Q1 of 2022
• a hope, a wish, and a prayer for the Orioles' success this spring

Transcript

Josh Allen: 0:10

Hello, everyone. Welcome back to digital shop talk the podcast. It's been a minute since my co host, Alex Porter has been on the podcast. I'm your co host, Josh Allen at location three. The last few episodes, we pivoted and really focused on a couple of key influencers and industry experts in franchising. Wanted to get back today and really talk about state of the state in kind of franchise marketing, the economics around franchising, some digital media trends that we're seeing, and really, honestly kind of reflect on the fact that we are closing out the first quarter of 2022. Hard to believe Mr. Porter, how're you doing today?

Alex Porter: 0:52

I'm doing great. Josh, good to be back on how are you?

Josh Allen: 0:55

Good, good. I'm ready for spring. I know you're working on your golf game. I'm working on my golf game. But alas, we're not here to talk about golf. We'll save that for another podcast. Maybe the future here. Perfect. Hard to believe. Like I said, we're closing out q1. You know, when I reflect back, I think one of the things I wanted to quickly touch on today is, you know, we, I think both felt it felt really good to be back at the International Franchise Association annual convention about a month ago at the end of February, for the first time in two years. You know, as we noted on our blog, and some other areas that it just the in person experience is really hard to replicate. But today, I wanted to focus more specifically on some of the trends that we're seeing. When it comes to economics and franchising. The IFA put out their annual economic report, right before the convention always serves as kind of a good gut check to what's going on in the world of franchising. The takeaway is, is growth is projected for 2022 coming out of the pandemic, what are your thoughts kind of around growth around the conversations you had while at IFA? And where do you see see things going? I think just generally speaking, in 2022.

Alex Porter: 2:13

Yeah, well, first of all, super amazing to be in person at the IFA out of San Diego. That was my first event. Since all this started happening, and you know, the franchise space, I think it really depended on the vertical COVID Obviously, hit some, some verticals, really, really hard travel and hospitality. And others did really, really well. So if you look at their economic outlook, some of those, those ones that were hit hard are probably going to experience the biggest bounce back. But one of the things that we're hearing from every single franchise person that we spoke to at the IFA is that opportunity bounce. People are interested in franchising, they want to be their own boss, they they have that entrepreneurial spirit, but want that help that the franchise organization provides them. I mean, I think you can agree every single person we talked to the very first thing they wanted to talk about was franchise development, which ship you know, is getting more sales more franchises sold. And if that's the top of everyone's mind, that's a good indication that that there's growth, so it's definitely a leading indicator that that was the buzz. And and it's great to see, I mean, it's great to see I think there's there's some there's some stuff going on kind of from a policy standpoint in the government that might be detrimental to the franchise model as a whole, that people are certainly looking out for. And the IFA is very much saying this position is the wrong person for this position. I don't get too much involved in the political side of IFA, but that's definitely something to keep an eye on. Yep.

Josh Allen: 4:04

Totally. The the friend Ed piece in particular, right, agreed. That's top of everyone's mind. We've had some conversations with folks in franchising, a few past episodes recently, and with kind of the great resignation continuing to evolve. I think another 4 million ish Americans left their current jobs in February alone. There's kind of this continued focus on career change, and franchising seems poised to capitalize on that. And then the economic report from the IFA backs it up, you know, saying that there's a forecasted growth of about 17,000 plus new units. So it'll be interesting or new units in 2022. To be added, I should say. It'll be interesting to see how franchisors that are projecting growth for their own respective brands kind of compete for those would be entrepreneurs and new franchisees. So I agree with you. I think that's going to continue to be a big focus in franchising as well. Well, the one question I also wanted to ask you coming out of IFA was, you know, your thoughts based on conversations you had around the role that technology plays at the franchisor level. At the franchisee level? I think there are some, there's some nuance depending on the type of business model you're in or the brand, you know, the legacy brand versus emerging. What conversations resonated with you around technology specifically while at the convention?

Alex Porter: 5:27

You know, there's definitely a few buzzwords that are going on in the marketing industry as a whole. CDP being kind of the biggest one that people are talking about, but I don't think it's really well understood in the franchising world. The fiduciary rule, you know, is a little bit more complicated, because unless every single person is using the same operating system or the same, everything, you're going to have some real issues with your customer database list and management. And so that's an area that I think will continue to be a focus on. hurt a lot of people. I hosted a roundtable about the metaverse, a lot of people are unclear about what this means to the franchise world. There's a lot of talk on that roundtable of okay, I'm Baskin Robbins, I want to have a location in the metaverse and you can come visit me and you know, you could even maybe order for pickup at a location close by but in franchising, what does that mean does rent, you still have geographic limitations in the metaverse? That's another one that's just kind of a big unknown. I think of what I just read recently that that Wendy's is is in the metaverse and is partnering with some gaming companies. So people are doing it. So everything kind of the consumer data. And then what is this web? Three? And how does it relate to franchising are kind of two four looking technologies. But then in terms of things that are actually happening right now, a lot of it is just around ease of use, how do we get technology into franchisees hands? That is very simple, right? We can, they can click a couple buttons, and they can do digital marketing, and they can understand what they're doing. So very kind of very big picture projects. And then some very tangible tactical technologies that are continuing to evolve and more and more uses coming out of them.

