Restaurant marketers continue to underspend in the digital space

By Noah Glass, founder and CEO of OLO

Every year at the Wall Street Journal’s "All Things Digital" Conference, Kleiner Perkins Caufield & Byers' Mary Meeker presents her compelling "Internet Trends" slideshow, demonstrating that consumers have become even more digital than they were the year before. My favorite slide – one that Meeker refreshes year after year – is a chart that examines "Consumer Media Consumption by Media Channel" as compared to "Advertiser Spending by Media Channel." Meeker uses eMarketer data to examine five distinct channels: Print, radio, TV, Internet and mobile. And every year, without fail, the now famous chart clearly demonstrates that consumers are spending more and more of their media consumption time with Internet and mobile, the digital/interactive channels, leaving in the dust print, radio and TV, the traditional/non-interactive channels.

Despite the fact that Meeker was recently named "Queen of the 'Net" by Forbes magazine ("Mary Meeker Talks Twitter, Waze, Venture Capital And More," July 19, 2012) and despite the fact that consumer media consumption is rapidly going digital, corporate marketers are still spending the lion’s share of their advertising budgets on the traditional channels. Meeker’s 2012 report highlights that the main culprit is print.

Marketers dump 25 percent of their advertising budget in the print channel, despite consumers spending only 7 percent of their media consumption time there. At the same time, marketers underspend dramatically in the Internet and mobile categories. This year, consumers are spending 10 percent of their media consumption time with mobile, but mobile receives only 1 percent of advertising spend. You read that right; print gets less media consumption time than mobile and marketers still favor print 25 to 1 over mobile.

Beyond the fact that customers are spending their media consumption time with Internet and mobile, the two channels have distinct advantages over the traditional advertising channels. Internet and mobile advertising allow marketers to experiment with small test campaigns and see results before launching high dollar advertising campaigns. The interactive nature of Internet and mobile means that marketers can derive insights from email open rates, click-thru-rates, offer redemptions, website visit scoring and e-commerce tracking. The savvy marketer can use Internet and mobile campaigns to do powerful "A/B testing" through online platforms like Optimizely, where two versions of the same message can be tested against one another in a systematic fashion that accurately and quickly predicts which message will be more effective at scale.

Internet and mobile advertising can ultimately demonstrate the return-on-investment (ROI) of each advertising campaign by allowing brands to measure their cost to drive an incremental transaction or, better yet, to win an incremental customer. By contrast, it is very difficult to run small test campaigns for print, radio and TV campaigns, measure different messages in a true apples-to-apples comparison, or determine the impact of campaigns run through these channels.

In addition to campaign measurement, Internet and mobile have provided marketers with new tools for customer relationship management (CRM): the ability to identify new customers from existing customers and generate loyal purchasing behavior and brand advocacy from the existing customer base. In fact, digital customer engagement tools in our industry, like Fishbowl, OLO, Paytronix and Zipscene, are coming together to provide restaurant marketers with a full 360-degree view of the customer through powerful reporting dashboards that show rich customer profiles based on how the same customer engages with email marketing and offers, mobile ordering and online ordering purchases, loyalty and gift card transactions, website clicks, social statistics and demographic information. The data generated from these new digital customer engagement tools combine to provide restaurant marketers with a far greater knowledge of their top customers than has ever been possible – and at a fraction of the cost of traditional market research.

Restaurant marketers often lament the fact that they are the first to be blamed for declining same-store sales and the last to be recognized when same-store sales are on the upswing. Here too, the measurability of digital advertising is the marketer’s best friend. Breaking down the ultimate goal of driving same store sales into its constituent parts means recognizing that the key performance indicators (KPIs) for restaurant marketers are to drive (1) new customers visiting their restaurant for the first time, (2) more frequent visits/orders from existing customers and (3) larger average order sizes.

Shifting to measurable digital/interactive advertising means that marketers can tie their advertising campaigns to improved results in these areas and truly demonstrate causation, not just correlation. No restaurant CEO would question a CMO who can demonstrate the impact of advertising campaigns by quantifying double-digit increases in new customers, visit frequency and average ticket.

If interactive/digital advertising is more efficient, powerful and measurable than traditional/non-interactive, how can we explain the prevailing bias toward print? Perhaps it is just hard to teach old dogs new tricks. Nevertheless, now is the time for every restaurant CMO to embrace the digital revolution, retool and prove his/her ability to drive better sales results.

Noah Glass is the founder & CEO of mobile and online ordering provider OLO. Highlighting OLO's innovation, Glass has been featured on Good Morning America, The Wall Street Journal, ABC World News and The Big Idea with Donny Deutsch.

 


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