How the election could (and should) change the way restaurants do business

 
Dec. 12, 2016

By Mike Lukianoff, Chief Analytics Officer/Fishbowl

In 1960, John F. Kennedy and Richard Nixon made history when they became the first presidential candidates to debate on live TV. TV was a new technology, having grown from penetrating 11 percent of households a decade earlier, to 88 percent at the time of the debate. 

Post-debate analysis showed radio listeners gave the win to Nixon, but TV viewers overwhelmingly preferred Kennedy. Ultimately, it was TV that propelled him to pull off one of the slimmest victories in history, winning by just 100,000 votes. 

Now, half a century later, TV's power in politics seems obvious, but again, until that 1960 debate, radio and print were the primary media of choice in political persuasion. The 1960 presidential election was, in fact, the first to be won on and by TV. Like now, that was also a time of massive change in how people consume information. 
 
A lesson learned 56 years ago repeats itself today

In 2016, smartphone adoption in the U.S. hit a record 75 percent household penetration, growing from just 3.5 percent 10 years earlier. Daily impressions and time spent on mobile devices surpassed TV impressions for the first time. 

Facebook now has 1.7 billion users worldwide, up from just 12 million 10 years ago. Twitter, which hit 350 million users this year, did not exist 10 years ago. In the midst of all this, a tweeting candidate with 15 million followers, who most agreed had lost all three presidential debates, won an Electoral College victory in the biggest presidential upset of modern times. 
 
It's another turning point that people will analyze for decades to come, but the lessons for business and the restaurant business, in particular, are available now. And while the final details on campaign spending are not yet finalized, a few things in preliminary reports really stand out and have important lessons for the way restaurants do business now.  

Case in point?  Clinton v. Trump

It's been widely reported that the Clinton campaign outspent Trump by a wide margin, but the details in how that spending was allocated are striking. In the weeks leading up to the election, Clinton outspent Trump on conventional media spend (TV and radio) by as much as 3 to 1 — with the spending gap being the widest in battleground states.

The Trump campaign, on the other hand, was outspending Clinton's campaign in digital at times by as much as 5 to 1. According to Trump's son-in-law, Jared Kushner, the campaign "played Moneyball" to find the best return on investment per electoral vote and used micro-targeting to get the right message to the right people.  

At times, they had 100,000 unique digital ads running in a single week. They measured, then  quickly killed messages that weren't working, and re-adjusted. The strategy enabled them to target the right people in the places that mattered the most, with tailored messages that were most likely to influence behavior.  

The death of TV advertising has been predicted for some time, but forecasters of its demise have repeatedly been proven wrong as traditional ad sales have remained stable. And, if there is anything 2016 has taught us, it's that change does not always come when and where we expect it. 

Restaurants: From the time of TV ... to now
The 1960s ushered in TV's golden age, transforming industry and society in ways we could not imagine then, and the U.S. chain restaurant industry was largely made possible by the TV advertising age. In fact, over the time from 1970 to today, the chain restaurant business grew from $43 billion to more than $750 billion in 2016.  

Restaurant chains built mega-brands based on simple TV campaigns that featured jingles, a consistent product, simple messages and glamorized food photography.  In today's world, consumers are more likely to look at an less-than-glamorous guest-generated food shot posted on Facebook than to actually look at a shellacked burger on a TV ad. 

Brands no longer must entice people to eat out, rather today's consumer now considers that part of their everyday life, and then turns to online reviews to inform them about which brand they'll go for, or simply forego altogether. Likewise, once they try those brands, consumers today are not shy about telling the world via social media if their experience was less than satisfying. And so the cycle continues. 

And as always, marketing restaurant brands today is still about getting the sale, but over time the ad industry lost track of that and turned to more easily measured things like TRPs (target rating points), impressions, click-throughs and other metrics. Though these measurements help determine the currency of advertising, they are too often confused with the end goal. 

What technology promises for restaurant marketing

The promises of the most recent emergent technology, however, are manyfold. For instance, it's not only easier to target consumers at the moment they are making dining decisions today, it's also much easier to measure current media channels than those of the past. As statisticians well know, those are the kinds of factors that make today's marketing technology much more predictable and far less risky than the venues of the past.

That's why all restaurants competitive on the local front should embrace this new promotional paradigm. Indeed, many are already well into doing just that. But it's the mega-brands that have the most to lose by going with the diminishing effectiveness of blanket advertising.

And they're beginning to see that. All over giant brands are beginning to shift their big budgets to the more digitally inclined persuasion channels of the future. And that means that right now the smaller regional chains and independents restaurants are looking through a unique window of opportunity. 

They can — in this moment — be more effective than their larger rivals by embracing local and social media marketing to influence customer choices in their favor. After all, who knows the local area better? And who knows best how to deliver those yearned for experiences to those customers?

In fact, smaller brands currently have the kind of competitive edge that ought to be keeping their larger competitors up at night since many of those behemoth brands still approach the task of driving up sales, by doing deep discounting, as well as digging ever deeper into their pockets to pay for those ever-higher TV ad costs for production and air time. 


Topics: Business Strategy and Profitability, Marketing, Online / Mobile / Social


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