Josh Allen: 7:29

So let's talk about the growth piece, right, because while there's a lot of projected growth, both in a unit perspective, and just economic perspective, in terms of output, things are getting more expensive, inflation continues to kind of roll along here, you know, there's signs that we may be in a bit of an economic recession, you know, for a good portion of 2022. So if you're a franchisee, and the franchisor, running your business, marketing, your business growing your customer base, inherently is getting more expensive. That said, you know, as we know, digital and media is a good way if managed effectively to be a driver of growth efficiently. So when we look at kind of user trends, where users are as those users get, essentially more expensive to acquire, in many ways, depending on overall adspend budgets. What Where do you think as we roll along here, from a channel perspective, from a platform perspective, where where do we see user spending time and where can franchisors and franchisees capitalize?

Alex Porter: 8:35

Yeah. You know, there's a lot of talk a couple months ago with Facebook switching the meta, and they were having some issues with the apple and the cookieless. And can you track and a lot of advertisers have grown frustrated with the Facebook platform, because of some of those challenges. But I'm here to tell you that it's still the number one channel that people spend time on, if you look at and we can maybe drop some links to some research here or some blogs about it. But the number one platform that people use is Facebook. You know, younger audiences are on Snapchat or tick tock. And Facebook owns Instagram, which a lot of general users don't actually understand how that works either. So by by engaging with the Facebook platform, you're getting Facebook and Instagram, you want to definitely treat them differently. But Instagram has a huge influence on people shopping. And it's a it's a little bit different than Facebook, right? Because it kind of shows up in your feed with a video. It's just it's a different experience than the Facebook advertising. So for us, we're putting a lot of efforts into video on its own and the video format plays really, really well in Facebook and Instagram. And then really doubling down on on YouTube this this year for us is a big big push for us is to get as many of our franchisees and franchisors engaging and buying media inside of YouTube, and other video channels, there's just a quick stat. So this year 2020 to 82% of all online content consumed. So online content, it will be video content. And if you think about your own consumption, that's probably true that you're there's there's a lot of videos that you're consuming on a daily basis, whether that's news or how tos. And YouTube offers a great channel for us to reach that audience, especially if we know the kind of video content they're consuming, or what they search to get to that content, it can be very, very cost effective and is still underutilized. So if you are listening to this and you don't if you're not investing in YouTube, I would rearrange your q3 budget and q4 budget to put a decent line item in there and see what happens to your kind of your general awareness as well as your direct response.

Josh Allen: 11:10

Great point. The other stat I wanted to call out the you actually brought to our attention from media post I think supports this right the note that was some recent data that has come out from insider intelligence and analysts and forecasters there that TV linear TV ad spend is expected to fall below 20% of total budget for the first time in history. So dollars are moving into things like YouTube, but I guess the question is, is it being done efficiently for franchisors and franchisees? I think right now, we would say it could be done a lot better. Is that fair?

Alex Porter: 11:48

Yeah, it's interesting. You mentioned that because our good friend Gary Vee just recently came out, I think, on the heels of this information, and basically said, Look, people are still buying TV on impressions and GRPs. But nobody's seeing them. And really kind of saying that the efficacy of your TV buys rapidly declining, which which makes sense. If you you know, personally, I cut the cord recently, I have YouTube TV and Netflix and Hulu and Disney plus and all the things. It's kind of funny, right? Yeah, the eight different things. It's like, well, why couldn't they just be all in one place and cable

Josh Allen: 12:26

subscriptions, right?

Alex Porter: 12:29

TV do its thing, but you add all those up, and it's still half of what I was paying to DIRECTV six months ago. So we're seeing that right, then follow the eyeballs and digital, you can actually measure it. Now, with anything, there's some skepticism with the numbers you're actually getting reported on. But I'd rather have the digital numbers than the linear numbers at this point. And it's definitely a trend that's going to continue. I really feel that sometime this year, next year the traditional linear providers that cable providers are gonna have to do something drastic because the amount of people that are still willing to spend $200 a month for cable versus $80 a month for six different streaming services just because they can get Judge Judy I don't think it's going to be really high up there. That's my in my

Josh Allen: 13:23

What about your your Bravo shows? Are you still getting those three years?

