2023 AFDR Highlights, Part 2: 2022 Budget Spend vs. Effectiveness
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2023 AFDR Highlights, Part 2: 2022 Budget Spend vs. Effectiveness

2023 AFDR Highlights, Part 2: 2022 Budget Spend vs. Effectiveness

Highlights from the 2023 Annual Franchise Development Report (AFDR) were unveiled at the Franchise Leadership & Development Conference (FLDC) in October.

Participants consisted of franchisors that completed an in-depth questionnaire online. Responses were aggregated and analyzed to produce a detailed look into the recruitment and development practices, budgets, spending allocations, and strategies of a wide cross-section of franchisors. The data and accompanying commentary and analysis provided the basis for the 2023 AFDR.

A total of 101 franchisors participated, representing 21,802 franchised units and 2,044 company-owned units. Despite predictions of a recessionary year ahead, participants plan to open a total of 1,725 new franchised units in 2023.

Highlights from the report were presented in an FLDC general session by Franchise Update Media EVP and Chief Content Officer Diane Phibbs and Wild Birds Unlimited Chief Development Officer Paul Pickett. Below is the first in a series of selected highlights. All conference attendees received a complimentary copy of the 2023 AFDR.

2022 Spend: Budget vs. Effectiveness

When Covid hit in early 2020, many respondents told us they’d halted lead generation activities completely. Then, in 2021, as the pandemic continued to restrict business as usual, affecting employment and customer behavior, budget allocations for digital spending (the largest category by far) fell this year, after rising from 39% in 2019 to 42% in 2020 and falling slightly to 39% in 2021.

As shown in the graphic, while spending has shifted among the categories, effectiveness on the whole has dropped. One of the biggest changes this category is the YOY falloff in the effectiveness of digital spending (about 5 percentage points)—despite spending levels remaining essentially the same as a percentage of total spend.

These shifts, whether large or small, are something brands must seriously consider in determining how they allocate their online spend. The environment has changed, prospects have changed, and of course, as many say, Covid has changed everything.

Querying respondents about their frandev sites, a new category this year, accounted for 14% of brands’ budget mix. (“Spend” in this category includes a brand’s franchise development website but not its effectiveness, i.e., a frandev website is not a lead generator).

Next time: 2022 Digital Spend: Budget vs. Effectiveness

Published: February 6th, 2023

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