McDonald's wants to strengthen its digital marketing efforts. | Photo provided by McDonald's
McDonald's plans to invest “hundreds of millions of dollars” to upgrade its digital marketing capabilities over the next few years as the fast food giant shifts marketing spending to more channels.
McDonald's plans to create a digital marketing fund in the U.S. that will account for 1.2% of franchisees' digital revenue starting in 2025, according to a system message seen by Restaurant Business this morning.
Franchisees pay digital marketing funds through existing marketing contributions. The company estimates that the contribution shift actually improves a typical store's cash flow by about $2,600 per year.
The plan is to shift spending from low-return-on-investment marketing to digital marketing. It's unclear which areas of marketing McDonald's plans to cut to shift spending to digital channels, as these decisions will likely be made in conjunction with franchisees. Some of that may come from local marketing.
Morgan Flatley, McDonald's global chief marketing officer, said in a message to employees and franchisees: “We are investing in both traditional mass media spend and digital marketing capabilities to personalize the customer experience. Many markets have already begun to evolve their marketing approaches by balancing the .
McDonald's own investments alongside this spending are designed to keep the chain's digital gas pedal pressed. Digital sales have helped the Chicago-based burger giant increase overall sales in recent quarters despite an uncertain consumer environment.
The chain has also quickly become one of the most popular loyalty programs in the industry, with 150 million active users worldwide and 34 million active users in the U.S., more than Starbucks.
In his message, Flatley said McDonald's will invest in new ordering channels, including the ability for customers to order via the web without having to download an app.
He also said the company will work on “next generation loyalty” improvements, including personalized ordering recommendations and more ways for customers to use their loyalty points.
Next year, McDonald's plans to move funding for digital marketing tools such as mobile apps and customer relationship management systems into the Digital Marketing Fund. Five markets around the world will initially adopt this approach: the US, Australia, Canada, Germany and the UK.
“To maintain our leadership position, we must modernize our marketing model and personalize the way we reach, serve and connect with our fans,” said McDonald's U.S. Chief Marketing and Customer Experience Officer. Tariq Hassan, Chief Information Officer, and Whitney McGinnis, Chief Information Officer of the United States, said in a system message. , seen in the restaurant business.
They added that they will work with franchisee leadership on how to incorporate digital marketing costs into marketing budgets and how that change will be incorporated into McDonald's 2025 plans in the United States.
“We have an incredible opportunity to take our marketing strategy to the next level,” they said. “This funding model will help us better understand consumer behavior and optimize customer lifetime value while maintaining our systems of data management, network security, and data storage.”
Update: This article has been updated to clarify that digital marketing funds come from digital sales.
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