The need for change
For years McDonald’s had been communicating to their audience via broad mass media and it had worked perfectly. However, we were beginning to see a stagnating return on media investment and overall we identified the following challenges.
- Market conditions and technology improvements have changed consumer behaviour and media consumption drastically. Running consecutive TV-spots throughout the year were no longer sufficient in order to attract and communicate with today’s customers. We had to focus on digital media.
- McDonald’s had entered many new day-parts such as Breakfast and night open, plus they expanded into new product areas such as smoothies and frappés. But to be successful in these areas it required a different approach than the usual mass marketing.
In order to change this situation, we had to understand the consumers’ journey to purchase much better. This meant that we needed to change our entire way of thinking. We had to move away from targeting broad audiences based on age, sex and fast food consumption, and start focusing on behaviour and needs in order to become much more relevant and targeted. We needed to adapt our marketing to every single moment in our customers’ daily media usage and apply a ‘MyMcDonald’s’ approach instead of a ‘MassMcDoanld’s’ approach.
The segment study and enriching media insights
A ‘MyMcDonald’s’ approach includes enhancing and supporting all of McDonald’s customers’ preferences and experiences, so McDonald’s became highly personal and relevant. As we only had broad customer insights an in-depth segmentation study of McDonald’s’ customers’ behaviour was conducted. This study brought new knowledge and allowed us to be even more targeted, but we wanted to take it to the next level. In order to make the identified five segments actionable and move from mass communication to one-to-one communication, we matched this information with media consumption data. We then set out to combine the segmented data with an agile digital approach in a way never seen before – transforming insights directly into digital personas (profiles) to be used in our digital programmatic planning and buying tools.
Getting personal
When serving a banner for a client who opted in, or via our data partnerships, our Data Management Platform (DMP) grabs two types of information: cookie ID of the device we served an ad on and the URL where the ad was served. Our DMP then crawls the URL, scanning it for unique keywords and phrases, identifying what makes this page unique. All findings are tied together into our world model – a semantic model displaying what the Danish population is consuming in terms of specific words and phrases from articles, blogs, commercial and non-commercial sites within the last 30 days. The findings are also tied to the specific users’ profile so each ad impression tells us something about that specific user and the Danish population as a whole.
We then take the insights from the McDonald’s segment study and use them to identify users belonging to a given segment. The Immortals, for instance, are tech oriented, so we identify users where tech terms and phrases are overrepresented compared to the world model. We also know that they are predominantly male singles. From our socio-demographic segments in the DMP we know how to identify these users as well as what makes them different from the rest of the population. The system looks at all the cookies that fulfill the constraints set forth – i.e. consuming tech, interested in gaming and other things that characterise the segment and identify what makes them unique as a segment, creating a positive sample of an Immortal.
We then compare the rest of the population to that positive sample and identify the users/cookies that correspond enough to the positive sample to be included in the segment, and through our DMP/DSP integrations we are now able to buy those segments programmatically.
Enhancing the creative output
Being able to target the desired target group in such a precise manner gives the creative agency the chance to create messages and product offerings with a better fit to that specific target group. The level of precision targeting means that the creative agency can create day parted messaging for each segment e.g. targeting Joe, the Immortal, creating a McMuffin message for morning hours, Cheeseburger for lunch time, McFlurry as the tempting afternoon snack and a Big Mac meal for dinner time. So in essence, our targeting technology enables us to fulfill the marketing dream of the right audience with the right message at the right time.
Data-driven results
Our new approach has generated significant value to McDonald’s. Not only on a media ROI level but at a core business level as well, positively affecting sales and the ‘cost per guest count’:
- The overall digital ROI has increased from 2.6 to 5.8 – performing better than TV!
- Programmatic Buying has the lowest cost amongst all media groups for bringing a guest into the physical restaurants – and at an index 17 compared to traditional digital display buying – so more than five times better than traditional display advertising.
- Through the use of data, the sales lift from Digital activities has tripled from 2013 to 2014 and digital is now generating close to 20% of the total media-driven sales.
Moreover, this approach and use of technology have become best practice globally within McDonald’s and is currently being implemented across markets.
As the euphoria of Mobile World Congress’s 30th birthday party subsides and is replaced by an industry collective hangover, the question soon arises – was it worth it? What were the major themes? What was discussed? What did we learn?
Here is my wrap up.
VIRTUAL REALITY WAS A HOT TOPIC
From the minute that Mark Zuckerberg made a surprise guest appearance at the Samsung Galaxy unpacked event where he spoke for 20 minutes about the potential for virtual reality, you knew VR was a big theme at MWC 2016.
Indeed, amongst the three halls of exhibiting device manufacturers, every stall featured their own VR headset showcase. This meant that over the course of the week, I was able to test out a variety of VR experiences which plunged me into worlds ranging from ski-jumping (I actually wobbled as I took off from the jump), to being a maintenance worker in the connected city of the future, to taking a particularly stomach churning trip on a VR roller coaster.
What impressed was the fact that most devices are now able to deliver an impressive level of VR experience. It seems that the difference in quality of experience delivered by top-end versus bottom-end devices is not vastly different. When increased hardware capability is combined with the decreasing cost of ownership it is not difficult to imagine a world where VR headset ownership is commonplace. A lot will depend upon whether we as an industry can get the use case right.
Previous VR discussions have centred on usage: Why would people use it? How will benefit? How will brands engage in a VR world? What potential does VR offer for the delivery of exciting and compelling marketing experiences?
“VR may require an adjustment of retail business models, but ultimately could prove to be hugely effective in driving improved efficiency and profitability”
This year’s show went a long way to answering these questions, as the focus was very much aimed at demonstrating how the technology will be used in the real world. It is clear VR has a large role to play within the area of professional training, as the technology offers a safe and effective environment in which a pilot or a surgeon or indeed any job with a technical aspect, can learn the range of skills required in their jobs.
