Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



McDonald's Polishing Its Arches

I read an interesting article last week in the Hollywood Reporter -- seems McDonald's (NYSE: MCD  ) wants to change its approach to marketing. The trade paper quotes Dean Barrett, senior vice president of worldwide marketing at Mickey Dee's, as dissatisfied with traditional promotions the company has used: "We no longer ask for a stand-alone event or game or a licensed character tie-in just for the sake of having it."

Instead, the burger-flipping concern wants to customize promotions in a way that organically includes the brand equity of Ronald's chain in a more extroverted fashion -- the phrase used was "entertaining marketing." Barrett was addressing a conference put on by the Promotion Marketing Association, and he used the example of the "I'm Lovin' It" program, featuring Justin Timberlake, which successfully connected with the valuable demographics associated with Viacom's (NYSE: VIA  ) MTV cabler.

The essential implication is obvious: McDonald's is wary of just hawking merchandise and properties for others. And I have to imagine that the exclusive promotional pact that the company entered into years ago with Disney (NYSE: DIS  ) , which expires in 2007, is wearing on its nerves. At the time the long-term contract was signed, there was a ream of analysis dedicated to the fact that it seemed to be a rather limiting deal overall for McDonald's.

Sure, Disney is a great partner and has added a ton of value to the Golden Arches, but the cost of lost opportunities is a concern. For example, McDonald's might have made a better promotional partner with Lucasfilm and Fox (NYSE: FOX  ) on the release of The Phantom Menace than PepsiCo (NYSE: PEP  ) and Yum! Brands (NYSE: YUM  ) did.

What McDonald's wants is more than understandable. Think about it: When the Monopoly game is on, who benefits more -- the home of the Big Mac, or Hasbro (NYSE: HAS  ) ? It's hard to say, but I think more about Boardwalk and Park Place than I do about Quarter Pounders and McNuggets when I participate. But if I were Barrett, I would not necessarily give up on "stand-alone events," as I think they can create an increase in traffic just as well as anything else; the biggest factor is probably the cost-effectiveness of the given method.

McDonald's is certainly upping the ante in terms of making its restaurants a differentiated piece of fast-food real estate. Ronald means business. He's ready to offer a DVD to go with your cheeseburger or include a rocking tune with your Happy Meal. McDonald's is also interested, according to Barrett, in finding a way to work with Pixar (Nasdaq: PIXR  ) , even though the animation studio decided to take a pass on a future relationship with Disney. One has to wonder what a Pixar/McDonald's promotion would be like in the new era of "entertaining marketing." Maybe Steve Jobs and his brilliant computer animators could create talking CGI versions of hamburgers and fries that try to escape the fate of being served to the hungry masses (Drive-Thru Story, anyone?).

I can't wait to see where this new attitude leads McDonald's (hopefully to a higher share price, of course). But a big word of caution: Before the powers that be get too caught up in brainstorming new promotional schemes, make sure the product tastes good and is served as quickly as possible. That's the bottom line with the fans of food served fast.

Fool contributor Steven Mallas owns shares of Disney.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 508162, ~/Articles/ArticleHandler.aspx, 10/22/2016 7:47:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 22 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
DIS $93.03 Up +1.00 +1.09%
Walt Disney CAPS Rating: *****
HAS $82.81 Up +0.34 +0.41%
Hasbro CAPS Rating: ****
MCD $113.93 Up +3.36 +3.04%
McDonald's CAPS Rating: ***
PEP $105.62 Down -0.25 -0.24%
PepsiCo CAPS Rating: ****
VIA $42.05 Up +1.10 +2.69%
Viacom CAPS Rating: ***
YUM $86.97 Up +0.77 +0.89%
Yum! Brands CAPS Rating: ****