Alex Porter: 13:26

Oh, yeah, I got I got all the Bravo God, you know, and it's, and it's and it's unlimited storage, and it's smart. Right? So I went in and leastly a year when I got it. And I was like, anything from the University of Maryland. I want any sport. And there's a little Marilyn channel, I go in there. It's like there's a lacrosse game yesterday, there was a women's volleyball game three weeks ago, there is this and I was like, wow. So it's,

Josh Allen: 13:48

I don't even have to try. Yep. Well, and YouTube, I think where I think there's a tremendous amount of upside and you would agree with this is the obvious of, you know, regardless of budget, whether you're a franchisor or the individual franchisee level, the ability to tap into the broader Google Ads network from a remarketing perspective, to make those dollars go further, especially as everything is kind of costing more in this current economic environment. If you're if you're not doing remarketing one, that's a massive mess, but to right, you know, combining video with display with search brand, not all of

Alex Porter: 14:23

it has to be part of the mix. Yeah, it's not about budget. It's really not about the what screen it's being watched on. But the fact that you're just you're doing it and you're you're covering where those eyeballs are, truly, it's really a video strategy versus a linear strategy or a connected TV or streaming or YouTube. It's, you know, create, have the creative, make sure it's right for that environment and go out and find your audience.

Josh Allen: 14:52

Pretty simple. Yep. So to kind of wrap on that point to I think the other big news I wanted to touch on it that Last week, Google announcing obviously the shift to GA four. And moving away from Universal Analytics without going too far into the weeds. I think it just continues to bring into focus more and more. The need for advertisers, marketers franchisors, to really make sure that the data they're looking at is quality that they're starting to really plan if they haven't begun. So already for kind of this shift that's coming next year around, moving away from third party cookies. You know, we've had a lot of conversations around this. Our colleague, Veera and co host gave a fantastic presentation at the IFA convention on this in a short sense, because you touched on this regarding CDP. Where's your gut broadly across franchising? Do you feel there's enough attention on this topic across all franchisors? Or is it still kind of a lack of understanding? Well, it just doesn't to me feel like there's enough attention being paid to how this is going to shift dramatically in the next 12 to 24 months. What's your take

Alex Porter: 16:05

Prue? Um, I think I think it's probably still, I think the bigger larger franchises or the holding companies that have some, some kind of buying power, like, let's say inspire brands is probably already has a CDP in place. It's, it's still, it's still a very broad field, meaning there's a lot of there's a lot of players still in the space. So we're we're, you know, we have a few that we've vetted out that we're recommending to our clients that we feel they have the staying power, and they're price effective. And they'll they'll check a lot of the boxes. So so we're kind of waiting into that as more of a referral or having establishing these partnerships. Do I think you should Yes. Do you have to maybe be a certain size and certain revenue, a certain complexity to do it? For it to make sense right now that also yes,

Josh Allen: 17:03

for CDP specifically? Yeah, for CDP. Yep, yep. Yeah, yep. Yeah, it's, it continues to evolve. But, you know, to the point of GA four, I think the biggest takeaway, obviously, is making sure you have the look back data, right, and the historical data and making that transition properly as well. One would assume that is happening across the board every brand level, but you never know. Well, I guess it looks like we're kind of running up against time. We're wrapping q1, we're starting q2. Quick prediction when we're sitting here July 1 At the end of q2. Specific broad give me a q2 prediction. Oh, man q2, prediction,

Alex Porter: 17:48

q2 prediction. The Orioles will be number one.

Josh Allen: 17:53

I figured you might default to baseball or something. Alright, we'll hold off on the prediction, maybe we'll save that for down the line, we're hopefully going to have some good guests to talk in detail about some of the broader media changes, especially as it you know, continues to be the case that digital media is taking a larger percent of the budget, which always brings back the question, are those dollars being spent effectively and where can they be spent effectively whether it's at the brand level, or at that local kind of unit by unit level? So looking forward to some more guests coming in, in the next few weeks, having Veera back on especially as we talked about data, privacy centric marketing, and customer targeting and all that good stuff. So good to be back on Shop Talk. Mr. Porter, we'll we'll do it again here soon. Thanks to everyone else

Alex Porter: 18:39

has brought. That's right for franchising. Get your YouTube budgets in order.

Josh Allen: 18:46

You do budgets in order. Alright guys. Yeah, you bet. we'll see everybody next time. See you boss. Bye