From a consumer perspective VR provides the opportunity to enter into the world of celebrity or hero. Imagine being able to drive the Monaco Grand Prix through the eyes of Lewis Hamilton, or score the winning goal in the Champions League final through the eyes of Cristiano Ronaldo. VR will open new horizons for consumers through allowing them to experience the worlds of their heroes.
It is not difficult to see the role VR can play within digital gaming, as the opportunity for the gamer to completely immerse themselves within the virtual gaming environment is hugely compelling. We even saw the role VR could play within retail where VR could be used to deliver the same product purchasing experience, except this would be through a virtual store as opposed to a bricks and mortar one.
VR may require an adjustment of retail business models, but ultimately could prove to be hugely effective in driving improved efficiency and profitability.
When it comes to VR for marketing purposes, I believe it offers brands the opportunity to deliver new levels of consumer engagement around existing brand partnerships or sponsorships simply by allowing the person at home to be present at an event through their VR headset. Imagine McDonald’s inviting you to be a spectator at the next Olympics without having to leave your couch, and then linking product purchase to accessibility of new events.
Through AR, it could have been possible to have had unlimited attendance at the London Olympics on that magical night inside the Stratford stadium when the British athletics team won three gold medals. The possibilities for creative deployment of VR are endless. All you need is a good imagination; the technology gap has been filled.
One word of warning, though, despite all the excitement: there was significant discussion around how VR might negatively impact human behaviour as consumers may prefer virtual worlds to the physical one. Indeed, Zuckerberg spoke about the possibility for shared social VR experiences which seemed to further decrease the need for people to actually engage with each other in the real world.
EVERYTHING WILL BE CONNECTED
The much discussed ‘Internet of things’ was widely in evidence at MWC 2016, with many demonstrations of connectivity in everyday life. The concept of the ‘Internet of things’ has been around for some time, but the conversation felt different this time, away from the theoretical and concentrated on real-world practical activation.
AT&T demonstrated an impressive connected car software solution which illustrated how the combination of automation and connectivity can enhance the life of an individual.
The demo began by featuring car-to-car communication which allowed each vehicle to become aware of a new road hazard in real-time and subsequently recalibrate the route. This then moved on to showcase how the software enables the individual to manage email and calendar requests via voice whilst being behind the wheel, to finished by illustrating how the combination of automation and connectivity can deliver intelligent services, such as the car switching on your home central heating automatically when your car reaches the half way home point in the journey.
“Brands can learn more about how an individual customer uses their product, and offer them a service or piece of advice based upon their own behaviour, whilst also making repeat purchase a frictionless experience”
Oral-B demonstrated how they see connectivity impacting the humble toothbrush through the delivery of their connected toothbrush product. The toothbrush strapline was ‘brush like a demon’ and featured the toothbrush beaming real-time brushing related information to a display in your bathroom mirror which showed you where in your mouth needed extra attention.
The show went on to explore the role connectivity could play within marketing through the delivery of automated service delivery. In the case of Oral-B, you could automatically order a new toothpaste, or toothbrush head based upon the data your collected toothbrush gathers on you, how you brush and your level of oral health.
The point is the brand can learn more about how an individual customer uses their product, and offer them a service or piece of advice based upon their own behaviour, whilst also making repeat purchase a frictionless experience.
THE CUSTOMER DATA OPPORTUNITY
The advertising and media halls were the biggest and busiest I had ever seen them at MWC 2016. The huge level of interest in connectivity and associated advertising and marketing opportunity was clearly evident.
Companies exhibiting covered all aspects of the digital eco-system including DSPs, DMPs, ad-networks and data suppliers. No-matter which company you spoke to, all conversations inevitably featured a discussion around customer data and the range of ways this could be collected and activated. For me, connectivity allows advertisers the opportunity to better understand your target audience’s natural behaviour and to be able to better target them.
Over the week, we saw a few interesting new developments in the customer data deployment space. We had one location based company unveiling a location specific marketplace – think Google AdWords except for real-time real-world locations with little relevancy score.
This is interesting as it allows a brand to bid according to the importance they place on reaching a consumer when either in a specific location or their location history means they fall within the target profile.
Indeed, there was a lot of discussion around the concept of using an individual’s location history as a way of profiling them, and delivering them advertising that was targeted to them. I believe this offers advertisers rich opportunity to have a much greater depth of customer understanding, and a huge opportunity to either talk to them in a way that naturally appeals.
“MWC 2016 has been a positive experience for the mobile industry; it felt like we were actually growing up at last”
Another interesting opinion on the power of customer data came from network operators. There was a lot of discussion around the role they could play in replicating the success Facebook has had in mobile advertising across the rest of the mobile advertising eco-system.
It seems as if operators are finally waking up to the fact that their huge customer databases offer a highly valuable opportunity to open up new revenue streams and deliver this concept of personalized advertising. Whether the operators will commit to delivering this at scale still remains to be seen, but the initial signs are good. Particularly as dwindling voice, SMS and data tariff revenues continue, perhaps their motivation to explore will increase.
Overall, MWC 2016 has been a positive experience for the mobile industry; it felt like we were actually growing up at last. No longer was the focus on unearthing the shiny new thing. Instead, the focus has shifted to making previously discussed lofty concepts actually attainable and successful.
It was also noticeable that there were more brands and their agencies present than ever, which is a hugely important barometer of interest. People now realise not only the potentially game-changing opportunity offered by smart connectivity, but are also visualising the role that technology can play within their own business. Mobile really is everything.