Franchise Development Teams Face Growth Headwinds in Paid Search
By: Michael Alston for Franchise Insights
January 24, 2024 – In our last article, we highlighted some of the headwinds facing advertisers who generate franchise leads from Google. Traffic exclusivity from Apple, antitrust and regulatory court proceedings threaten Google in 2024, along with greater competition by other players like Microsoft who aim to use artificial intelligence to get a bigger piece of the search marketing pie.
Last week we discussed headwinds to Instagram and Facebook. This week we address two more pivotal factors on the demand side of the equation – advertiser (franchisor), and consumer demand at Google.
Forces squeezing Organic Results Add Pressure to Paid Search Marketing
Organic Results From SEO are Shrinking, and the Competition is More Fierce. Over time, the “real estate” on Google organic search result pages dedicated to the free blue links that consumers can click on has evaporated, especially on pages streamlined for mobile devices. The paid or “Sponsored” ads at the top take up a page or two on a mobile phone browser.
“Zero click” searches – where Google provides questions and answers right on the results page, so no click is needed – have increased over the last several years.. With more space taken up by video, images, and other search and advertising options, the real estate dedicated to organic links has greatly diminished.
And to make matters worse, the competition for the dwindling organic space is even more fierce, compounded by the spamming of organic results by low-quality middlemen trying to make a fast buck These are the fly-by-night franchise “opportunity” sites that you see pop up, some with offshore or no contact information, who sell “leads” for bargain prices, or don’t tell you that they are selling the information multiple times. They are copying your franchise content off of legitimate portal sites without your approval – to generate leads for your competitors. Stick with the suppliers you have seen around for a long time, who are members of IFA and other reputable trade organizations.
Uncertain Consumer Reaction to AI-Enhanced Results
Google has been much more cautious than Microsoft about this transition, for good reason. The continuation of a $300 BILLION advertising business depends on getting that right. But looking at early implementations, it is clear that further banishment of organic results to multiple scrolls down will hasten the decline in its value to your franchise development program.
The bigger question is – how will consumers respond? Will this help or hurt them in their franchise research? Will it result in more clicks – or will they turn elsewhere? What will changes to the consumer search experience from generative search features mean for franchise development and sales teams?
We’ll have a bit more data on search traffic and competition when Google and Microsoft provide Q4 earnings and commentary next week.
One thing for sure is that competition for paid searches is growing. In 2024, 45.7% of franchisors expect to increase spending “somewhat” or “significantly.”
Near Future for Paid Search Marketing for Franchise Lead Generation
The competition for the “Sponsored” (paid) ads at the top and interspersed every few pages has increased considerably, and is likely to continue to grow.
What is most relevant is the competition for potential franchise buyers. In 2024, 45.7% of franchisors, in order to reach their goals, expect to increase spending “somewhat” or “significantly” as seen in the chart above from the December 2023 survey. They also expect to increase their Instagram and Facebook spending in 2024.
When supply is constrained, and competition increases, only one thing can happen to price.
In the weeks ahead, we will dedicate much of this space to how franchisors can better position themselves to plan and thrive in the face of these changes.
Franchise Ventures is the leading franchise lead-generation platform for potential franchisees to thousands of growing franchise systems in the United States and Canada. Its franchise lead generation brands include Franchise.com, Franchise Solutions, Franchise Gator, Franchise Opportunities, Franchise For Sale, SmallBusinessStartup.com and BusinessBroker.net, and together they provide the largest aggregation of prospective franchise buyers in the U.S.
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Published on Wednesday, January 24th, 2024.