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Mobilizing Marketing and Advertising Dollars

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By Barney Wolf June 2014 Technology

Walk into almost any restaurant these days—even fine-dining establishments—and you’re likely to see at least a few guests gazing at their mobile phones or tablets. Operators see this, too, and realize that digital advertising is the way to connect with customers.

The numbers bear that out: During 2013’s third quarter, the restaurant industry’s ad spending fell 3.6 percent compared with the same period a year earlier, according to Kantar Media, a media marketing and research firm. During the same period, the industry’s mobile ad spending grew a hefty 234 percent, notes mobile marketing firm Millennial Media.

“We’re seeing more and more industries increase spending on digital” advertising and marketing, says Mark Fratrik, senior vice president and chief economist at BIA/Kelsey, a financial and strategic consulting firm for the broadcasting and media industries.

However, television and radio remain important ad platforms, he says. BIA/Kelsey estimates that in 2013, 15.8 percent of full-service restaurants’ local advertising dollars went for TV, while radio accounted for 16.3 percent. Online was 9.4 percent of spending, with mobile at 2.1 percent.

But the Chantilly, Virginia–based company forecasts online advertising will grow to 11.9 percent by 2017, while mobile is expected to jump to 6.9 percent. TV and radio will dip to 13.9 percent and 15.3 percent, respectively.

One restaurant company putting more marketing dollars into digital media is Darden Restaurants, the Orlando, Florida–based parent of Red Lobster, Olive Garden, LongHorn Steakhouse, and others.

Darden’s digital moves should “enable us to have much more one-on-one conversations with guests,” chief executive Clarence Otis told analysts in December. “As those scale up, we would expect our television marketing expenses to scale down dramatically.”

Although Darden declined further comment, the company’s Red Lobster chain, which is slated to be sold or spun off, has worked to increase its online visibility with the assistance of companies like Levelwing, a New York-based digital marketing company.

That work “was very straightforward, spent on search marketing to target users actively looking for dining options,” says agency president and co-founder Jeff Adelson-Yan.

Digital media, both with computers and mobile, is becoming increasingly important to consumers, he says. “The average adult spends five hours a day online—40 percent of that through mobile—and four and half hours on TV. That’s a huge shift.”

Mobile advertising is particularly interesting because of geo-targeting capabilities, BIA/Kelsey’s Fratrik states. “It’s remarkable for reaching people in a mile or two miles. Radio does a little of this, but TV covers the full market.” Essentially, mobile marketing enables specific data and promotions relative to a single location, while broadcast media, which blankets an entire market, begs for a more general message.

For some, the best solution is an integrated media strategy. Buffalo Wild Wings (BWW) has increasingly grown its digital marketing to integrate with its television spots. The sports-bar chain uses cross-platform advertising for several major sporting events, including the NCAA’s March Madness basketball tournament.

But that has not been enough for one of the company’s franchisees, which is using LocalVox’s marketing platform to take national messages and make them hyper-local.

“It begins with making sure that your messaging is optimized on the key sites where consumers are trying to find you,” such as Google and Yelp, says Evan Manes, vice president of Four M Franchising, which owns and operates 13 BWW units in New York and Connecticut.

In 2013, the franchise doubled its March Madness in-store traffic by taking simple steps, such as cleaning up hundreds of directory listings and optimizing its online search potential for generic terms such as “sports bar” and “buffalo wings.”

During this year’s tournament, Four M focused on putting out specific messages about the event “making it easy for customers to check in,” Manes notes. (Specific results from the 2014 campaign were not available at the time this story went to press.)

LocalVox founder and president Trevor Sumner notes that Four M successfully boosted its online metrics by taking control of the local message, adding, “For franchisees, there is often a responsibility gap between what is being done at the national and local levels.”

Still, many small businesses have balked at digital marketing. A survey by The Boston Consulting Group of 550 businesses with fewer than 100 employees found only 3 percent of their ad spending was online. Conversely, large companies may spend as much as 16 percent online.

“Most small businesses are struggling to do all the things it takes to keep a small business running, so they have not had time” to look at digital marketing, says David Knox, a San Francisco-based adviser with Boston Consulting. Small businesses are less eager to climb out on a limb and change their marketing efforts, he explains. “And a lot of it [comes down] to what the guy across the street is doing.”