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The NRN 50: The sales pitch

The NRN 50: The sales pitch

The invention of radio did not kill newspapers, as doomsayers of the time predicted. Nor did television kill movies any more than the Internet killed television.

The only thing that happened as each medium became popular was that advertising found yet another place to call home.

Advertising has not only survived, it has thrived in the traditional print and broadcast media and has become pervasive on the Internet and mobile devices.

One thing that hasn’t changed is that marketers still use advertising for the same reason it has prevailed since advertising’s inception: to raise brand awareness and persuade consumers to buy products.

Ad executives and restaurant operators agree that the biggest change within the past 10 or so years has been the fragmented media landscape. Where once a restaurant chain’s media buy would include print, billboards, radio—and TV if the budget was big enough—the buy now includes those media and banner ads on the Internet, a viral campaign, a microsite, perhaps a text-message promotion and maybe even a social-networking website.

Despite the proliferation of media, one constant remains.

“The one thing that hasn’t changed is that TV remains king,” says Dan Dahlen, executive vice president of the restaurant business group of IAG Research, a New York-based firm that tracks ad effectiveness. “The majority of ad dollars are still being spent by the major brands on television.”

Total U.S. ad spending in 2007 was $283.9 billion, according to an estimate by Bob Coen, director of forecasting for media agency Universal McCann. Of that amount, $37.5 billion was spent on cable TV ads and spots on the four major broadcast networks. In comparison, Internet advertising reached $10.9 billion.

Coen predicts a modest 5-percent ad growth in 2008 for both broadcast and cable networks and 16.5-percent growth in Internet ads.

While it seems ironic that TV remains the major medium for advertisers when all of the buzz is about cell phone promotions and interactive Internet campaigns, there’s a reason that marketers still turn to TV.

“It’s predominately a result of the pressure to deliver positive same-store sales, whether you’re Starbucks or Cracker Barrel or any of the larger chains,” Dahlen says. “Wall Street will look at same-store sales trends. To increase same-store sales requires you to bring more people back more often.”

Although the death knell for the traditional 30-second TV spot has been sounding for many years, such chains as Starbucks Coffee, Cracker Barrel Old Country Store and Red Robin Gourmet Burgers have only recently launched TV campaigns to achieve the reach and frequency that other media don’t provide.

For Red Robin, which broke its first national cable TV campaign last April, using the medium “was the most cost-efficient and effective way to grow brand awareness,” says Kim McBee, its vice president of marketing.

The campaign, created by G&M Plumbing of Manhattan Beach, Calif., showcased the “insanely delicious” products coming out of Red Robin’s “Department of Deliciousness” and how consumers couldn’t resist them, even if it meant getting splattered with blue dye for committing a “burger violation” by swiping a burger from a display stand.

The ads aired for 11 weeks and contributed to a 4.8-percent same-store sales increase at company units during the third quarter of 2007, McBee says.

The chain, which has more than 350 units, plans to increase its ad spending this year, raising contributions to the national advertising fund to 1.5 percent of sales from 1 percent, she says.

Mickey Taylor, co-founder and creative director of G&M Plumbing, succinctly explains of why TV is still a viable ad medium: “Because it works.”

A video on YouTube can attract a million viewers, Taylor explains, but a TV spot can reach many more than that “if used correctly.”

“It’s still very persuasive, especially for restaurants,” he says. “You can tell a story, you can see food photography.”

The visual aspect is why McBee prefers TV to radio.

“Whenever we can have a visual, that’s going to be our top priority,” she says. “For food especially.”

But for the past several years, marketers have worried that their visuals weren’t being seen by TV viewers using digital video recorders to fast-forward through ads.

That fear seems to have been premature. A recent analysis by Palisades MediaGroup of Santa Monica, Calif., showed that fewer than half of DVR owners skip past commercials.

Mobile marketing is touted as an effective way to reach consumers, but a study last fall by Nielsen Co. revealed that 79 percent of mobile-device users who surf the Web, send text messages or play video games did not view the ads they received.

Mobile marketing is supposed to target consumers more narrowly than the mass medium of TV, but RSS feeds can do a better job of doing that, says Richard Turer, vice president of marketing for Tampa, Fla.-based Bonefish Grill.

“RSS is a wonderful product online that ensures privacy,” he says. “That trend is a slow-growing trend that I suggest will dramatically increase exponentially in use.”

U.S. consumers do not respond to mobile campaigns because they use cell phones differently than consumers in Europe, who regularly use them to buy things from vending machines, Turer points out.

Once cellular commerce catches on in the United States, mobile devices will be more effective as an ad medium, he predicts.

Still, that doesn’t mean narrowly targeted ads are right for everyone, Turer says.

“It depends on the maturity of the brand,” he says. “Different brands need to throw wider nets. As you start to grow out and reach maturity you want to balance that with more targets.”

Dairy Queen is as mature a brand as any, and when it introduced waffle bowls and cones last year it supported the rollout with traditional TV spots showcasing characters named Soft Serve and Waffles.

“One of the things that has survived, and survived quite nicely, is the classic 30-second television spot,” says Michael Keller, chief brand officer for Minneapolis-based International Dairy Queen. “I’m not sure there’s yet a replacement for the connection you make with your customers in 30 seconds. There really isn’t anything [else] that any of us has seen where you can connect pretty robustly with such a big audience.”

The chain, which has nearly 6,000 units worldwide, also promoted the waffle treats with personal appearances by the characters. A mobile initiative in which consumers uploaded photos of themselves enjoying waffle bowls and cones did not work well.

People just aren’t using cell phones the way the restaurant industry wants them to, Keller explains, which makes mobile marketing a tactic for the future.

“It all feels a tad premature, not that it won’t become bigger later,” Keller says.

He acknowledges that targeting smaller niches is something more marketers are attempting, and Keller points to cable TV as a good medium for doing that.

“There are so many cable channels, and they cater to increasingly smaller slices [of viewers], that in some way you start narrowcasting when you buy programming on certain cable stations,” he says.

Dairy Queen has its own form of narrowcasting “to our most loyal fans” through its Blizzard Fan Club, Keller says.

“We’re actually aggregating an audience that has in common a product,” he says. “How much more narrow can you get?”

Nearly 1.5 million customers have joined the club during the last two and a half years. Dairy Queen reaches them through e-newsletters that focus solely on news about the Blizzard treat.

Whether chains incorporate new media into their marketing plans or stick to traditional media, the effectiveness will depend on consumers belief in the ad messages.

And the medium that most consumers trust above all the rest is word-of-mouth.

A Nielsen Internet survey last fall found that 78 percent of consumers trust the recommendations of other consumers more than they trust traditional and non-traditional advertising. In the end, it seems, all the marketing tactics restaurant chains use come down to whether those tactics can influence two people talking about where to have dinner.

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