Professional Documents
Culture Documents
MC Donalds
MC Donalds
Principal authors: Tom Roach, Leo Burnett; Alistair Macrow, McDonald's Restaurants
Contributing authors: Beate Lettmann, Mindshare ATG; Mike Treharne, Leo Burnett
Introduction
Turning McDonald's around in 2007 after four years of stagnation has been widely celebrated as a remarkable business
achievement.
This is about what happened next: how advertising helped accelerate McDonald's growth in the next four years, helping take
the business from recovery to resurgence.
In 2007 customers had begun to return in sufficient numbers for the business to register positive growth. But for millions of
customers McDonald's had yet to regain its shine – we'd lost their trust, and their love for the brand was a distant memory.
We will prove and quantify the considerable contribution that brand advertising made to this success, showing how two distinct
brand campaigns worked simultaneously to regain people's trust and love for the brand. We will quantify the contribution
advertising made to improving brand image and show that this drove millions of new customer visits. We will show the
considerable and increasing sales impact these campaigns have had and the near four-fold increase in ROI they delivered.
But before we tell the resurgence story, here's a reminder of the recovery story.
From 2002-2006 McDonald's suffered at the hands of a perfect storm of issues which took a considerable toll on the brand
and the business
These issues included the McLibel trial, the obesity debate, the residue of health scares such as foot-and-mouth, the book
'Fast Food Nation' and the movie 'Supersize Me'. The brand was fashionable to attack and appeared out of step with the mood
of Britain, with media commentators, celebrity chefs and politicians all taking turns to score easy points.
Unsurprisingly, people's trust in the brand suffered at the hands of this criticism2 (figure 2).
Figure 2
Alongside this brand image decline came a decline in visitor traffic3 and sales (figure 3).
Figure 3
Since the brand's arrival in the UK in 1974, McDonald's had only ever known sales growth. So to see stagnation from 2002-6
understandably caused anxiety within the business.
The new business vision was to be a 'modern progressive burger company': all the changes that were made from this point on
sprang from this.
First the business sought to fix the fundamentals: introducing more balanced choices to the menu, improving the nutritional
profile of the food, increasing investment in crew training and redesigning the restaurants.
Only once these changes were in place did we adopt a new approach to managing external brand perceptions. Our principle
was 'act first, talk later'.
New premium products were introduced including Rainforest Alliance certified coffee, and porridge and bagels were added to
the breakfast range. Product reformulations included reducing levels of fat, salt and sugar and improving the quality of
ingredients such as only using 100% chicken breast from approved poultry farms, free range eggs and organic milk.
Changes to Happy meals included adding fibre to buns, serving unsalted fries, organic milk and fresh orange juice, and the
nutritional content was managed to ensure that 79% of the Happy Meal is classified as not high in fat, salt and sugar.
The restaurant re-designs that began in 2006 completely changed their look and feel. Out went the bright red and yellow
plastic and in came softer greens, purples, wood and contemporary furniture.
Communications
We adopted a transparent approach to managing external relationships, firstly with stakeholders and later the public. After
years of being more defensive, the company now regularly met Government bodies and NGOs and became a willing
participant in public debates. The change programme was also openly shared with the media.
The only customer-facing communications at this time were the launch of a website, makeupyourownmind.co.uk, inviting
people to ask us any questions they wanted, and a small burst of magazine advertising announcing improvements to
ingredients in Happy Meals to parents.
Apart from this, the vast majority of our media spend continued to focus on driving footfall from frequent customers by
promoting our Saver menu and promotional food.
With a wide range of business issues addressed, customers began to return in sufficient numbers to make 2007 the year of
the first upturn in footfall since 20024 (figure 4).
These changes combined to make the turnaround possible. We can't reveal the contributions of all the changes, but restaurant
refurbishments accounted for around a 6% sales increase per store5.
McDonald's had achieved its turnaround. But for millions of customers McDonald's had yet to regain its shine – what follows is
the story of how communications helped achieve this.
The decline in trust in the brand was by now well-known to us as a key factor in the poor sales performance6, and we already
believed driving trust would unlock future growth.
But in exploring this problem more deeply, we uncovered another one: McDonald's also had a brand 'affinity' problem.
We undertook a range of research initiatives to help us understand how to re-build the brand – co-creation weekends with
groups of customers, employees and franchisees, a bespoke 4000 sample 'Usage & Attitude' study and mining the data from
our tracking tools7.
Our U&A study, conducted in early 2008, shed new light on the problems, highlighting a need to rekindle the emotional bond
with our customers.
It revealed that a significant proportion of customers had fallen into a functional relationship with the brand, visiting McDonald's
purely for its convenience and value: a surprising 44% of visits came from customers critical of or neutral towards
McDonald's8. And it revealed that increasing these customers' brand advocacy would increase their frequency.
