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💸 Are ads worth it for coffee shops?

Updated: Mar 4

Howdy, this is Coffee Shop Keys, the newsletter that's like a wand to wave and make coffee magic happen.

Take it easy, Tom

 

Here's what's in store for today:

  1. Do ads work?

  2. When to advertise

  3. Alternatives to ads

  4. Who to target with marketing campaigns

 

Do ads work for coffee shops?

Ads are everywhere.


We're constantly being bombarded by ads on TV, YouTube, magazines, billboards, social media, and even by drones in the sky?

So, naturally, we might assume these ads work to get more customers for the companies paying for them. The people buying those ads are probably pretty smart and would make wise decisions, right? Right??

But what happens when they don't work?

An economics paper studied what happened when eBay shut off their ads for branded keywords one Bing.com.

Guess what?


No impact.

How is this possible?

Branded keywords are searches that already include the term "eBay," and when someone is searching for eBay, they already show intent to visit the website, thus, not discovery.

It's like walking into a room looking for someone named "Aaron," whether Aaron is at the front of the room or not, the searcher is going to yell out "Aaron!" until they find the person.

Oh yeah, let's not forget about the fact that eBay did this in 2012, after it was a well-established player as an online marketplace for second-hand goods.

Have others tried this, too?

In a similar vain, other companies have slashed their performance marketing budgets – Airbnb to name one – and seen a negligible change in website traffic and bookings.

Yeah, but those are already household brand names

Ah, yes, I see you are a person of great discernment.

Everyone already knows about eBay and Airbnb, they're huge. But most independent coffee shops are not.

So, how do we square this circle?

Dolla Dolla Bill, Y'all

There are major differences between companies in the S&P500 and local cafes.

First, eBay and Airbnb spend money to acquire customers, but they can lean on customer loyalty while fueling growth with other people's money. They know they probably won't see a positive ROI on those ads one the first order – and they don't need to.

They're getting customers hooked hoping they won't switch to a competitor.

So, they buy ads to show people new things.

New products.

New services.

New destinations, etc.

That brings me to this next point.

When ads work for coffee shops

Ads can be more difficult for cafes because the cost of customer acquisition is high and the margins on each order can be tight. Making ROI a true hell.

BUT advertise something new and novel and attract attention, and you can gain, not just an order, but a customer.

 

When to advertise

What do you want your audience to know?

Discount coupon? – Forget it

Cute latte art? – Nah

Grand opening? – YES!

One-time holiday event? – LET'S GOOOO!

Grow your customer base by advertising new, novel events/specials/items/etc.

Don't count on recouping your ad costs in their first order.

Just provide an amazing experience that will have them yearning for more.

This is difficult for small business owners because, unlike venture-backed startups and large companies, monthly cash flow is their lifeline. So, if a dollar into an ad platform doesn't return more than that dollar by the end of the month, many SMBs will call it a failure.


So, who do I advertise to?

Focus on your immediate audience that lives and works within a 3 mile radius of your cafe.

These are the folks you can turn into Daily Debbies, rather than Occasional Ophelias.

 

Alternatives to ads

What to do instead of ads?


Yeah, it's been said a zillion times – provide excellent customer service. Buuuut that's not all we can do.

It's just the table stakes to creating a successful business.

Additional alternatives to buying ads are:

  • Influencer marketing – I know, you might think influencers are super lame (or awesome?), but working with a local influencer can make a huge impact on your local audience.

  • Event marketing – One of my all-time faves here. I love creating fun, interesting events to bring in customers. Typically, I don't try to make a positive ROI on these events, just provide awesome product and service and get new people in the cafe.

  • Giveaway – Find a cause or organization you and your target audience love and then endear yourself. Give coffee to teachers at the local elementary. Host a "Free coffee for nurses" day and let the hospital next door know.

  • Organic social media – 'Tis true. Organic social media is a hot channel for coffee shop discovery. Don't make it your one and only focus, but give it some time and effort.

And many more things...

 

Who to target with marketing campaigns for coffee shops

All in all, these tactics make up marketing, whether it's advertising, social media, events, or something else. And you should be doing marketing. Just pick something and try it on for size. Above I mentioned that you should target people who live and work in a 5-mile radius of your store. But who else? Or whom else? (did I do it correctly??)

Look for connectors

You know that friend whose always finding the new, hot places? And always getting the group together? They're a connector. A single customer is nice, but a daily customer is better, and a daily connector is best. Connectors are the people who invite others in. Give them a remarkable experience and get to know them and watch them bring others in to your cafe.

 

Hey, thanks for reading

Here are some things that will hopefully brighten your day.



 



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