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Digital Advertising : Did you knew that your franchisees/ points of sale pay management fees up to 45%-83% to their local marketing agencies?

08/05/18 11:49

At Mobilosoft, we are often on the field with our partners and have contacts with franchisees and local teams on a regular basis. For a few months we have been discussing media buying with them. And the conclusion is that a lot of franchisees and local teams have been approached by local marketing agencies for local campaigns. Facebook Ads, Adwords or even Waze Campaigns, we are seeing a growing number of solutions that are sold pretty easily to local points of sale.

There is a real demand from local teams and franchisees

A Franchisee contract often states that the owner has to spend a small percentage of the overall turnover on advertising. A few years ago, owners had the choice between buying space on a billboard near a busy road, give away flyers or even sponsor shopping carts.
Nowadays, digital advertising is becoming more and more important to gain local visibility.

For example, the three media mentioned above offer a wide range of targeted advertising solutions. This specific targeting is very helpful because each store can target its catchment area.

Local managers will often do the same with the local marketing budget they receive.

Limited control and very little help

An element that often came back during our discussions with local teams is that they would like to have more support from corporate. Unfortunately this support is often denied or delayed because corporate digital marketing teams are more focused on national campaigns which represent bigger budgets and challenges for the company. Therefore, local managers often reach out to local agencies to find some help. And the offer will often seem like a good deal, but if you scale this local offer for the whole distribution network of this company, the waste is tremendous!

Nevertheless, sometimes corporate will help and check what local teams have done for their local marketing. But this is often the moment where things get complicated because local agencies rarely follow the marketing guidelines set by corporate. This often results in compliance and GDPR issues.

A waste of valuable resources

The problem is that this waste of resources is rarely tackled by corporate, as upper management often judges is it not their responsibility to look after each store’s individual spending on local marketing.

fee-agences-communication

This is very unfortunate, because we had the opportunity to check multiple offers sent by local agencies and the conclusion was desperate. The management fees included in those local offers vary between 45% and 83% of the overall campaign budget!
In some cases, we even saw offers for media that aren’t even relevant no more.

Below you will find a table that extrapolates the two extremes for distributions networks between 50 and 100 points of sale. If the entire network would buy campaigns for a monthly budget of 200€, and that we compare with a budget media of 85% (with a variation between 55% and 17%), those would be the results:

  • For a network of 150 points of sale, the dry loss will rise between 108.000€ and 244.800€.
  • For a network of 400 points of sale, the dry loss will rise between 288.000€ et 652.800€.

Optimizing your expenses, an advantage for national and local as well

If companies would put a little more time in optimising their local investments, this would truly be benefic for everybody (except for the local agency), because:

  • If 85% of the budget was really spent on the discussed media, points of sale would generate a lot more sales in their shop.
  • Those sales will inevitable add to the overall sales on the national level.

Besides the fact that this time investments would solve lots of compliance and GDPR issues, this measure would also strengthen the relationship between corporate marketing and local teams. Furthermore, it is clear that local points of sale would benefit from a huge improvement regarding in store traffic as their marketing budget (that is already spent) would generate a lot more in store traffic.

Besides, we made our analyses based on a monthly fee of 200€… This is nothing compared to points of sale that sometimes pay up to 5000€ per month for their local digital marketing!

A Local Digital Marketing solutions for companies and their points of sale.

Since 2010, Mobilosoft is providing SaaS marketing solutions to more than 100 companies and 20.000 points of sale. Enabling them to efficiently manage every aspect of their presence on a global and local level in order to attract always more customers to their stores.

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Lost media budget for a local POS

Assessment 1: 45% management fee

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Assessment 2: 83% management fee

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Written by Ambre