The data also showed that McDonald's brand performance was weak on the most important drivers of brand advocacy in the
'Informal Eating Out' (IEO) category. McDonald's worst performing brand attributes were the most important category drivers –
perceptions of our food quality and integrity, and customers' affinity for the brand (figure 5).
To bring the brand back to health we would not only need to increase people's trust in it (via the quality of our food and our
integrity as a business), but we would also need to get people to feel a close affinity or love for it once again.
Relationships between people are built on trust. And whilst trust is a pre-condition of a loving relationship, on its own it is not
enough. Trust means you can love someone, but is not the reason you do. And the same is of course true of brands.
We would need two complementary brand campaigns working in harmony: one to regain customers' trust in the brand, another
to re-ignite their once strong love for it. And doing both together would get customers coming back a little more often.
Alongside our two existing promotional communication strands that drive sales by 1) communicating our great value menu
items and promotions and 2) launching new products and temporary food events, we now needed to commit significant spend
to brand communication to drive both trust and affinity.
Our two existing roles for promotional communications were defined as follows:
With a growing array of communications tasks we needed a simple marketing framework. So we brought everything together
into a model we call our 'marketing pillars', each pillar defining the details of the communications strategy to achieve one of our
key objectives. The 'Trust' pillar aims to drive brand trust, the 'Favourites'9 pillar aims to drive brand affinity. Figure 6 is a
simplified version of our marketing pillars.
All of our marketing since 2008 has been driven by these pillars. They structure and simplify a complex marketing program,
help deliver long-term creative consistency with creative freedom and balance our promotional and our brand activities.
Persuading the business that we needed to fundamentally change how we used advertising was a major challenge. Previously
McDonald's advertising had been a promotional not a brand-building tool, a series of ad hoc and unconnected campaigns,
each one expected to deliver strong year-on-year comparative sales. Brand campaigns played a minimal role, the belief being
that they weren't able to drive sufficient short-term sales.
Persuading internal stakeholders was hard. Finally they agreed, but on one condition: our new brand advertising had to match
the short-term sales performance of promotional campaigns.
The new marketing strategy required us to balance our predominantly promotional spend more evenly across our four pillars.
Trust spend was introduced from June 2008 and Favourites from October 2009 (table 1).
Table 1
Over the period total media spend increased10, driven by additional spend on brand campaigns and reflecting the growing
confidence of the business in the results we were seeing.
This encompasses communications for the Saver menu, our free Coke Glass promotion, Monopoly promotion and targeted
vouchering activity. Outdoor and TV are the primary Value media, with digital and mobile playing an increasingly strong role.
This encompasses limited time food promotions (such as the Festive menu and 1955 burger) and permanent product launches
such as 2010's launch of a new wraps range. TV and Outdoor are the primary media, with social media playing supporting
roles.
Trust advertising aims to enlighten people with surprising stories about the quality, nutrition and sourcing of our food, our
positive impact on communities, our pride in developing our people and how we limit our impact on the planet.
A combination of quantitative11 and qualitative12 research helped us understand the most powerful stories to communicate, for
example that our burgers are made only from whole cuts of 100% British and Irish beef and our chicken products are made
only with breast meat from approved farms.
Television is Trust's primary medium, with press, in-store and digital display used in support. Media is bought against parents,
who research identified as the most in need of reassurance about food quality given their role as both customers and
gatekeepers to children's visits13.
Our first three Trust campaigns (2008-9's 'Planting', 2009-10's 'Big Nothing' and 2010's 'Weather') aimed to enlighten parents
about our sourcing of great quality, British ingredients.
2011-12's Trust campaign, 'the A-Z of M', broadened the campaign out to encompass the full range of stories, including facts
such as our use of the oil from our fryers as bio-diesel in our trucks, our litter patrols and the educational qualifications crew
members can earn.
This aims to remind people why they once fell in love with McDonald's.
Qualitative research14 uncovered a range of brand truths to help us create resonant advertising that could re-ignite people's
latent love of the brand: it's welcoming, inclusive, consistent, always there for you, part of the fabric of British life, everyone
has their favourite products and their own quirky ways of eating them.
These truths inform all our Favourites creative briefs. For the initial campaigns we brought them together into one proposition,
celebrating the brand's role in modern British life:
So far we've created six Favourites campaigns. The first four (2009's 'Just Passing By', 2010's 'World Cup', 2010's 'Golden
Arches Beacon' and 2011's 'Symphony' campaign) highlighted that McDonald's is welcoming, inclusive and always there for
you, all featuring the endline 'There's a McDonald's for everyone'.
Television is the lead medium for Favourites, supported by outdoor focussing on people's relationships with their favourite
food.
The most recent campaigns (2011's 'He's Happy' and 2012's 'First Day') focus on the fact that McDonald's is a welcoming,
familiar haven for people.
