How McDonald’s does mix market modelling – the secret marketing sauce
Upping its order on digital, cooking up market mix modelling and serving up KPIs for its creative agency are all part of the marketing recipe at McDonald’s, according to the fast food giant’s head of global media accountability and sourcing, Chris Graham.
Speaking at the Interactive Advertising Bureau (IAB) annual MeasureUp event, Graham, who has been at the multinational brand for six years, revealed how McDonald’s assesses its ROI from media investments to reach the optimal marketing mix.
CEO of IAB Gai Le Roy captured the highlights for Marketing.
Gai Le Roy, CEO of IAB: Tell us about your role
Chris Graham, head of global media accountability and sourcing at McDonald’s: I first joined the business in 2014 as head of media Australia and New Zealand, in 2018 I joined the global media team in the newly created head of global media accountability and ROI, before pivoting to my current role within global sourcing in March this year.
There was always ROI being created for our media campaigns, but ultimately, we wanted to understand the size of the returns for each media channel. It was all about business outcomes which for me, made a lot of sense.
My new role has seen me jump to the world of procurement but our goal is still to maximise return. It’s not what you think though – it’s not a focus on savings and driving the bottom dollar, it’s actually the upside we focus on and savings becomes one of many ways to deliver the upside.
How does this role work on a global level?
It’s about trying to establish best practice guidelines and then trying to make people aware of them around the world, to the point that they embrace them. One of these guidelines is measurement – looking at what measurement is in place and why it is (or isn’t) there.
We are asking our teams to consider what values they have in place around transparency and ensuring they have good agency management practices in place. My position is that if you have those elements in place and you’ve got your measurement in order, you’re off to a good start.
How do you diagnose ROI?
The way we have approached it is to put in measurement practices around what we refer to as ‘market mix modelling’.
We wanted to get rid of subjectivity when trying to identify a ‘great campaign’. You need to start talking about all of the variables that can actually impact a great campaign. It might be product price, the fact that you’ve refurbished your restaurant, the outstanding campaign creative or perhaps it’s down to the media channels you used. Even if you know which one of those variables drove the favourable campaign outcome, it’s then about looking at how much each one of those helped drive that outcome.
Is McDonald’s sticking with this market mix modelling for the future?
Yes, I believe market mix modelling is the best way to answer the ROI question.
How often do you look at the market mix modelling results?
We have some markets that only review their results annually, however in Australia we do this quarterly. We’ve now been doing that for the last five and a half years in Australia.
What do your agencies make of your approach?
Day one, our Australian media agency’s perspective was probably, ‘oh my god, how much data do we need to provide? This is going to swamp us’. But once we got through those issues, once they started seeing the numbers, they shifted to ‘okay, this actually helps us do a better job’.
It’s worth noting that I’m a big believer in the media agency side – I believe they consistently aim to deliver business outcomes for us.
Are creative agencies on board?
Well it was a bigger exercise, but yes. We now have the creative agencies on board with KPIs and being part of our market mix modelling. That was super important because creative plays a huge role in that ROI calculation.
While we’ve had the traditional measurements of creative effectiveness and brand effectiveness for every single campaign, now we can add in another measure, which actually links that through business outcomes. In fact, modelling data now shows that 70% of the variation in ROI impact comes from creative.
It’s early days but having creative in our modelling hopefully fuels that kind of village approach between our agencies. They actually want to work collaboratively to get a better business outcome. It’s great to actually be able to say that a good ad has translated through to a definable contribution to the business.
How do you know market mix modelling is making things work better?
The numbers don’t lie. In Australia, ROI has almost doubled over the last five to six years.
The contribution of media to business outcomes is almost double. And we’ve actually increased our media budget through that time and we believe we can continue to grow that media budget and still see higher ROIs.
Are there any particular media channels you lean in to?
I’m not pro any particular media channel but I am pro understanding which media channels work and why. Over the last six years we have tripled McDonald’s media budget in the world of digital (up to 30%). Initially we started increasing it with the belief that it was the right thing to do based on what was going on in the consumers’ world. But over the years we have confirmed that digital works in combination with all the other media channels and that reinforced the notion that if we put more money into digital, it would help drive us a return.
But that doesn’t just mean we blanket throw money into digital or indeed into any particular sort of media. We know from everything we’ve done, there’s so many different kinds of scenarios to consider, starting with what type of message you have because some will work better on certain platforms better than others.
What about the role of traditional media?
We’ve got to have those building blocks of TV, radio and outdoor, but combining these with digital actually gives us the best outcome.
Have you changed your approach to long-term and short-term marketing?
We haven’t changed our views towards it but we can honestly say we’re still behind where we would like to be in terms of brand investment. We’ve got the data to support the position that long-term marketing benefits are really strong and powerful and generate returns but we still have that challenge of supporting short-term sales objectives.
We know the benefits of both, and the need to get that balance but we by no means have we cracked that as business yet.
Which of your markets is leading with the marking attribution?
Australia! The UK probably follows, along with Canada and Germany. It’s quite ironic but the US is probably behind where they really need to be – both for digital and also in the measurement, but they are now starting to really lean in.