Imagine suiting up at your local gym after work and hitting the treadmill. As the minutes go by, your thoughts turn to dinner. Just then, you notice a small backlit billboard featuring a photograph of a sumptuous cheeseburger and plump French fries on the wall in front of you. The low-fat, high-protein bison burger and air-baked fries are available at a new health-conscious fast-food restaurant located right around the corner, the sign says. You're sold.
If George Naddaff has his way, that's the kind of reaction gym-goers will have when they see the ads for KnowFat, a franchiser of health food restaurants/fitness shops, which he founded in 2004 in Newton, Massachusetts. When Naddaff launched his first restaurant chain, Boston Chicken, back in 1988, he spent hundreds of thousands of dollars on TV, radio, and newspaper ads to reach the largest audience possible. This time, Naddaff aims to save money and hone his marketing strategy by targeting a specific group: health-conscious consumers. "I was looking for a way to deliver rifle shots, not buckshots," he says. He found his answer in Zoom Media & Marketing, a company in New York City that helped KnowFat develop a series of billboards that are currently on display inside a half dozen gyms, each within walking distance of one of the company's six Boston-area franchise restaurants, which also contain small retail shops that sell nutrition products. "This is hitting the customer right in the face," Naddaff says.
Zoom Media is playing in a burgeoning niche known as out-of-home advertising. Once associated with mammoth billboards on buildings and highways, out-of-home ads now adorn the walls of everything from subway cars to bar restrooms. Spending on such ads increased 8 percent in the first half of 2006, to $3.5 billion, compared with the same period in the previous year, according to the Outdoor Advertising Association of America, a trade group in Washington, D.C. That's roughly double the spending increase for overall ad spending. Zoom Media alone has 19,000 small billboards in 3,500 venues around the country. "Companies like KnowFat have a vision for their product and of who wants to buy it," says Dennis Roche, Zoom Media's president. "What we're trying to do is offer up venues and signs that allow a company without a big budget to reach customers."
Indeed, placing small billboards in novel or unexpected locations is a smart way for cash-strapped businesses to stand out in a world increasingly cluttered with ads, says Bruce Vanden Bergh, an advertising professor at Michigan State University in East Lansing. One reason out-of-home ads can be more effective than other forms of advertising, such as TV commercials, is that they often have a captive audience that can't simply change the channel or head to the kitchen for a snack. Consumers are more likely to remember ads placed in venues like sports arenas and bowling alleys than those that appear on television, Vanden Bergh says. What's more, people who are already on the go are more likely to stop off at a new restaurant or shop than folks who are already in their robes and slippers.
For Naddaff, the most appealing aspect of out-of-home advertising is its ability to target specific consumers. Last summer, as Naddaff and his team were discussing ways to make a big marketing splash on a small budget, KnowFat's chief marketing officer, Gary Jacobus, told the group about a handsome backlit billboard he had spotted in a New York City gym. Naddaff had been encouraging franchisees to set up shop near gyms to guarantee proximity to health-conscious diners. Marketing in those venues seemed like the next logical step.
Jacobus immediately contacted Zoom Media, which has exclusive relationships with Bally Total Fitness (NYSE:BFT), Town Sports International (NASDAQ:CLUB) (owner of Boston Sports Clubs), and dozens of independent gyms nationwide. In September, Jacobus helped the agency create six billboards that feature tempting images of KnowFat's healthy fare and a chart comparing the fat content in KnowFat's offerings with that of menu items at a typical fast-food restaurant. Each customized sign also lists the address of the nearest KnowFat location. KnowFat pays Zoom Media about $2,000 a month for the billboards, which includes the cost of making the signs. The agency's monthly rates start at $400 per sign and vary depending on number of venues and advertisements.
The price is right but there is a downside: Aside from anecdotal evidence, it's almost impossible to track the effectiveness of out-of-home advertisements. That's a big drawback for business owners who have grown accustomed to tracking every click of a banner ad or pop-up window. The indoor billboards, which typically run for a month or longer in any given location, also run the risk of getting stale. "The same ad in the same location could quickly get annoying," Vanden Bergh warns.
Jacobus, for his part, says that KnowFat's billboard campaign has had a noticeable effect on business. "Our lines at dinnertime have definitely been longer," he says. KnowFat recently opened a restaurant in Oakdale, Minnesota, and is slated to add a dozen new locations around the country, in cities such as San Francisco and Las Vegas, within the next year. Naddaff aims to have at least 500 locations by 2010. Zoom will be a major part of the expansion strategy, according to Jacobus. "It would be impossible for us to buy enough radio and TV time to do what we are doing with Zoom today," he says. "We have found the perfect way to crack the media clutter."