Lea Mira, RTN Staff Writer – May 13, 2024
McDonald's is overhauling its technology-enabled marketing approach by establishing a digital marketing fund supported by donations from U.S. franchisees. The strategic move is aimed at modernizing the fast food giant's marketing strategy, strengthening its competitiveness and solidifying its position in the digital space, according to a CNBC report that cited an internal memo.
The company's plan, which goes into effect next year, requires U.S. carriers to contribute to the digital marketing fund. The initiative is part of McDonald's broader strategy to strengthen its digital operations, with significant investments aimed at enhancing its loyalty program and introducing new ordering channels, such as web-based ordering that doesn't require an app. It contains.
During the first quarter, members of McDonald's loyalty program contributed more than $6 billion to the company's global systemwide sales. With his 34 million active digital customers in the US alone, McDonald's is keen to leverage its digital capabilities to attract and retain more customers and aims to increase the number of members in its loyalty program by 2027. We aim to expand this number to 100 million people.
To support these digital marketing efforts, McDonald's advises franchisees to allocate a portion of their existing marketing budget to the fund. Currently, franchisees must devote at least 4% of their gross sales to marketing. Starting next year, U.S. carriers will contribute 1.2% of the projected value of identified digital sales, such as transactions made through loyalty programs and delivery orders, to a digital marketing fund.
The new funding model will also be adopted by franchisees in the UK, Canada, Australia and Germany, contributing to the global digital marketing fund. McDonald's plans to gradually expand this model to other markets.
During the company's first-quarter earnings conference, President and CEO Chris Kempczinski said the company aims to more than double system-wide revenue from loyalty program users by 2027 and increase membership. He emphasized the company's ambitious goal of increasing the number of people to 250 million people. He highlighted the company's unique position for growth leveraging its brand strength, global presence and digital ecosystem.
As outlined in a memo obtained by Restaurant Dive, starting January 1, 2025, McDonald's will reportedly launch a digital marketing fund to accelerate digital investments and improve competitiveness. The fund includes digital marketing tools such as MyMcDonald's App, customer relationship management platforms and consumer web tools in several major markets including Australia, Canada, Germany, the UK and the US.
The fund represents 1.2% of the identified digital sales forecast and will cover McDonald's ongoing costs as it expands its digital business. The company has decided to fund this fund through existing marketing contributions, in line with feedback from owner/operators that digital tools are essential marketing resources and should be funded accordingly. I suggested it.
The strategic shift in marketing investments from traditional media to digital capabilities is aimed at personalizing the customer experience, thereby increasing profitability and increasing customer lifetime value. Mr. Kempczinski emphasized this point in his earnings call, noting the importance of adapting restaurant operations to meet customer demands for convenience, accuracy and quality.
McDonald's continues to see strong growth in its digital channels and loyalty program, with systemwide sales from loyalty members in 50 markets of $25 billion in the past 12 months and $6 billion in Q1 2024 This strategic shift in marketing underscores the company's commitment to innovation. and customer centricity in the digital age.
