Advertising Franchise Industry Profile
Advertising franchises help other businesses plan and execute strategies related to their marketing goals. Some advertising franchises offer a wide range of services that utilize different types of media; others concentrate on one type of promotional product or concept and succeed as specialists. Advertising franchises offer services in areas including print, broadcast media, email and digital services. You may enjoy owning an advertising franchise if you excel in client interaction, creating marketing solutions and coordinating creative services. Advertising franchises also can be a favorable option for career changers since these businesses typically provide industry training and involve low start-up costs.
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Advertising Franchise Industry Outlook and Trends
Advertising is an important consideration for virtually any business. The U. S. Small Business Administration (SBA) advises small businesses with revenues totaling less than $5 million to apply 7 to 8 percent of their revenues toward advertising/marketing services. However, every business has unique advertising needs. The challenge for advertising franchisees is to help clients identify their advertising goals and creative solutions for meeting them. Franchise owners must work to prove how their offerings can replace or complement the many traditional and novel options competing for clients' advertising dollars. In doing so, they also must provide cost and convenience advantages to in-house advertising departments.
According to an industry report by First Research, maintaining successful client relationships is one of the key requirements for the profitability of individual advertising agencies, including franchises. As the owner of an advertising franchise, you'll have access to systems that can support you in meeting this demand. Pre-planned advertising franchise systems can guide you in producing creative and effective client solutions. In addition, time-saving proprietary software can help you deliver proven results without jeopardizing your ability to remain attentive in this client service-driven industry.
The United States is the largest advertising market in the world, with U.S. spending positioned to remain more than double the amount spent in second-place China. The demand for advertising is driven by companies that do business in sectors such as automotive, retail, entertainment and media, food and beverages, and technology. In 2018, advertising agencies and franchises have benefited from growing corporate profits in these key industries, along with the expansion of digital media, two trends that likely will continue to boost industry growth, according to analysts at IBISWORLD.
Advertising industry analysts point to several indicators that show continued opportunities for growth:
- With the top 50 advertising agencies owning less than 50 percent of industry revenue, there is room for new advertising franchises to compete in this fragmented industry. (First Research)
- Continued growth of local advertising dollars, with 2018 total expenditures increasing 6.6 percent to $220.96 billion, offers increased opportunities for advertising franchises to establish relationships in their nearby markets. (eMarketer)
- One of the biggest growth areas in advertising agency business is service specialization, a business strategy characteristic of many advertising franchises. (Mumbrella)
- U.S. mobile advertising spending grew at a rate of 23.5 percent in 2018, a rate three times faster than total media advertising, drastically expanding opportunities for advertising franchises in this specialty. (eMarketer)
Common Business Models for Advertising Franchises
Advertising franchises include a wide range of companies that provide specialized services with measurable results. Some concentrate on a specific product or service, which can range from proprietary software to a unique promotional product. Full-service advertising franchises are at the opposite end of the spectrum. These companies provide services that include planning, creating and executing advertising campaigns.
Most advertising franchises can be classified into one of several business models:
- Full-Service Printing Companies: Franchises such as Minuteman Press and PostNet offer several types of services. While these companies may have originated as printers and shippers, their expanded services provide clients with the convenience of one-stop shopping for many advertising needs. For franchisees, multiple revenue streams can help sustain these franchises when business slows in one specific segment.
- Digital Services Specialists: Franchises such as SMS Masterminds and Digital Marketing Training Group specialize in the booming business of digital advertising services. These franchises provide a wide range of services such as search engine optimization (SEO), social media advertising and website creation/hosting.
- Sign Companies: Franchises including Fastsigns and Signarama provide unique visual products such as banners, event graphics, tradeshow displays and vehicle wraps. These franchises service businesses as well as small print shops that don't have the ability to meet their clients' large format needs.
- Direct Marketing: Franchises such as Money Mailer and Birthday Pak provide direct marketing opportunities that help businesses reach targeted customer groups. These franchises typically specialize in local advertising, an industry valued at $220.96 billion in the United States.
- Promotional Products: Franchises such as Hang up Garment Covers and Hotel Key Kaddy use promotional products as media for advertising. These businesses can work with both local and national advertisers in providing creative options for reaching target customer audiences.
Financial Matters of Advertising Franchises
With so many types of advertising franchises available, opportunities for ownership exist at all investment levels. Many advertising franchises are suited for operation as home businesses and as a result, require a low level of capital expenses. Most of the work involved is related to personal contact with clients and creative work. In many cases, creative services are performed via computer software, specialists on the franchisor staff or freelancers who work on a project basis remotely. Without the expenses involved with location-based businesses, home-based advertising franchises can help you earn stronger returns on your investment in less time, according to Franchising USA magazine.
