Nationalization of Franchisee Budgets Bad News for Local Media

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The recent battle between Burger King and its franchisees on the reallocation of local media dollars to its national brand advertising indicates a wider battle between franchisees and their corporate owners.

MediaPost writer Dave Morgan points out:

“We’re in a severe recession. Everyone is being asked to do more with less, and it’s natural to expect business partners to fight for control over scarce resources. National brands want to grab industry market share and see their ads on national television. Local store owners want foot traffic, sales and their ads on local radio and in local newspapers. Unfortunately, there’s not enough money to do both at the moment.”

With local media markets already bracing for a smaller auto dealer network, the shift of local franchisee spending to national brand advertising could pull another significant block of ad spending from the likes of directories, newspapers and local TV and cable stations. With many local media outlets struggling to make revenue goals, the loss of franchisee spending couldn’t come at a worse time.

Right or wrong, many more national brands want more accountability, and to them consolidation of media spend control gives them more accountability. Morgan goes on to say, “Whether or not local control over media and promotion produces the best results is ultimately less important to many companies today than the ability to actually measure those results. In these times, CFOs are exercising more control, and that means more centralization.”

What this means to local media is that they need to focus more on measurability, value and ultimately ROI to be able to show the increased value of what they deliver on a local basis. In the directory space, national advertiser services must be enhanced to capture the shift from local to national so they do not lose this spending. The relationship between Yellow Pages publishers and their CMRs (certified marketing representatives) in the U.S. is critical in order to manage the local to national shift with their franchisee base.

While the local to national shift has been occurring over the past several years, local media need to be proactive about how to manage or market to national brands to show how they can best maximize spending.

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