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Why WPP refuses to work with McDonald's

there was a scandal provoked a kind of marketing policy on the McDonald's global communications market. According to the portal, fast-food chain has a strictly control the creative "in the field", and to update the concept of seeking a global partner.

The participants of the tender were put in such conditions that they put out of himself the most powerful man in advertising - the head of WPP Sir Martin Sorrell.

The McDonald's lately, like most major global fast food chains, are experiencing problems with sales. McDonald's Financial indicators fell for the first time in the last twelve years. By the end of last year the company's net profit decreased by 15%, sales decreased by 1%, revenue - to 2% (up to $ 27,4 billion). The network has produced a number of measures to combat the crisis - such variety in the menu, the new HR-policy didzhitalizatsiya customer service.

One of the key problems, because of which reduced the company's profit, is, in the opinion of management of McDonald's global office, lack of respect for the local offices of the brand communication strategy. In other words, too often regional units depart from the general advertising strategy in favor of local peculiarities. This affects the perception of the brand and does not allow the global office fully build communication with the consumer.

And really - whether it be France, India or Russia, "national character", the local socio-cultural features appear in the McDonald's menu and advertising like no other brand. And it's not just about the fast-food market. With strong local creative expertise, companies such as IKEA, Coca-Cola or Mars strictly adhere to the overall advancement of the concept. McDonald's also safe to change it for the sake of consumer sentiment "on the ground".

A striking example of this behavior is the situation with the Russian McDonald's. After the aggravation of Russian relations with the West, the network underwent a serious attack on the part of the public, and Russian officials. The matter even reached the closure of a number of restaurants, including the very first - in Pushkin Square. In response to McDonald's launched a massive image campaign to prove his "Russian character". In the course were different arguments - from tens of thousands of Russian employees to local suppliers.

This spring touched localization and product line: for the sake of the local user has changed the positioning of the popular seasonal product sandwich Creek Mack. If in other regions (and in Russia in previous years), he moved as a product of the ethnic Greek cuisine, but now it served as the Russian consumer reward lived through the Russian winter.

To align the situation with the advertising creative in the world, McDonald's announced a tender to select a partner to refine marketing strategy towards its "centralization". In the competition three leading advertising holding company were invited - the US Omnicom, Publicis and the French and the British WPP. Under the terms of the tender, the winner must develop uniform criteria for the communication of the brand in the local markets, which in the future should be followed by all, without exception, the regional offices of the company.

Common criteria for the successful tenderer should develop as soon as possible - for 60 days to 30 of June. Updated creative strategy for the company's plans should integrate all communication channels, ranging from mobile applications and ending with advertising on TV. Due to renewed creative brand strategy, which, according to the terms of the contest, the winner has to offer, McDonald's plans to significantly increase the coverage of consumers and increase sales.

The official announcement of the company director of marketing for McDonald's Deborah Bullock noted that the management does not intend to radically change the positioning of the company, which is reflected in the famous slogan «i'm lovin 'it». It is exclusively on strengthening existing positioning in the local markets. Searching for a new creative partner also does not affect the operation with other partners, the fast food chain. McDonald's, in particular, intends to continue working with Golin (PR), OMD (media) and agencies working directly with McDonald's in the regions.

"We are committed to the modernization of the McDonald's in every sense, including in the content that we produce for consumers. We appreciate partners that are already working and who share our values, but the world does not stand still. International agencies, for example, continue to look for new ways of communication with the consumer. "

Deborah Bullock, director of marketing for McDonald's in the US

McDonald's will study the best solution from the world agencies to develop an integrated strategic thinking and coordinated approach to all of our creative activity.

Large-scale changes in the company, including changes in marketing, associated with a new course Steve Easterbrook, who headed the McDonald's at the beginning of last year. Easterbrook has already submitted its proposals for reforming the companies that seek to expand the role of the franchisee. Deborah Wall also joined the company about a year ago, in the wake of the change of the previous command does not meet the expectations of shareholders.

By itself, the "centralization" of creativity is an interesting occasion for debate, however controversial individual infopovodom became tender for selection of the developer of the new strategy. Less than a week from the start of the competition, as a communications holding WPP largest in the world has announced its withdrawal from it. The reason was the unrealistic demands that McDonald's has brought to the participants. The WPP, in particular, was not satisfied with the terms of development of common criteria which will be evaluated by all creative and strategic brand solutions. 60 days - too short a period for it, believe in the WPP.

In addition, the WPP leadership has angered the financial side of the deal: the winner will have to work within a common set budget, without taking into account the specificity of commission agencies involved in the project and other possible expenses. In other words, the holding company simply does not understand how much specifically receive its affiliated companies for their work, and how much of the budget goes to the associated costs - for example, in the media or contractors if they are needed as part of the new concept.

Such conditions have been named members of WPP «absurd and inconsistent with market conditions." Recall that the head of the WPP Group, Martin Sorrell is firmly convinced that the Agency should receive a separate fee for the development of marketing strategies and other services, which are the result of creative effort. Costs spent on the agency contractors, firmly convinced Sorrell, must be paid by the client separately.

No McDonald's, no WPP currently do not comment on the situation. Payment Problem agency works raised by the WPP, of course, beyond the scope of the conflict with McDonald's. In a crisis, customers continue to cut marketing budgets, including trimming and agency commission, or even completely abandoning it. The largest customers often negotiate with agencies on a sliding scale fees and about what work will be performed by the agency at a bargain rate of commission, and that must be paid for separately.

Currently, there are different forms of payment services to advertising agencies, but in general they can be divided into two basic forms: percentage of commission and costs of the various forms of compensation.

When using a sliding scale agency receives a fixed commission fee depending on the amount of advertising costs. It is equal, as a rule, 15% (this is the standard fee does not allow the agency to get more or less of a profit, as the agency is still forced to apply to the contractors and to pay for their services).

In compensation the customer returns the agency costs of waste for the production of advertising contractors and pays a certain percentage of commission. Selected results of the fee amount of the fee can also be tied to a specific indicator of advertising effectiveness.

Claims advertisers are clear, but the customer has a motive: McDonald's revised scheme of work with agencies not of the simple life. With the reduction in sales and profits in the past year, the network has reduced the administrative structure on 225 employees. New McDonald's CEO Steve Easterbrook said while the intention to reduce the company's costs of $ 300 2017 million to the year. At the same time the company's spending on advertising reach 1,4-1,5 billion dollars, and a large part of this amount to the amount of contributions to advertising agencies.

With regard to avoiding excessive "local" creative, then the validity of this strategy will be clear only after its implementation. Finally look at another example of creative approach to the promotion of the local market - the Russian video McDonald's, which has become a real meme in 2012 year. Hopefully, the new strategy will not deprive us of the pleasure.

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