Topline Strategy: Highlights from the 6th Annual Franchise Marketing Report

The 2024 Annual Franchise Marketing Report (AFMR) is back and bigger than ever with new details that reflect the evolving nature of franchising.

Unveiled this summer at the Franchise Customer Experience Conference (FCXC) in Atlanta, the sixth annual AFMR provides data-driven insights that marketing professionals and other leaders can use to measure and elevate their efforts.

The franchise space is constantly faced with opportunities and challenges as marketers adapt to industry shifts, including the need to accelerate the digital transformations of their brands. This year’s survey reflects this with a greater CX focus on online reputation management, and for the first time, we tracked marketers’ views on the topic everyone is talking about: artificial intelligence (AI). 

AFMR participants included CMOs, CEOs, VPs, directors of marketing, and other senior-level marketing leaders who completed detailed questionnaires. The data and statistical findings were aggregated and analyzed to examine marketing practices, budgets, and strategies across a broad spectrum of franchise brands and sectors. 

The following are selected highlights and top takeaways from the report. 

Participating brands

Franchise marketing teams are tasked with marketing to consumers, business customers, or both. This year, more than half (55%) of the respondents were B2C marketers with 8% exclusively targeting B2B and 37% saying they marketed to consumers and businesses. 

As with the 2023 AMFR report, service brands accounted for the majority (69%) of respondents with 40% of marketers representing brick-and-mortar businesses while 29% were territory based. 

Another 24% of surveyors worked for food brands (14% food, 10% retail), and the remaining 8% were in non-food retail.

Leads and traffic 

This year’s report started with good news. Brands continue to strengthen their resilience in the post-pandemic era, focusing on future growth despite inflation concerns. 

Lead to Close

Leads and traffic count were up for more than half (54%) of respondents with 24% saying they were about the same. That was up collectively from 74% in 2023. Roughly 20% reported leads and traffic count experienced slight declines from the previous year. 

Looking at lead-to-close ratios across all marketing strategies, digital marketing and company websites were the most effective lead-generation sources. The report also found that other forms of outreach also connected with audiences, reinforcing the need for an omnichannel marketing strategy.

Marketing budgets

Marketing continues to solidify its place as a topline strategy for franchise brands looking to drive growth and boost brand power. This year, 66% of those surveyed increased their marketing spend in 2024 with 53% of franchises saying they added to their marketing team in the past 12 months. 

Marketing ROI

Today’s path to purchase is a winding road filled with discerning consumers. Brands have responded by changing algorithms, adding automation, and embracing disruptive technologies that are transforming the way the world does business. As a result, teams are focused on strategies that provide high ROI when marketing to moving targets. 

A robust online presence remains the top priority for AFMR participants with digital advertising, social media, and company websites receiving the bulk of brands’ allocated marketing budgets. 

Digital advertising soared as the prominent overall marketing strategy in 2024. The report found that 72% of franchise brands cited digital advertising as the most effective in driving customer leads and traffic, significantly higher than 44% in 2023. Digital advertising was followed by social media advertising (48%), referrals (42%), and websites (40%).

The survey drilled down to explore marketing’s impact on the customer experience and conversion. Although results vary by industry, the following highlights reveal where marketers invested their budgets and achieved the best results:

• Digital sources. Survey respondents allocated the most significant chunk of their digital advertising budget to pay-per-click on search engines (29%) and social media advertising (17%) with both being equally effective.
• Best social media sales platforms. Facebook dominated as the leading social sales platform across all categories with Instagram and LinkedIn tied for second. LinkedIn was on the rise for 2024 while YouTube and X, formerly Twitter, plunged to the bottom of this year’s report as marketers shifted gears to keep up with platform changes and consumer sentiment.

Tools and platforms 

Respondents cited Google Analytics, HubSpot, and their own in-house marketing platforms as the top three tools and platforms used in business operations. Google Analytics, Canva, and ChatGPT topped the list of platforms and tools used to manage marketing efforts. 

Local spend

Local marketing programs are crucial to franchise systems. Still, challenges remain, including difficulties with buy-in and compliance from franchisees who were busy tackling labor shortages, supply chain issues, and inflation. Most of those surveyed required or recommended local marketing spend, yet nearly half (45%) left it in the hands of their franchisees, relying on the honor system.'

Measuring CX

Franchise brands have never been more aware of the importance of customer experience metrics. Marketers leveraged AI and other disruptive technologies to optimize business and deliver improved CX. Every marketer surveyed has a customer experience process or model in place for their brand. That’s up from 78% of brands in 2023.

Online Reputation 

CX and online reputation go hand in hand for today’s brands to foster trust, boost brand power, and grow and expand business. This year’s report took an in-depth look into the metrics, platforms, and tools used to track a brand’s CX and online reputation. 

Marketers revealed that 75% looked to review sites, 46% used third-party surveys, 53% used internal surveys, and 4% used other tools. 

Online reviews topped the list of tracking metrics by 75% of respondents followed by social media mentions, website traffic, conversion rates, engagement metrics, brand mentions, and sentiment analysis. The platforms and tools used to measure this vary with 68% using social media monitoring tools, 45% using review monitoring platforms, 43% using online reputation management platforms, 36% using SEO tools, 21% using sentiment analysis tools, and 15% citing none of the above. 

AI’s impact

Marketers are just beginning to understand and unleash generative AI’s power to digitally transform the future of marketing at scale. Among those asked, 57% of franchise brands said they are leveraging AI technologies to engage and enhance the customer experience. Customer support chatbots are the most used application. Other uses for AI included personalized recommendations for products and services, customer service interactions, marketing campaigns, predictive analytics for anticipating customer needs, and loyalty programs. 

AI BENEFITS

Brands that are using AI are already seeing digital gains. Respondents said the integration of AI helped to resolve customer issues (43%) and improve customer satisfaction (33%) among other benefits. 

With generative AI still in its early stages, marketers said they face plenty of challenges as they strive to balance cutting-edge technology with the essential human element to enhance CX. Difficulties included finding skilled personnel for AI management, data privacy, security concerns, technology maturity, and reliability issues.

Franchisors need to invest in training and support and focus on measuring customer feedback. AI’s effectiveness will expand as brands embrace the promise of machine learning. The majority of AFMR participants seem to have gotten the message. Most respondents say they plan to moderately or significantly invest in AI-powered marketing. For the 43% of brands that reported not using AI—and remain on the fence—experts say now is the time to start. 

As futurist, organizational strategist, and FCXC keynote speaker Mike Walsh noted, “If you’re not currently using AI, you’re already behind.”

For more information about the 2024 AFMR and to order a copy, visit afmr.franchiseupdate.com/.

Challenges Ahead

As part of the 2024 Annual Franchise Marketing Report, marketers were asked to share the obstacles they face. Areas for improvement include: 

•  Budget constraints
•  Franchisee engagement and training
•  Maintaining brand consistency 
•  Digital marketing
•  Competition
•  Consumer trends and preferences
•  Data privacy and compliance