What Should You Be Spending on a Franchise Marketing Budget?
The average recruitment budget for franchises in 2019 is $186,000 per year, or $15,500 per month. Franchisor spend slightly more in 2018 as budgets increased from 2016 to 2018.
The average franchisor typically sells about 20 units per year at this average franchise marketing budget. Franchises looking to sell more units and open more locations each year tend to have higher budgets on average.
58% of the budget went to digital marketing channels ($107,880 yearly/$8,990 monthly), including 32% to digital, 14% towards the franchise website, and 12% towards social media.
You can see how the average franchisor divides up the budget. Some interesting takeaways here.
Breaking that down further into actual dollars, we see the following:
- Franchise Opportunity Websites (what we call the “Barnacle Approach”): $26,970 yearly / $2,247 monthly)
- PPC (Adwords, Display, etc): $25,890 yearly / $2,157 monthly
- Social Media Advertising: $11,866 yearly / $988 monthly
- SEO: $9,709 yearly / $800 monthly
What Digital Marketing Channels Are Most Effective For Franchisors?
The top producing channels in digital marketing for franchises are Franchise Opportunity Sites (Digital Franchise Ad Portals below), SEO (Search Engine Optimization), and PPC.
With SEO being one of the top channels, it’s often an undervalued channel, with only about 9% of the budget going there on average. SEO is one of the top producing channels because of the intent of the searcher. As searches are performed to find info on franchising, you can create great lead opportunities by being a resource.
The return on investment can vary based on campaign performance. The average cost per lead is $126, with top producing campaigns getting this down to about $72. This has a big impact on the cost per franchise sale. The average cost of the leads needed to close a franchise sale averaged $8,984, but top performing campaigns managed to be twice as efficient at a cost per sale of $3,974. Leads that produced an application closed at 23% close rate on average, with top producers hitting a 39% close rate.
Marketing plays a big role here, but individual franchisor sales processes and the overall attractiveness of the brand (culture, product, AUV, and NET) also has a big impact on the close rate. Marketing can bring in qualified leads, and it becomes the role of the franchisor to nurture and close. SEOteric’s digital marketing services help improve AUV and NET by increasing search exposure that produces revenue growth at the local store level.