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McDonald's - Capacity Based Advertising

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Insight 

McDelivery is the fastest growing part of the McDonald's business in Singapore seeing a 10% growth YoY. As a result, delivery is at the forefront of the agenda for McDonald's Singapore to sustain business momentum. 

In order to sustain the growth of McDelivery, OMD needed to devise a way to maximise revenue for every restaurant across Singapore in the face of uneven demand and increased competition from QSRs like KFC as well as food delivery aggregators like Food Panda, Deliveroo and Uber Eats.  

Through analysis of real-time order volume data it found that supply & demand were highly localised and varied significantly at any one time among restaurants.  

Customer delivery time constantly increases and decreases dependent on the capacity of the restaurants and the drivers. For example, a busy restaurant in Bugis could have an average wait time of 90 minutes, struggling to fulfill orders, while a quiet restaurant in Jurong could have a wait of 30 minutes, with unused capacity.   

A one size fits all approach to media activation was longer be enough for sustained growth. 

Consumer Insight: “When I decide to order food from you and have to wait a long time for it, or worse, don’t get it at all, I would probably not order from you again.” 

With such a vast choice of food delivery options, Singaporeans have a low tolerance for waiting for fast food. This combined with their low loyalty in the fast food space, delivering a poor experience by making consumers wait too long would push our customers straight into the arms of competitors. 

Strategy 

The solution was a global first for both McDonald's and Google.  

The agency picked paid search as the primary focus as it is the channel with maximum ROI for McDelivery.  

Previously it didn’t factor-in variances in local restaurant capacity for McDelivery in paid search. It challenged that outdated structure with the innovative use of real-time restaurant-level data enabling it to optimise and automate the investment approach based on actual demand at a hyper-local level. 

Linking real-time McDonald’s customer delivery order, processing it, then pushing it dynamically into Google AdWords for paid activation, OMD was able to create a dynamic search engine marketing investment model based on live restaurant data.  

This approach ensured that the media investment approach as well as the message were tailored to real data; not only ensuring the best possible customer experience with the brand, but also maximising media cost efficiencies to drive greater return on investment for McDonalds. 

Execution 

It divided Singapore into more than 25 neighbourhoods using Google’s hyper-local targeting capability. Real-time data from McDonald’s helped identify High, Medium and Low capacity areas. Pausing paid media in High capacity areas and reinvesting in Low capacity areas with personalised ad-copy enabled the agency to deliver higher overall sales volume and greater media efficiency. 

Steps: 

1. Used a real-time data feed (API) into McDonald’s nation-wide delivery management system to access customer delivery wait time by neighbourhood every five minutes. 

2. Using delivery wait time as the indicator of restaurant capacity, OMD categorised each Singaporean neighbourhood into three separate capacity groups using a custom-built coding script, in real-time: 

 High Capacity  – Restaurants with low customer delivery time. 
 Medium Capacity -  Restaurants with moderate customer delivery time. 
 Low Capacity - Restaurants with very high customer delivery time/unable to deliver. 

3. A set of capacity based media activation rules were then developed in Adwords to determine media investment and messaging in each of the three capacity scenarios: 

 High Capacity 
- Spend more: Higher spend limits to drive more customer demand.  
- Conquest: Increased bid levels on generic & competitor keywords to increase impression share. 
PersonaliseLocalised ad copy dynamically showing geographical location and delivery wait time. 

 Medium Capacity  
- Spend less: Lower spend levels to generic & competitor terms, whilst remaining strong on brand terms. 
PersonaliseLocalised ad copy dynamically showing geographical location only. 

 Low Capacity  
- Pause: Pause all media activations and reinvest budgets to high capacity restaurants. 

Results 

The results from this activation had significant impact to McDonalds’ business objectives. 

Over the two month activation it achieved a 9% increase in total revenue from online orders and an % increase in transaction volume. 

A 35% reduction in cost per transaction equated to a 58% greater return on ad spend from paid search investment. 

It also saw an uplift in campaign metrics with 7% higher click through rate, 33% lower cost per click.  

Successfully increasing revenue for McDelivery with greater media cost efficiency.

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Brand:
McDonald's
Category:
Food
Region:
Singapore
date:
September - October 2016
Agency:
OMD
Media Owner:
Google
Media Channel:
Digital,Online
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