Administering Advertising Funds

Leveraging Collective Power for Marketing Success

Administering Advertising Funds

• When and how to structure local and national advertising funds

• Do we need and advisory council? How to build consensus for your plan.

• Can we use our ad fund for this? The do’s and don’t of allocation.

• Whose money is it anyway? Decision making and control.

• Encouraging participation and enforcing collection. What happens when not everyone agrees.

Administering Advertising Funds

Moderator• Jan Muhleman, President, re:group, inc.Panelists• Jim Wassell, Chief Marketing Officer, The Service

Master Company• Cathleen Stewart, Director of Advertising and

Marketing, Batteries Plus• Steve Spicer, N. Dakota Area Area Developer, Chair

Marketing Advisory Council, The UPS Store

Jan Muhleman, re:group, inc.

Franchise Advertising Experience

• American Speedy Printing Centers/Allegra

• A&W Restaurants• Ben & Jerry’s• Chevron• Children’s Orchard

• Computer Renaissance• Domino’s Pizza• Duskin, Ltd.• Floor Coverings

International• The Coffee Beanery• The Medicine Shoppe• Tutor Time

Lots of Variables

• System size and maturity?• What’s in the contract?• Do you have different contracts in the system?• Do you collect the advertising royalty?• Do you have local co-ops?• Do you place national media?• Do you have an Advertising Advisory Council?• Who owns the customer?

Other Questions or Issues?

ServiceMaster Clean National Advertising Fund

Jim Wassell Chief Marketing Officer

2007 Overview• $4.8 million fund contribution

– Franchise owners- .5 to 1% with Cap– Corporate- 5% of collected

• Major expenditures– Regional Marketing – 30%– Internal and external sales force – 30%– National tradeshows -15%– Web initiatives – 14%

Management & Communication

• Within franchise bi-laws, plan and spend is approved by National Franchise Council

• Bi-annual face to face meetings with NFC for budget discussion/approval

• Monthly conference call updates• Audited annually• Communicated via intranet site,

printed newsletter and email

1997 – 2006 Co-opBenefits• Improved perception of NAF• Easy to apply for

Challenges• Reimbursed existing programs• Innovation / creativity• Limited incentive for working together• Limited involvement of local support

Ave. # participants per year = 426Ave.$ dispersed per year = $887

2007 – ForwardRegional Marketing Fund• $ allocated for regional offices to spend against

franchise marketing initiatives • Approved initiatives must be new, not established

programs • Provide incentive to market together• Move away from reimbursement & support to

innovation & improvement• Put funds closer to the need• Opportunities have a greater impact at local level

Batteries Plus

Cathleen StewartDirector of Advertising & Marketing

Support

Batteries Plus• About Us

– First store opened in 1988– Nearly 300 stores in 42 states – Comprehensive selection of batteries and

battery related products– Serve Commercial and Retail customers

Batteries Plus• Our Fund

– Started in 1994– 1% contribution per store– National Marketing not Advertising Fund

Batteries Plus• Fund Use

– 1/3 Supports In-House Marketing Services• 16 Person Team Providing Design, Layout,

Production, Media and Marketing Services• High Participation in these Services by Owners

– Allows for Marketing Expertise while Maintaining Control of Local Marketing Efforts

Batteries Plus• Fund Use

– 1/3 Supports New Market Development• Websites• National Accounts• Commercial Sales Program

Batteries Plus• Fund Use

– 1/3 Supports Franchisee Services• 800# / Store Locator• Public Relations• Intranet• Creative Production• Tradeshow Booths• Merchandising

Batteries Plus• Fund Use

– National Advertising• Minimal Allocation to National Advertising• 500+ Stores• Consider Supporting Co-ops First

Batteries Plus• Our Council

– 6 Elected from Geographic Regions– Serve a 3-Year Term– One Per Ownership Group– 3 Managers / Officers from Franchisor

Batteries Plus• Our Council’s Purpose

– Promote Open and Equitable Use of the Fund

– Address/Resolve Issues of General Interest– Champion the Fund Use to Owners

Batteries Plus• Whose Money Is It Anyway?

