Subway increases national media reach in search of a bigger brand voice
Subway is putting nearly all of its U.S. media dollars behind national marketing to increase the visibility of the massive chain, which has been struggling to keep up with competitors even though it has many more locations than any other restaurant in the country.
Under the new model, about 95 percent of Subway’s media dollars will be allocated for national media, up from about 75 percent.
The shift is the biggest marketing change yet under Carrie Walsh, Subway’s chief marketing officer for North America, who joined in October, and CEO John Chidsey, who joined in November. The increased national push should be in place by mid-2020, Walsh says.
Subway is continuing to work with Dentsu Aegis. It’s been two years since Dentsu Aegis began handling Subway’s North America creative and media work, which are led, respectively, by McGarryBowen and Carat.
“We have permission to make Subway the iconic brand that it deserves to be,” Ida Rezvani, president of McGarryBowen New York, says of the national media increase.
“Change is afoot,” Rezvani says of Subway's approach now that Walsh is leading North American marketing. “She’s very clear on the potential of the brand and what she wants to do.”
Privately held Subway, which does not share sales data, says it has seen “positive momentum” with its digital push, menu updates and remodeled restaurants.
Subway and Dentsu say the move toward national media gives the brand more opportunity to increase its visibility and share of voice. The broader reach, they believe, has the potential to provide a much-needed boost in visits to the chain's nearly 24,000 U.S. restaurants and help drive more sales momentum.
“This allows us to have a bigger presence in a lot of big, national media platforms,” Walsh says.
While Walsh declined to share exactly where Subway plans to invest its media dollars, she expressed interest in areas ranging from live sports to emerging digital platforms and potentially sponsorships.
“It’s what a lot of brands are looking at, how can they be part of bigger, memorable moments,” says Angela Steele, CEO of Carat USA.
Research and benchmarking against competitors showed that Subway has an opportunity to drive more reach and frequency, Walsh says.
“National media is a lot more effective and efficient in terms of reaching customers,” says Walsh, who joined Subway after most recently serving as senior VP of marketing at retailer Michaels. Subway had filled its CMO role on an interim basis following the December 2018 retirement of Joe Tripodi.
Subway's U.S. sales fell each year from 2014 through 2018, according to data from industry tracking firm Technomic. The research company all but confirmed that Subway is set to drop below its No. 3 spot in U.S. systemwide sales when Technomic’s 2019 tally is released, most likely replaced by Chick-fil-A.
Subway’s media spending has also declined. Subway was the country’s 103rd largest advertiser in 2018 based on total U.S. ad spending of $468 million, according to the Ad Age Datacenter. That spending included $325 million on U.S. measured media in 2018, down from $353 million in 2017.
In a franchise model like Subway’s, franchisees agree to pay a percentage of their sales into an advertising fund. When their sales decline, so does the amount of money the chain has coming in that is earmarked for advertising. The opposite happens if sales increase.
Subway, Walsh says, is not asking franchisees to contribute a higher percentage of sales as part of the national media shift. Franchisees pay Subway 12.5 percent of their weekly gross sales, minus sales tax—4.5 percent goes toward advertising and 8 percent goes toward royalties.
The media shift follows updates to Subway’s menu and customer-facing details, such as being able to order ahead of time through its app and for delivery. The company also continues to update the look of its restaurants. In 2019, Subway said that more than 10,500 U.S. locations would be remodeled by the end of 2020.
Now, Subway will be able to have “a bigger voice and stage to communicate” such updates, says Walsh.
The 75 percent/25 percent media split was Subway’s highest percentage of national spending in the U.S. in the last decade, the company says.
“This shift that they’re making will make them more competitive with their competitive set,” says Carat’s Steele. “It will make them a much larger advertiser on the national stage.”
Currently, the brand is focused on “fresh value,” at a time of year when price-driven messages are typical from restaurants. Subway is running ads for two 6-inch subs priced at $2.99 and sliders starting at $1.89. Those ads do not include the “make it what you want” slogan that Dentsu introduced in 2018.