McDonald’s has almost doubled its advertising ROI over the last five years in Australia following a focus on marketing mix modelling, measurement, digital channels, and more accountability being placed on creative agencies, according to its head of global media accountability and ROI, Chris Graham.
“The contribution of media to business outcomes is almost doubled,” Graham said this morning at IAB Measure Up, the Australian digital advertising industry group’s annual conference held in Sydney.
“And to kind of counter that you [might normally] cut your media budget. We’ve actually increased our media budget for that time.”
Graham, who is based in Sydney but runs the fast food giant’s global media accountability and sourcing, said McDonald’s is now focused on the right marketing mix – the theory that the impact of several channels and are greater than the sum of their parts – rather than individual channels.
For marketing mix measurement and analysis McDonald’s partners with Analytics Partners, a global research firm that claims the right mix can typically generate an extra 20 per cent ROI.
Graham said marketing mix modelling is the best way to answer the question of which variables drove a campaign outcome and also provides more accurate measurement. McDonald’s has been measuring advertising impact every quarter for the last five years but has been working with Analytics Partners globally for the last two.
Over the last five to six years, in which local advertising ROI has doubled, McDonald’s has tippled its digital spend, Graham said.
“When we first started increasing [digital spend] we did it in the belief that was the right thing to do just based on consumers and what was going on in their world. The data has backed that [decision] up.
“The key learning that came from that was that digital works in combination with all the other media channels… If we put more money into digital incrementally it will help drive our return but we’ve got to have those building blocks of TV, radio, outdoor within that [mix].’
Graham also revealed the fast food giant has begun placing KPIs on its local creative agencies.
Graham said the ability to measure the business impact of a “good ad” was now viable and McDonald’s is trying to remove some of the subjectivity and lack of accountability of creative agencies. The introduction of KPIs on creative has not been welcomed with open arms by all agencies, Graham says, but he’s confident there is a mutual benefit to improving the measurement of creative, which he said is a huge driver of campaign success.
“[Our creative agencies are] actually now KPI’d on on helping us improve that ROI. So it’s early days, but hopefully that fuels that kind of village approach – they actually want to work collaboratively to get a better business outcome.”
The agency KPI is linked to McDonald’s advertising ROI and Graham says he’s increasingly confident in the data being used to measure the performance. Agencies have not embraced the metric “100 per cent”, Graham says, but they also have not fully resisted it.
“We’ll have the traditional measurements of creative effectiveness, brand effectiveness for every single campaign, but the fact that we can now go with another measure which actually links that through to business outcomes means [agencies] go ‘great, not only was it a good ad, per se, but actually that good ad is translated through to a definable contribution to the business’.”