– Direct Control is with Us– Significant Consideration to the Council

Batteries Plus• Getting Consensus for Our Plan

– Council is Open & Willing to Test/Validate– Council Encourages Owners not to be so

Singular in Scope

Batteries Plus• Do’s & Don'ts of Allocation

– Focus on the Do’s:• Get Consensus • Openly Communicate/Report• Expand the Vision • Manage Expectations

The UPS Store Advertising OverviewSteve Spicer

Chairman, The UPS Store Marketing Advisory Council

The UPS Store• MBE

– Franchisor of The UPS Store and Mail Boxes Etc.– Subsidiary of UPS

• Retail locations selling business services to small business and personal customers– 4,262 The UPS Store locations domestically*– 287 The UPS Store locations – Canada and India*– 1,300 Mail Boxes Etc. locations – Domestic and

international*

*As of December 2006

Why Me – Steve Spicer?• Chairman of the Marketing Advisory Council• Not a corporate employee• An area franchisee and individual store franchisee

– Own territorial rights to franchise The UPS Store brand in North Dakota, South Dakota and Nebraska

– Own two The UPS Store locations

• Part of the network for 15 years• Other committees

The UPS Store Advertising Support Team

• MBE Corporate Marketing Department• Doner Advertising• Marketing Advisory Council

Marketing Advisory Council• 12 elected members

– 8 franchisees representing each region (domestic only)– 2 area franchisees representing entire area community– 1 chairperson, a franchisee or area franchisee– 1 corporate representative

• VP of Marketing

• Meet face-to-face quarterly• Monthly conference calls• Guided by by-laws that mirror the rights granted in

the Franchise Agreement

How is advertising funded?• National Advertising Fund (NAF)

– Funded through 2.5% contribution on revenue subject to royalty from the franchisees

– No corporate funding directly to the NAF

• Additionally, franchisees pay a 1% Marketing Fee to MBE that is administered internally by MBE– This fee covers marketing costs related to merchandising,

public relations, product development, research, etc.

How the NAF is administered• MBE has the legal right to manage all aspects of this fund, with

the exception of approving the funds to support the media plan– This approval needs to be done by the Marketing Advisory Council

(MAC)• However, MBE Marketing works very closely with the MAC to

gain input and support for:– Strategic Planning– Product Development– Media recommendations– Promotional ideas– Creative concepts– Merchandising– Communications

Advertising Co-op Additional to NAF

• Each store is required to be a part of an advertising co-op and contribute to their co-op advertising fund– An additional contribution outside of the NAF

• 191 co-ops– Doner and MBE co-op teams work with the co-op leadership

to manage each co-op’s marketing plan development, media and promotional planning, media buying and promotional support

Doner – Who are they?• Handles all national and co-op advertising services for The UPS Store

brand domestically• One of the largest privately held, independent advertising agencies in

the world• Headquartered in Southfield, Michigan

– Offices in Boston, Cleveland, Dallas, Newport Beach, Tampa, Toronto, Montreal and Vancouver

• Billings approximately $1.6 billion• Clients include

– ADT, American Greetings, Blockbuster, Cintas, Cox Communications, Helzberg Diamonds, HGTV, Mazda, PacSun, PetSmart, Progressive Insurance, Serta, Sylvan Learning Center

Summary• MBE, a UPS company, is the franchisor for The UPS

Store brand• All franchisees contribute 2.5% to a National

Advertising Fund– Administered by MBE Marketing Department working with the

Marketing Advisory Council• The MAC must approve any funds used for media

• MAC includes elected representatives, franchisees and area franchisees, and one corporate representative

• Meet quarterly, with monthly conference calls in- between

QUESTIONS?