What McDonalds is doing to optimise its marketing and media mix
- 30 October, 2019 07:12
Marketing mix modelling (MMM) has not only seen McDonald’s investing more into media in Australia, it’s been the foundation for demonstrating creative’s impact, its head of global media accountability and ROI claims.
Speaking at the IAB MeasureUp conference in Sydney on 29 October, the QSR’s Chris Graham took attendees through the journey he’s been on to ensure everything McDonald’s does in the media space delivers a growing return and ladders up to business outcomes. While operating as a decentralised business, he explained his role is to establish best practice and guidelines helping marketers across McDonald’s globally better select and optimise media efforts.
Key principles include having strong measurement in place, building values around transparency, and good agency management practices.
As a way of cracking the onerous ROI question, McDonald’s adopted market mix modelling (MMM) globally two years ago via a partnership with Analytic Partners. The collaboration stems off work the two organisations have been doing in Australia for more than five years.
Graham said quarterly local reporting is based around defined variables McDonald’s knows can impact a “great campaign”, rather than subjective points of view. These include weather, media channels used, creative content, if the product is great, if the restaurant has been refurbished and so on. It’s an approach now embraced by all stakeholders, including external agency partners.
To get to this point, the first challenge was overcoming how much data you need to provide, Graham said. “If you get through those issues and once partners start seeing the numbers, you realise it helps us do a better job,” he told attendees.
“It’s about how media helps to deliver business outcomes. We now have our media agencies aligned on being more focused on business outcomes, and less about the inputs driving it.
“The creative agencies are on-board as well – for me, this was the bigger exercise. Their usual reaction is it’s all about efficiencies... But suddenly they realised creative plays a big role in that calculation.”
Importantly, McDonald’s is at a point where its creative agency is being KPI-ed on helping improve that ROI, Graham said. “It’s early days, but hopefully that fuels the village approach where they want to work collaboratively to get a better business outcomes,” he said.
As well as creative effectiveness measures, the company has metrics that directly link creative back to business outcomes, he said. For Graham, media ROI through MMM incorporates responses to advertising, including product, placement and creative, as well as how much you pay for it.
Of course, MMM takes time to implement, one frustration for Graham. The question of MMM helping or hindering McDonald’s from trying new media activations or channels is another one he’s constantly navigating.
“We’re looking at consistent trends firstly. Whether it’s format or media type, we can be fairly confident on what it looks like moving forward,” he said. “On the flip side, if we want to try something new, a key learning for me is don’t just come up with a recommendation, talk to Analytic Partners on how best to test to ensure we have the best chance of identifying in the future if it’s worked. It’s a long-term test and learning exercise.”
Graham said MMM results show McDonald’s media activities are getting more effective. When rolling up data in Australia for example, the contribution of media to business outcomes has almost doubled in the last five years. As a result, McDonald’s has increased its media budget through that time.
“We continue to grow the media budget as we know we can continue to get more growth from it as we know where our leaders are and we know which channels to increase spend in,” Graham said.
For example, five years ago, McDonald’s was spending 10 per cent of budget in digital; that’s since tripled. “Firstly this was done on the belief it was right thing to do based on what was going on with consumers; the data has since backed it up,” Graham said.
“A key learning was digital works in combination with all other media channels. It’s reinforced if we put more money into digital, it will help drive our revenues. But we have to have the other building blocks of TV, radio, outdoor to deliver the best outcome.”
It’s also vital to get the right messaging in channels. For instance, using certain messaging on Instagram hasn’t worked as well as it does in Facebook.
“It isn’t so much what’s worked for you in one instance, the most important thing is the ability to have the data to answer the questions yourselves,” Graham added.
Investing in measurement
For other organisations looking to better optimise the marketing mix, Graham advised starting with a philosophy from the top that measurement is crucial. If you’re short of funds to invest in comprehensive MMM, he advised at least having the philosophy everything in media space is going towards delivering a business outcome.
“But my view is the budget is so well spent… the cost of doing measurement is a fraction of the per cent of what we spend on media,” he said. “You have to find some sort of measurement that will answer the effectiveness questions for you.”
On the question of balancing short-term with long-term activity, Graham agreed it’s an ongoing challenge McDonald’s faces and said the company is still behind where he’d like it to be in terms of long-term brand investment.
“We are seeing at least 2-3 times the short-term benefit over long-term,” he said, noting the added challenge of stakeholders and licencees over the age of 50, who don’t believe digital works.
“We have a real education challenge in trying to explain we’re putting brand out there but consumers are not buying that tomorrow – there’s no brand button on the cash register,” Graham said.
Yet with the UK business reporting 40 consecutive quarters of growth off the back of brand building, it’s clear long-term, strategic investment is crucial to sustained growth for McDonalds, Graham said.
“It’s much easier when your business is going well to get more long-term. We know the benefits, but we have by no means cracked it as a business. I am supportive of finding that balance,” he added.
Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.