Favourites outdoor shows glorious close-ups of our food alongside insightful headlines about what makes these iconic
products so special.
Before sharing the results, the tough market conditions we faced in achieving our objectives are worth outlining.
Once 2007's turnaround had been achieved, the economy worsened. Retail footfall, which correlates strongly to traffic in our
market, fell dramatically15 and traffic in the informal eating out market was mostly negative or flat16 (figure 7).
Figure 7
Figure 8 shows that sales growth in the IEO market was correspondingly flat 2008-1117: it is a misperception that our market
benefits from recession. To grow in this period, McDonald's needed to either grow the market or increase share.
Our two new brand advertising strands delivered a step-change in key ad tracking metrics. Our brand advertising was more
enjoyable, more motivating and much more likely to make people feel good about McDonald's than our previous campaigns.
We saw remarkable 74% and 84% uplifts for 2009-11's brand campaigns on the measures 'talking to people like me' and
'makes me feel good about McDonald's'. These scores are especially worth noting as these statements are close to the brand
image measures in our separate brand tracker for affinity and trust ('a place for someone like me' and 'a company I trust').
Figures 9 and 10 show the dramatic increases in key tracking measures from 2009-11 vs 2006-8 caused by our new brand
campaigns18.
Figure 9
Also worth noting is the 40% uplift in motivation to visit for 2009-11's brand campaigns vs. 2006-8's promotional advertising,
given McDonald's fears about the sales-driving ability of brand advertising.
And it wasn't just customers who noticed a step-change in the quality of our advertising: our brand campaigns impressed
awards juries too, with 31 major creative awards from 2009 onwards19, including a Cannes Creative Effectiveness Lion20.
Since the introduction of our brand advertising, we have seen dramatic shifts in all our key brand image measures, but most
importantly from the two key brand image measures our two brand advertising strands were designed to influence.
We've seen remarkable shifts in our Trust and Affinity image statements, the Trust measure appearing to improve from around
2007, the time of the initial recovery, with the rate of increase in both measures accelerating from 2008-10 when we embarked
on our new communications approach21.
Figure 11
Importantly, the measures we sought to drive experienced disproportionate increases. On average these two statements
Figure 12
A consequence of the brand image problem was our high number of 'critics'22 and 'neutrals'23, even amongst frequent
customers24. Since 2007 we have seen declines in the number of neutral customers and strong increases in numbers of brand
advocates25 (figure 13). Hardened critics are a tougher nut to crack and we still have work to do here.
We now know that 'frequent advocates' visit around 50% more frequently than frequent 'neutrals' or 'critics'26 so there is a
tangible business benefit in creating more advocates even before any word-of-mouth benefits of brand advocacy are factored
in.
Figure 13
Of course it is not enough to observe improvements in brand measures and suggest advertising was responsible. So in
addition to our rigorous econometrics analysis evaluating the sales impact of our campaigns, we have gone further and used
econometric modelling to prove the contribution made by media in driving our brand image measures and then linking these
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improvements in brand image to sales.
To do this we built a range of new regression models to investigate whether the factors driving sales (such as restaurant
refurbishments, PR and media investment) also drive brand metrics, establish which campaigns do this, and to what extent.
We then explored the sales impact of improving brand metrics by evaluating the impact on customer visits.
The results show our brand media investment has a strong impact on key brand metrics, and that without it, agreement with
key brand measures would have been much lower. So without brand media, 'company I trust' would have grown much more
gradually. As soon as Trust media was introduced, improvements in this statement are evident (figure 14).
Figure 14
Similarly, without brand media, agreement with 'place for someone like me' would have been much lower and we see strong
improvements as soon as our Favourites campaign began in October 2009 (figure 15), with a smaller impact evident before
this when our Trust campaign began in June 2008.
Figure 15
This analysis is a remarkable validation of our dual brand campaign approach: both Trust and Favourites drive their primary
Figure 16
Our models show that whilst Trust media is the strongest advertising factor driving 'company I trust', positive PR also has a
strong impact on this measure. And they show that whilst Favourites media spend is the strongest driver of 'a place for
someone like me', accounting for 11.6% of total agreement with this image statement on average from 2009-11, our three
other communications strands (Variety, Value and Trust) have a lesser, but still important, impact.
Figure 17
It is also worth noting the greater increase in 'company I trust' amongst parents vs non-parents, given Trust media is bought
against the former (figure 18).
Using econometrics to evaluate the factors driving brand measures has given us useful learnings not only about how our paid-
for channels work but also how they work in combination with 'free' channels – in this case PR and refurbished restaurants.
Positive PR, as we have seen, is the strongest driver of 'company I trust'. And we also found that refurbished restaurants are
not a driver of our Trust or Affinity measures, but are the strongest driver of 'my favourite informal eating out place to visit'.
