BIA/Kelsey: Franchise SMBs to spend nearly half of annual ad budget on digital

Franchises are upping their spending on advertising and promotion and allocating a growing share of their ad budgets to digital media, according to a new report from BIA/Kelsey titled, "Franchise SMBs – Advertising & Marketing Trends." The report is based on data from BIA/Kelsey's Local Commerce Monitor^TM, an ongoing study of the advertising behaviors of small and medium-sized businesses (SMBs).

According to the report, on average, franchise SMBs spent $87,165 on advertising and promotion during the 12 months prior to the survey, up from $57,072 the previous year. On average, the franchise SMBs surveyed spent 39.1 percent of their total ad budget on digital media during the same 12-month period. They reported they planned to increase their digital spend to 42.9 percent of their total ad budget during the 12 months following the survey, compared with 33.8 percent for SMBs overall.

"Franchises are one of the most distinctive SMB segments," said Steve Marshall, director of research, BIA/Kelsey. "In almost every metric, franchises act differently from the overall SMB sample. In general, franchises are taking a tighter and more disciplined approach to their customer relationships. They're using more marketing tools and platforms, loyalty programs and social media."

Indeed, the franchise SMBs surveyed demonstrate a remarkable willingness to experiment with digital media and platforms:

• Social: 26.4 percent use Twitter; 24.6 percent use Twitter ads; 15.7 percent use Instagram; 11.5 percent use Pinterest
• Mobile: 22.6 percent use mobile banner or display ads; 21.6 percent use mobile deals; 19.3 percent use text messaging
• Online/Video: 23.6 percent use online deals; 22.6 percent use website video; 16.3 percent use video banner or display ads.

Franchises value agency relationships
Many franchise SMBs work with digital or advertising agencies, with 49.3 percent reporting they have worked with an agency for two years or more. Among those that work with an agency, 87.7 percent are either "very satisfied" or "extremely satisfied." The most widely used channel by franchise SMBs for purchasing online advertising is their advertising/digital agency (36.5 percent), followed by TV stations (28.9 percent), self serve without assistance (28.2 percent), self serve with assistance (27.9 percent) and newspapers (26.9 percent).