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Advertising: Do You Get What You Pay For?

To make it in today's market, any restaurant or foodservice operation needs to have a clearly defined marketing plan and budget for the upcoming year. One of the key components of the marketing plan is advertising. Advertising will be frequently the most visible part of your marketing plan, and will be an integral form of support for any of the promotions that you undertake.

In general, the advertising budget should equal 3% to 4% of gross sales. It is important to allocate a specific advertising budget to each month. This monthly budget should be a function of the month's projected gross sales. It may be useful to establish a minimum budget for each month.

Once a monthly budget is determined, a comprehensive plan identifying all the advertising activities for each of the upcoming 12 months should be prepared. It may be helpful to develop a chart which has the months listed down the left column and the days listed across the top row. Pencil in the promotions which you want to schedule. For example, you may want to do a New Year's Eve party, a Valentine's Day and Mother's Day special.

Additionally, depending on the style of restaurant, you may want to promote traditional holidays such as St. Patrick's Day or Chinese New Year's.

A specific advertising budget should then be allocated to each promotion. The budget for each promotion will be based on the monthly advertising budget, the number of promotions scheduled during the month, and the amount being spent on general advertising.
In planning your advertising campaign it may help you to think of the "5 Ws".

Why - In spending your advertising dollars, it is important to remember that all the advertising you undertake is a function of your marketing plan. The marketing plan should clearly identify the objective of each advertising campaign (attract new customers, or increase the amount of repeat business).

Who - The advertising campaign should be directed to a specific target market. This target market can be defined by a variety of characteristics such as current customer base, potential customer base and geography.

What - Before undertaking the advertising campaign, it is important to understand what benefit(s) need to be offered to customers in order to achieve the campaign's objective. This benefit must be then clearly communicated in the campaign.

Who - Based on the marketing plan, a decision can be made as to the timing of the campaign.

Where - The decision of which medium to use will be based on the other "Ws" and the available budget. The basic question you need to answer is "will this medium reach my target market and will it successfully communicate my message?" One of the implicit decisions is whether the advertising should be internal or external.

At the simplest level, external advertising can be defined as advertising undertaken outside the establishment in printed media (newspapers, magazines, show guides), radio, television, billboards, or at specific events (through sponsorship). Internal advertising can be defined as advertising done within the establishment (tent cards, menu inserts, banners). In terms of objectives, external advertising is designed to draw customers to the operation, while internal advertising is intended to influence customers' buying decision/pattern inside the establishment.

As a rule of thumb, in the foodservice industry you should spend approximately 70% of your advertising budget on external advertising and 30% on internal advertising.

As with any business decision, it is important to be able to quantify the results/impact of the advertising campaign. You need to assess whether, for example, your promotion was appropriate for your target market and also whether the campaign was effective in communicating to and reaching the target market.

Part of this assessment can be done prior to the beginning of the campaign. It is possible to conduct consumer research of the advertisements (and promotion) prior to the launch and predict with confidence the likely success of the campaign.

During the campaign, you should track the impact of the advertisement. For example, what percentage of customers are taking advantage of the two-for-one special? In addition, it may be useful to solicit customer feedback on the campaign. At the end of the campaign you should quantify, as best you can, the impact of the advertising campaign on gross sales.

In today's economic market, it may seem difficult to some to justify spending money on advertising, but we argue that effective advertising does not necessarily have to be prohibitively expensive and that the payoff can be significant. It can be persuasively argued that during an economic downturn it is vital to increase the advertising budget to bring in more customers.

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