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What McDonald’s new US marketing model means for agencies, holding companies, and big advertisers

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What McDonald’s new US marketing model means for agencies, holding companies, and big advertisers

Category : entrepreneur

Earlier this month, McDonald’s concluded a review of its US marketing strategy by assigning lead creative duties to independent agency Wieden and Kennedy.

The move took many in the industry by surprise three years after the world’s biggest fast-food brand consolidated work in its most important region with holding company giant Omnicom. But what did the move really mean for the market?

Was it yet another sign of weakness for the Big Six holding companies that control most of the world’s ad spend? A strike against the industry narrative that places data over creative quality when determining the value of ad work? Or was McDonald’s simply an outlier?

See what the winning agency had to say: Internal memo from McDonald’s new ad agency reveals why the world’s biggest fast-food chain bucked industry trends to reshape its marketing strategy

Wieden and Kennedy leadership told staff that the decision was a victory for traditional, back-to-basics storytelling. In the note, the agency’s copresidents said incumbent We Are Unlimited “forgot the power of creativity (or arguably didn’t have much to offer)” and all but dismissed the original pitch, which promised to place data “at the core of everything they did.”

Read more about how Omnicom won the account three years ago: Internal documents reveal how ad-holding-company giant Omnicom won the $800 million McDonald’s account and used its model to pitch other advertisers

Omnicom promoted its “agency of the future” model back in 2016 by hyping cross-agency integration and “embedded teams” from Google, Facebook, and Twitter along with its ability to turn insights gleaned from social media into promotional content. The holding company framed this approach as unique even though it was similar to offerings from other agencies.

The holding company will fold its once-dedicated division into parent company DDB: McDonald’s demanded that Omnicom create an ad agency dedicated to its business. Now that unit will fold.

While the holding company retained the vast majority of its McDonald’s business around the world, the loss was significant enough to spark a significant strategic shift. Sources confirmed to Business Insider that the dedicated agency We Are Unlimited, which was founded as a standalone business, will soon become part of parent company DDB.

Check out an insider’s view of how the agency-client relationship broke down: McDonald’s and its ad agency sparred over a bizarre campaign stunt involving an LP made entirely of bacon. The agency later lost the majority of the account.

Disagreements between agencies and their clients are a daily fact of life in the ad industry. But one particularly crazy instance for McDonald’s and Omnicom involved a pitch for a record made entirely of bacon to promote the chain’s new “bacon week” deal.

The move could signal a new approach to conflict management for big spenders: Advertisers have long avoided sharing agencies with competitors. McDonald’s just abandoned that tradition, and other big brands could follow suit.

The most interesting aspect of the McDonald’s shift, according to several industry analysts, is the fact that Wieden and Kennedy will now simultaneously work with rival KFC in a reversal of both chains’ exclusivity politices. If this turns into a trend, it could be good news for brands and agencies alike.

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About Author

Sammy Singh

Global VC, Founder, and entrepreneur extraordinaire as featured in Inc. Magazine, Bloomberg, and Forbes. Sammy Singh is a graduate of UCLA and Wharton School of Business as well as a former student of Loyola University of Chicago. Sammy is best known as a renowned financial technology global entrepreneur and has founded over 26 different firms across industry and all over the world. He is a venture capitalist,a TV/ Film actor, tax specialist, and marketing solutions strategist. Connect with Sammy Singh on social media below! www.linkedin.com/in/cfo www.instagram.com/champagnegqpapi www.facebook.com/officialsammysingh www.twitter.com/cxosynergy www.medium.com/@sammysingh www.crunchbase.com/sammysingh

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