How to Solve the Franchise PPC Cannibalization Problem

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Working with dozens of franchise brands, it’s been interesting to see how digital teams have structured their national pay-per-click (PPC) programs. Actually, maybe “interesting” isn’t the right word. It’s more so concerning. Many are so narrowly focused only on their national campaigns, they’re aloof when it comes to the local campaigns their franchisees are running. If corporate marketing teams are running digital campaigns on behalf of local franchises, they’re likely not set up and optimized in such a way where they’re being given enough TLC to drive meaningful results at the local level. While some brands get it right, many others have failed miserably. 

For franchise brands to truly be successful in their digital marketing efforts, they need to fully embrace the opportunity that local PPC, display, and programmatic campaigns present in terms of benefitting not only local franchise-owned locations but the brand as a whole. Google and other search engines have been incredibly vocal in recent years about the power of localizing digital campaigns, and rightly so. A 2019 study from Social Media Today found that 46% of all searches on Google are seeking local information. If you are a large national franchise brand with local brick-and-mortar locations, distributors, independent agents, or channel partners, it’s imperative to drive traffic to them, not to your corporate site where customers need to figure out where to get your product/service or how to find the closest location to them.

In this article, I will explore the current landscape of franchise digital marketing, the challenges franchisors and franchisees face, some tips on how to avoid competing against one another, and ultimately what the right solution might be for your franchise system to execute a winning digital marketing game plan for paid search, display, and programmatic advertising. 

What Is and What Never Should Be

The following scenarios represent how problems typically unfold from a digital marketing standpoint within franchise organizations. Franchisees are generally and rightly only concerned with making money in their unit(s). Corporate digital marketing teams, who may or may not be trying to drive traffic to franchise locations, also have to worry about using national campaigns to drive sales on an ecommerce site or to corporately owned locations in markets where franchisees also operate. In addition, franchise brand marketers can only do so much to fight the battle of brand compliance issues and consistent messaging at the local store levels.

Franchise Advisory Councils (FAC), Marketing Advisory Councils (MAC), or National Marketing Fund Councils (NMFC) within most franchise organizations are the voices of the franchisees. If there’s a national advertising fund that exists within your franchise system that’s pooled together using aggregated franchisee contributions based on their store sales, it is likely controlled by a FAC, MAC, or NMFC (not all are). This brand fund or ad fund is there to promote and build brand equity across the franchise system using various marketing tactics, which in theory should benefit all locations equally. This gets very sticky when it comes to digital marketing. 

When national PPC or display ad campaigns are built using a single national ad fund budget, or even fragmented budgets on a regional or co-op level, the results on Google, Bing, Facebook, Amazon, and elsewhere are guided by broad programmatic optimizations based on clicks, conversions, impressions, or other KPIs that drive the spend. Performance and budgets typically shift toward larger metro markets where there are more locations and more customers in terms of population density or to certain ad groups that are performing well for most locations but may not be having any impact on customers in other local markets.

The ability to gather meaningful data and optimize all campaigns also suffers when national and regional campaigns are executed and campaign delivery is only optimized toward performance. Post-campaign data is only representative of the audience where the most conversions occur. In many cases, the brand will then try to retrofit a strategy that’s only representative of the results of some locations in the biggest markets and apply it across the board to other DMAs. Efficient, yes. Impactful, no. Plus, it could also leave a huge percentage of your locations outside of a DMA with major targeting issues — not marketing the right product to the right customers and therefore wasting money. 

In other scenarios, depending on your industry and how campaigns are structured, more rural, small-market locations may have trouble generating enough impressions and clicks to even hit their budget. As a result, franchisees aren’t receiving calls or leads on their local websites or microsites, nor foot traffic at their stores, to help drive revenue to their local business. Additionally, if the right negative keywords and local search terms aren’t in place, and believe me this happens when corporate digital marketing managers are trying to juggle hundred or even thousands of campaigns, the quality of leads can also suffer. 

In these cases above, the theory that all locations will benefit equally from national ad fund marketing efforts is not reality. All franchisees do not benefit equally. Having experienced this across multiple franchise organizations, it’s become apparent that this is the biggest franchise marketing problem brands face when trying to execute local store marketing. This becomes a bigger problem when there isn’t transparency in terms of reporting and franchisees don’t see nationally geo-targeted PPC marketing campaigns, or even regional/local campaigns built by corporate, immediately benefiting them at the local store level and driving revenue to their business. 

The Franchise Marketing Plot Thickens and Not in a Good Way

So what happens next? When franchisees aren’t seeing transparency in reporting or getting the results they want, their solution is to seek out their own self-funded strategies and set up their own local campaigns. Some, even though they’re not marketing experts, will try to do this on their own. Others will go out and hire their own local ad agency.

Can you blame them? While their decision may not be wise or correct, they are business owners. When they have their own bottom line to worry about they want to take immediate action as most scrappy entrepreneurs would.

The problem worsens when there are a multitude of franchisees or local agencies all trying to do their own thing and not working in tandem to integrate their strategies alongside the brand’s corporate marketing efforts. If there isn’t a sophisticated technology-based marketing platform or single ad agency in place to execute local store PPC, display, or programmatic marketing programs alongside the brand’s national campaigns, they will inevitably start competing on corporate brand terms within their digital campaigns.

