Subway boosts foot traffic 31% by targeting ads based on weather patterns

Brief:

The Subway sandwich chain boosted store traffic 31% by changing its ads to correspond with weather shifts. The company used artificial intelligence (AI) technology developed by International Business Machines called Weatherfx Footfall with Watson, a real-time signal-based targeting tool, to create dynamic ads for a foot-long sandwich promotion based on weather patterns, per an announcement. The chain also leveraged IBM's MetroPulse platform, which provides insights about neighborhood demographics.
Through its efforts, Subway saw a 53% reduction in campaign waste by making 7.9 million impressions more relevant to the current weather. That meant avoiding ad placements for hot sandwiches during heat waves that blanketed much of the country last summer.
IBM touted Subway's results as part of an announcement for its AI Toolset that includes two AI-powered solutions for marketing and advertising. In addition to Weatherfx Footfall, the company introduced the IBM Watson Assistant for Marketing feature to automate manual, time-consuming processes such as shepherding, wrangling and corralling data.

Insight:

Subway's results with ad targeting based on weather patterns is an interesting example of how companies are using AI technology to adjust campaigns on the fly, as unpredictable events like weather changes affect consumer behavior. Brick-and-mortar stores are adjusting their marketing strategies as consumer shopping habits evolve, leading 47% of advertisers to leverage AI technology in their audience targeting, according to Econsultancy research cited by IBM in a statement.

Weather is the single most important external factor in how businesses perform, and affects about $500 billion of annual commercial activity among Fortune Global 500 companies, per an estimate by IBM. Two out of five (41%) CMOs surveyed by IBM said cognitive computing is going to have a huge effect on their companies in the next three to five years, behind cloud computing (59%), mobile solutions (64%) and Internet of Things (62%).

For restaurants, weather can greatly affect whether customers go out or order in as well as what they choose to eat. Social networking giant Facebook found in a survey that 83% of people pick a dining location within three hours of a meal, and 57% make the decision within one hour. This "point of hunger" is a prime opportunity for restaurants to gain visibility in their mobile marketing, including the practice of "conquesting" that uses location data to send ads to people as they walk into a rival restaurant.

Subway is among QSR brands that are integrating mobile technologies into marketing programs, which include customer loyalty apps. The sandwich chain this year introduced a loyalty program in the U.S. and Canada that offered flexible points for repeat customers. The mobile app let customers enroll in the Subway MyWay Rewards program and keep track of the points they had earned to receive discounts and other special offers.