Where’s the Buy?

As you likely heard, last month McDonald’s announced plans to consolidate its global media planning and buying with Omnicom Group’s OMD Worldwide. The account is worth an estimated $1 billion. The move, a company press release states, was made:

to deliver optimum strategic media efficiency, effectiveness and value to McDonald’s restaurants and franchisees worldwide, while fueling greater innovation, creativity and cross-border media opportunities.

News of McDonald’s consolidation came while I was reading Eric Schlosser’s “Fast Food Nation: The Dark Side of the All-American Meal.” Schlosser traces the history of McDonald’s marketing tactics, from the introduction of mascot Ronald McDonald to the toy merchandising that lures children.

McDonald’s, Schlosser says, was the first fast-food chain to achieve notable success. At the time, the closest thing to a fast-food restaurant was a drive-in burger joint, and the McDonald brothers were making a fortune off theirs. The brothers had taken a risk and introduced a new and unorthodox approach to running a restaurant business: They eliminated all food that required cutlery to eat; introduced disposable plates, bags, and cups; and gave each employee a specific task, thereby creating a speedy food assembly line. Though I doubt McDonald’s would appreciate that imitation is the greatest form of flattery, the chain has inspired competitors ever since.

Little wonder then media buyers have long looked to McDonald’s for guidance in developing and executing marketing campaigns. If McDonald’s tries a new marketing technique or tests a new form of advertising, marketers everywhere sit up and take notice. Media sellers know this well. They take full advantage whenever they get the big-name advertiser on board.

When the chain launched an online campaign to increase awareness of its flatbread sandwiches, MSN jumped at the chance to include Dynamic Logic’s case study in its cross-media optimization promotional package.

When McDonald’s signed on to develop a direct-to-desktop application to promote McFootballmania.com, 24/7 Real Media, supplier of the technology, placed the company at the top of its client list.

Though some campaigns have been criticized in the past, by both consumers and industry professionals, for the most part, McDonald’s is still considered a notable leader in consumer marketing.

Lately, in spite of McDonald’s eminence, the company’s marketing efforts haven’t quite been up to snuff. Although fast-food chains such as Subway increased media spending in 2002, Competitive Media Reporting revealed McDonald’s reduced spending to $537 million from $629 million in 2001. Early last year, McDonald’s posted a quarterly loss for the first time in decades.

According to some reports, the worldwide review of the chain’s media planning and buying efforts wasn’t incited solely by a desire to improve the efficiency of its marketing spend. In January of last year, McDonald’s president was quoted as saying, “Our great brand deserves great advertising, and of late, our advertising has not been so great.” This suggests the move was made to improve the quality of the company’s ad campaigns as well.

A company in this position can’t be blamed for putting its ad creative first. After all, there’s a reputation to live up to. Yet McDonald’s doesn’t seem to realize that saving money and improving ad creative alone cannot ensure success in years to come.

A key factor for this company — as for all others — is the quality of its media buying. It’s an aspect of its marketing plans largely overlooked in the description of what the new consolidation will provide.

Consumer interaction with media has drastically changed since the ’70s and ’80s, when McDonald’s TV campaigns were ad classics. Today, studies substantiating the value of online advertising are innumerable, as are reports indicating a mass migration toward the Web. McDonald’s has dabbled online already, devoting about 3 percent of its budget to the channel. If last year’s accounts of McDonald’s spending are correct, that measly 3 percent translates to over $16 million in ad spending. Following the success of the flatbread sandwich promotion in 2002, McDonald’s senior head of Internet advertising told a marketing conference audience his company would up the budget for online by 50 percent… from 1.0 to 1.5 percent of total spend.

When was the last time you saw a McDonald’s ad on the Web?

McDonald’s will likely always be an innovator, both in the fast-food industry and in marketing and advertising. As with other businesses, decisions won’t always be winners. But if there’s one thing you take away from its example, let it be this: Massive ad budgets, brilliant corporate strategies, and killer campaigns don’t mean a thing if the consumer never sees the ads.

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