The quick service restaurants (QSR) industry used to be one we thought of as tech-proof.
In the early days of the Internet, most of us couldn’t see how digital channels would change how QSR companies do business. The development of smartphones, mobile payments, and delivery apps have proved us wrong. The fast food advertising statistics we’re seeing now show us that consumers still choose QSRs for their convenience, but they also expect that service to be tech assisted.
QSR advertising and marketing managers need to focus on tech now more than ever. Even traditional methods of fast food advertising, like television commercials, are losing reach. Throughout 2017, for example, more than 1 million cable customers canceled service in favor of online streaming platforms. The Internet has become a major industry disruptor for QSR brands. The fast food advertising statistics of recent years are showing that QSR marketers must use digital tools to connect with consumers in the right way and at the right time.
Food Delivery Disrupts the Industry
As more companies begin to offer food delivery and online ordering, QSR marketers must be willing to put an increased focus on those options. The US market for food delivery is expected to grow by 79% over the next five years. Some of the reasons for this growth include:
- Third-party delivery services: By far, the biggest driver of food delivery growth in recent years has been the development of third-party options like Uber Eats and Grubhub. These tools allow QSR brands to offer food delivery even when they don’t have an in-house delivery team.
- Rapid growth: As consumers begin spending more time ordering in than dining out, it’s expected that off-premise restaurant growth will outpace overall restaurant traffic growth over the next decade. This is a major opportunity for brands that want to expand outside of on-premises dining and drive-thrus.
- More options: Pizza has always been a major part of food delivery, making up about 60% of the food delivery market. However, with more restaurants accepting online food delivery, and thereby giving consumers more options, delivery will begin to cut into that piece of the pie.
Advertisers need to be aware of the increased interest in food delivery and be prepared to work with the companies that deliver better experiences to consumers. Choosing the right partners as the delivery market expands will be a necessary step for success. In fact, tech and QSR partnerships are going to become a major part of the advertising paradigm in the years to come.
Preparing for Increased Programmatic Advertising Competition
Programmatic advertising has completely changed the way marketing managers purchase ads. This type of ad purchasing isn’t done through in-person negotiations. Instead, it’s a system that uses machines to manage ad purchases. There are basically three ways this works:
- Real-time bidding (RTB): With real-time bidding—think Google AdWords—anyone can bid on any search phrase and receive priority for their ad to be shown when the phrase is searched. Easy to access and simple to use, it is also highly competitive.
- Private marketplace: Private marketplace bidding is similar to RTB, but in this case, advertisers must be invited to participate in order to bid. It’s less competitive than RTB, but at the same time, the platform is smaller and has less of an audience.
- One-on-one partnerships: In this direct deal between the platform and the advertiser, the advertiser pays a fixed amount to the platform to display their ad. This is something you’d see on shopping apps like Shopkick. The benefit of these arrangements is that the ads are guaranteed and the platform is advertising to a specific audience, so you can reach the right target market at the right time.
For QSRs, programmatic advertising is highly competitive. This segment of digital marketing strategies is expected to grow faster than all other online avenues, to include social media and video streaming. More competition means a higher cost of bidding on most sites, which is why those in the QSR industry would do well to seek out those least competitive options—such as one-on-one partnerships—early on.
Mobile Becomes a Major Player
Mobile offers a benefit that desktop often doesn’t: geo-tracking. The ability to connect with a customer via mobile is a major advantage to QSR brands as consumers frequently make QSR decisions as they’re on the go. A good example of a brand that took advantage of this is Domino’s, which used a mobile strategy to pull a significant portion of market share from competitor Pizza Hut. While Pizza Hut has lost 6 points of the market over the past five years, Domino’s has gained 8. Domino’s managed this by providing several mobile features, including:
- Rewards: Users can save their QSR rewards program points and redeem them directly from their smartphones.
- Payments: They can link in credit and debit cards and pay for orders rapidly, in a secure environment. While Pizza Hut offers this now as well, Domino’s was among the first to roll out the option.
- Order tracking: Customers can watch the progress of their order, from it being received to it going out for delivery. Pizza Hut didn’t roll out its own tracker until 2017, several years after the Domino’s tracker was released.
With their mobile strategy, Domino’s was able to pull ahead of one of their biggest competitors, Pizza Hut. Mobile is important to consumers, so it needs to be equally important to QSR brands. What’s particularly unique about Domino’s is that through this strategy, they were also able to capitalize on two of the other critical strategies mentioned: delivery and programmatic advertising. The company’s mobile app is entirely focused on delivery, with much of their programmatic advertising focusing on this option.
One thing that we can see, based on these fast food advertising statistics, is that all current trends are closely linked. By implementing a strategy that ties them together, QSR marketing managers can make the most of fast food advertising trends in the years to come.
Shopkick is a platform that can specifically help with QSR advertising, by exposing the messages of our partners to a dedicated audience of active users. If you’d like to take advantage of this, contact us.
Image courtesy Rawpixel.com.