The impact of PR on brand image increased over time, with positive PR more than doubling from 2006-11 and negative PR
declining (figure 19): positive PR grew because of all the positive changes that were made in the business which were shared
openly with the media.
Figure 19
So from our analysis of 'free' channels we see that changes to our food and restaurants helped improve brand image. And
importantly for this paper, we see that these improvements in image are distinct from the improvements driven by the paid-for
communications that, from 2008, communicated many of these changes.
In addition, our new econometric models also demonstrate how improving key brand measures increases the frequency of visit
to our restaurants.
Driving agreement with 'company I trust' or 'place for someone like me' delivers an additional 0.81 and 0.95 visits a month
respectively amongst McDonald's customers, a 36% or 40% increase in average frequency27.
Our models show that purely due to our brand campaigns, 1.8m additional McDonald's customers now agree that McDonald's
is 'a company I trust' and 2.3m additional customers now agree it's 'a place for someone like me' 28. We know they are now
visiting nearly once a month more often as a result, so are worth millions of incremental sales each month.
So we see a significant but indirect benefit for the business in driving these brand metrics, in addition to any direct sales
impact measurable via our standard econometrics (figure 20).
Figure 20
When we began investing in brand advertising from 2008 we were challenged not only with driving brand image, but also with
driving short-term sales. The consequence of our campaigns not achieving both was that this kind of advertising would cease:
an outcome we self-evidently avoided.
Mindshare ATG's econometric modelling proves that our brand campaigns drive both brand image and sales, and also deliver
much stronger ROIs than our promotional campaigns29.
We have seen a stronger total sales impact every year, with brand campaigns responsible for an incredible £349m in
incremental sales over and above the £460m sales driven by existing promotional campaigns since 2007. Brand campaigns
account for a growing and now dominant share of the sales impact of our media (figure 21), despite promotional advertising
still receiving 72% the total spend (see table 1).
The ROI from both our total media investment and from brand media has seen strong increases every year since 2007, the
short term sales ROI30 of our brand advertising spend in 2011 being, at £9.79, nearly four times 2007's total ROI (figure 22).
Figure 22
Trust campaigns deliver our strongest returns. 2011's Trust campaigns delivered a short-term ROI of £12.40, or £24.80 over
the long-term31. And our best performing individual Trust campaign, 'Big Nothing', achieved a short-term ROI of £15.41 in
2010, or a phenomenal £30.82 in the long-term.
Recent business success has been remarkable. Each of the five successive years from 2007 onwards was a record-breaking
sales year and McDonald's growth far exceeded that of the market, which was mostly flat over this period32 (figure 23). We
have now experienced 24 consecutive quarters of growth, in stark relief to the stagnation of 2002-2006. And 2011 capped it all
with an incredible 48m more customers served vs 2010. Remarkably, this was all achieved without increasing store numbers
(figure 24)33.
Figure 23
This success came as a result of a wide range of business and communications factors all working together in harmony.
We saw the initial turnaround in 2007 before any significant paid-for media intervention. This was fuelled by a renewed clarity
of vision and a range of changes to the business.
Our two new brand campaigns built on this change, working cleverly together to regain trust and re-ignite love for the brand.
They accelerated improvements in brand image which we have shown improves customer frequency, so have an indirect
sales impact in addition to their remarkable direct sales impact which has been growing stronger every year.
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Brand advertising has made a significant and growing contribution to the dramatic growth in the business34, helping to
accelerate growth in the UK (figure 24).
Figure 24
The journey from recovery to resurgence has taught us invaluable lessons: about when to act and when to talk; about
balancing complex marketing programmes; about television's enduring ability to simultaneously drive sales and brand image
better than any other channel ever invented; about using complementary brand campaigns to solve different problems; and, an
IPA Effectiveness case first, about using econometrics to evaluate the brand image impact on sales of not one, but two
campaigns, each driving different image measures.
In summary
2007-11 saw the UK business enter a new phase. A phase in which it has seen stronger, faster growth than at any other time
in its 37 year history. And brand advertising had a huge part to play: because of it, millions of people trust and love McDonald's
more, are coming back a little more often and feeling good about it.
Footnotes
1. McDonald's Corporation does not publish total sales or profits, % sales or profit growth, profit margins or customer
numbers for individual markets so it is not possible to disclose this data anywhere in this paper. Where possible we have
indexed or hidden data to disguise it.
2. Source: TNS Fast Track brand tracker, data indexed for confidentiality, IEO = 'Informal eating out' market
3. Source: McDonald's UK, data indexed for confidentiality.
4. Source: McDonald's UK, data indexed for confidentiality.
5. Source: McDonald's UK
6. TNS Fast Track brand image tracking, McDonald's UK sales data.
7. HPI Advertising tracking, TNS Fast Track brand image tracking, NPD Group's Crest customer share data, Mindshare
ATG econometric modelling, McDonald's sales data.
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