Revolutionizing McDonald’s: How First-Party Data is Shaping the Brand's Future

McDonald's has experienced a marketing revival in recent years by collaborating with popular culture figures and appealing to younger consumer groups that had previously rejected its fast food. The brand's focus on first-party data has played a significant role in this transformation, an area where McDonald's had previously fallen behind. The company's app and the introduction of the MyMcDonald's rewards program in 2020 have been instrumental in its success in the data field. According to Tariq Hassan, McDonald's USA's chief marketing and customer experience officer, the brand only began prioritizing first-party data about two and a half years ago when they launched the rewards program. Despite having an app earlier, it primarily served as a menu display. These insights were shared by Hassan during an event organized by the Digital Place-Based Advertising Association (DPAA) on Tuesday. Barry Frey, the president and CEO of DPAA, moderated the discussion.

McDonald's launched its loyalty program in 2020, coinciding with a revitalization of its marketing strategy. One notable initiative was the Famous Orders platform, featuring the favorite meals of celebrities like Travis Scott and Mariah Carey. These on-trend campaigns represented a shift away from previous efforts focused on addressing criticism and relying on limited-time offers. According to Hassan, it was an attempt to regain momentum through spending, but it was the Famous Orders platform that truly restored their confidence.

The executive, hired by McDonald's from PetCo two years ago, acknowledged that the QSR was slow to recognize the value of first-party data. However, the company has now adapted and operates with the same level of sophistication as a customer relationship management platform. This transformation has been instrumental in appealing to Gen Z, a highly sought-after demographic that QSRs have struggled to attract due to their focus on health-conscious millennials.

"In a youth market dominated by digital channels, data has become a valuable currency and a means of communication," explained Hassan. "By leveraging it effectively, we can develop stronger connections and create added value."

McDonald's extensive reach and brand awareness have greatly supported the data acquisition mandate. According to Hassan's estimates, about 90% of American consumers visit McDonald's at least once a year, with nearly 60% doing so on a quarterly basis. In 2022 alone, the McDonald's app was downloaded 40 million times, and currently, the brand has a user base of over 60 million individuals that can be reached through various means, as stated by Hassan. This has shifted our perspective on the business, as the level of data we now have access to, both first and third-party, has brought about a fundamental change.

Tapping into culture

Restructuring the mindset of a company as extensive as McDonald's to incorporate significant changes can be a complex task. With a history spanning almost 70 years, this globally recognized brand operates through a vast network of franchisees who traditionally focused on driving daily transactions. However, an expanded perspective on data analysis prompts McDonald's to shift its focus towards evaluating lifetime customer value and optimizing expenditures on cost per acquisition.

"For our franchisees, this is a significant change," stated Hassan. Describing his collaboration with franchisees, who can sometimes be confrontational, as the "legislative aspect" of his profession, the marketing executive emphasized, "In the final analysis, I oversee a portion of the funds provided by all of our operators. I hold myself responsible for this task. It is a weighty responsibility."

McDonald's has been extremely successful with their data-driven pivot, experiencing 83 consecutive weeks of growth and traffic growth. They achieved a record-breaking 10.3% increase in comp sales in the second quarter, thanks in part to viral marketing efforts. Despite this success, McDonald's recognizes the importance of addressing failure and has implemented a strategy of celebrating "amazing almosts" to foster a startup mentality and facilitate quick pivots in cultural marketing.

Hassan emphasized the importance of establishing appropriate objectives, fostering collaboration, implementing the correct approach, and providing valid reasons for any failures. He questioned how to instill a pivot mindset into a corporate culture to ultimately lead to success.