In a more granular state, franchisees in local or regional markets may compete against each other as well. This becomes the ultimate form of franchise digital marketing cannibalization. It’s imperative to not let your brand reach this scattered and fragmented point where siloed data, brand compliance, and cannibalization, among other issues will all rise to the surface. 

A Closer Look at Franchise PPC Cannibalization and Tips for Righting the Course

When franchisees and franchisors are not in sync with their digital marketing efforts, PPC and display ad cannibalization wastes both national ad fund and local store marketing budgets and ultimately leads to a poor ROI for all parties. 

What can franchises do to eliminate PPC cannibalism between franchisees and even the franchisor? A competent digital marketing plan includes establishing defined goals, the right keywords, effective geo-targeting, leveraging customer data, and a cooperative relationship. Franchises need to set clear strategic guidelines across their franchisee network to ensure everyone is operating under the same logic with the same goals in mind. The focus should be on increasing engagement and profit. Ensure all national and local campaigns are pushing in the same direction and complimenting each other, not competing against one another.

Here are five tips to help your franchise brand avoid cannibalization and ensure both franchisors and franchisees come out winners:

Keyword List – Identify the keywords each franchisee should bid on, and identify keywords each franchisee should not bid on using negative keywords so as not to compete with corporate or each other. It’s fair to consider whether or not brand search terms should only be part of national campaigns or should they be included within local campaigns as well (e.g. Dominos near me). On the local level, consider using more long-tailed keywords with location-specific search terms. 

Geo-Targeting – Consider an overhaul of each franchisee’s and the franchisor’s geo-targeting, which should help with any overlap and potential for PPC cannibalism. It’s recommended to focus more granularly by the zip codes within each franchise territory or layering zip codes over radius targeting for an even more focused approach. Just be careful to not go too small in limiting matchable searches especially in more rural markets. This can lead to volatility, low traffic, and poor performance which will result in not hitting your budget or conversion goals. Likewise, the franchisor should be removing those same zip codes by using negative locations within the geo-targeting of national campaigns to avoid competing for the same keywords and search terms being used in local store PPC campaigns. If you’ve strategically set up your national and local campaigns to have some overlap when geo-targeting because it relies on siloed keywords, consider removing zip codes in the event your keyword strategy contains overlap to prevent cannibalization. One other added benefit to geotargeting is in the reporting as it will allow you to see both “the forest and the trees” of your performance.

Franchise Territory Overlaps – In areas where franchisee marketing territories may overlap with each other or corporate, or when targeting customers in free-for-all “grey areas” between two store territories, consider collaborative efforts and perhaps running the same promotion across multiple local campaigns. Also, while you can assign and split up zip codes, ensure these campaigns are not using the same keywords. Setting up regional/co-op advertising budgets and campaigns using pooled funds may be helpful in this scenario, but individual store budgets is an even better approach to achieve equality and ensure the customer who clicks within a store campaign will purchase from that specific store. Here you may choose to implement a targeting method if you only want to show ads only to people who are physically in the designated franchise store marketing territory. In those neutral territories or gray areas, you may choose to target people who are not physically in the designated location (store service area) but are online searching about it.

Location-Specific Ad Content – Writing locally relevant ad copy can encourage consumers to call or visit your business online or in-person. According to Google, four in five consumers want ads customized to their city, ZIP code, or immediate surroundings. Make sure that the language in your ads speak to the location you are targeting. This will eliminate confusion on where the customer should go and help avoid competition. Here, similar to the scenarios above, the use of location specific landing pages and local store call tracking numbers is critical.

Give Franchisees a Piece of the ecommerce Pie – If you’re a franchise brand who happens to drive national and/or local PPC traffic to an eCommerce site and use product landing pages versus local store landing pages, there are still workaround solutions to ensure the store gets credit. Some brands have set up programs and sophisticated tracking whereby the franchisee will receive a portion of revenue from any product sales generated by local organic or paid search terms that drove a customer to the website to make a purchase versus into a local store.

The Holy Grail

The ideal scenario is executing local store PPC correctly alongside and in cooperation with national programs and gleaning insights from the data on one program to benefit the other in a symbiotic fashion. Strategic guidance in terms of keywords, targeting and approved brand creative/messaging is owned by corporate. Franchisees are then empowered to invest their additional local marketing budget and given access to certain customization options they can tailor in their campaigns based on community preferences. They also will get full visibility into their local campaign performance reporting so they know exactly how their local ad dollars or national ad fund contributions are benefitting their location. In terms of digital marketing, this is the Holy Grail for franchise systems. For many franchise brands who have chased this Holy Grail, it’s been elusive. When franchise digital marketing is done right, local PPC campaigns may outperform large national brand campaigns that are centrally managed by franchisors or agencies and show up higher in rankings thanks to Google’s algorithm giving precedence to local search results. 

If you take nothing else away from this article, take into consideration how you are structuring and managing your national and local paid search, display, and programmatic ad campaigns into serious consideration. Allocate a national budget, but provide individual budget options for local stores. Even if there isn’t funding for location campaigns, encourage franchisees to use the same PPC agency partner or marketing platform as corporate to ensure that the campaigns will complement each other rather than competing from an overarching strategy standpoint.

Kristian Kotsbak is Director of Strategy and Trading at Hyperlocology.