However, many advertising franchises require a more significant investment. Those that use proprietary equipment, service vehicles or storage space can inflate your initial and ongoing expenses. Since The Wall Street Journal reports that it's common for franchisees to contribute about 20 percent of initial expenses from their personal savings, your financial resources will be a consideration in choosing a franchise. Companies that have a free-standing commercial location can require investments that reach into the hundreds of thousands of dollars as costs for property purchase or rental, maintenance and equipment add up just to get established.
As the owner of an advertising franchise, you will be obligated to pay royalties to your franchisor for the life of your franchise. However, owning a franchise also can offer financial benefits that can include:
- Franchisor-backed financing for capital expenses or other purchases involved with business setup
- Favorable financing options from lenders, based on having a proven business plan
- Franchisor support in finding lenders experienced in franchise financing
- Franchise savings from group discounts for inventory, equipment and professional services purchases
You can find an advertising franchise that may work for you by searching Franchise Opportunities' Advertising Franchises category.
An advertising franchise offers the advantage of starting your new venture with a proven business plan to guide you. By following your franchisor's guide, you'll be making decisions that position your business for success, while avoiding costly mistakes that could jeopardize potential profits. Your franchisor's experience in areas such as setup, financing, marketing and staffing in relation to your franchise product or service will be invaluable in giving your business the best possible start versus making these decisions based on trial and error on your own.
Owning an advertising franchise also can give your business the benefit of starting out with name recognition. You'll have the potential to market to established franchise clients, as well as new clients that are interested in your specific product or service. You'll also have an assigned geographic territory, giving you exclusive rights to your franchisor's clients in set markets. Even if your franchise doesn't have a familiar name, a new business backed by a franchise has inherent reputability versus an independent startup. You also can refer to your franchisor's existing customer base to prove the effectiveness of your franchise offering.
As the owner of an advertising franchise, you'll also have the support of a corporate franchise team that's familiar with the processes and systems your franchise needs to succeed. These professionals often can advise and guide you in:
- Finding and establishing the most appropriate franchise location
- Offering ongoing franchise training and industry education
- Including franchise practices in your client offerings
- Providing advice on issues related to licensing and legal issues
- Devising a business marketing plan to attract and secure clients
- Connecting with other franchisees to share support and solutions
Many of the challenges you'll encounter as the owner of an advertising franchise are the same as those faced by franchisees in all industries. Your association with a franchise will position your investment as a reputable business to first-time clients, but your location's individual customer service and output will be key in building upon that reputation to turn first-time clients into long-term relationships. You also will have to learn how to be creative and effective, while running a profitable business within the unique guidelines of your franchise.
One of the most important strategies for success in the advertising industry is the capability to incorporate new technology into existing services, according to IBISWorld analysts. The increasing emphasis on digital advertising has resulted in new industry skillsets related to services such as search engine optimization (SEO), website design and data analytics. Keeping yourself and your staff educated and current with regard to new and emerging industry technology, whether through franchise education or independent instruction, will be key to remaining competitive.
Generally, owning an advertising franchise also can involve the following potential challenges:
- Presenting your franchise as a reputable and professional entity, especially if you interact with clients remotely
- Producing creative options within the guidelines of your franchise offering
- Maintaining value and service advantages that offset the benefits of your clients performing advertising services in-house
- Keeping current on the availability of competitors' offerings
Characteristics for Success: Who Should Consider an Advertising Franchise?
If you're intrigued by the possibility of owning a franchise in the advertising industry, there likely is a business that you'll enjoy at your desired level of investment. Though an advertising background isn't always required for franchise ownership, having experience in marketing, sales or promotion may make you more confident when dealing with clients. Whether you're an advertising veteran or are new to the industry, owning a franchise can give you a strong business start and ongoing support to help you succeed.
In addition, you may be better positioned to enjoy your work and be more successful as the owner of an advertising franchise if:
- You can manage multiple projects simultaneously. Having strong organizational skills are key to keeping multiple projects progressing efficiently and on time.
- You have work experience or training in sales, marketing or promotion. You'll be more successful in satisfying your client's needs if you can creatively strategize ways to use your franchise services to help your clients succeed.
- You're comfortable working with the pressure of meeting deadlines. Many advertising projects coincide with projects that have non-negotiable deadlines such as special events or company announcements. Missing a deadline can jeopardize repeat business and your professional reputation.
- You have strong personal communication skills. You'll have to be a good listener to understand your client's advertising objectives and needs, and an effective communicator to convey those details to creative professionals if you're not handling those services personally.
- You can identify and retain employees who can help your advertising franchise succeed. Finding and keeping the right support staff is key to establishing a reputation for excellence, even though employer competition for some specialized advertising professionals can be intense.
Industry Snapshot*:Minimum Cash Required: $ 9,600
Average Cash Required: $ 34,200
*Based on currently active listings at FranchiseOpportunities.com