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WARC Talks: How McDonald’s built a culture of creative effectiveness

In this episode of the WARC Podcast we are given a look into how McDonald’s has built a culture of creative effectiveness.

• WARC Insight Director Aditya Kishore talks to Joan Colletta, Senior Director of Global Brand Leadership Team at McDonald’s.
• They discuss how McDonald’s overhauled its marketing communications to become a real driver of commercial growth.

Listen to the episode in full here

Timestamps

02:39 – Tariq Hassan on Famous Orders.
05:35 – What caused McDonald’s transformation?
06:45 – The link between creativity and impact at McDonald’s.
09:16 – Who is responsible for ensuring this new approach is adopted?
10:48 – Working with agencies to continue building on this success.
12:53 – Celebrating success at McDonald’s.
15:12 – Has a culture of creative effectiveness taken McDonald’s forward?
17:06 – Tariq Hassan on the effects of this transformation.

McDonald’s: Famous Orders

Building a culture of creative effectiveness

Creative impact unpacked: Building a culture of creative effectiveness

Growth efficiency: a new metric to monitor brand health and generate future sales growth

Short-term sales efficiency is not an indicator of how efficiently a company can grow, but by measuring longer-term growth efficiency, scale-up brands can plan for profitable growth, according to a new report from WARC.

Growth Efficiency: Marketing’s Existential Metric, produced in partnership with brand tracking company Tracksuit, and WARC sibling company Perpetua, a provider of e-commerce advertising optimization and intelligence also highlights that building brand awareness drives greater effectiveness in performance marketing.

Key findings

• The Paradox of Unscalable Efficiency
  A common pattern among brands seeking to scale up is that at a certain point, growth plateaus, becomes more expensive, and previously strong performance marketing metrics, such as ROI or ROAS, decline.

• Growth Efficiency and Brand Strength
  High awareness brands generate more than twice the sales lifts of low awareness brands as they increase their spend. At a 10% spend increase, high awareness brands yield an average 13% sales increase, while low awareness brands yield just a 6% sales increase.

• Future demand and growth efficiency
  Very low awareness brands (1-5%) with small overall sales have very high growth efficiency. But as those brands grow past a certain scale, if they haven’t built awareness among Future Demand, their growth quickly diminishes. 

• Modelling growth efficiency as brands scale
  When brands scale up awareness at the same time as scaling up performance spend, sales can continue to happen very efficiently and brands can grow profitably into a much bigger and much more valuable business.
  Greater levels of brand awareness supports greater levels of growth efficiency. Both are critical to sustainable, profitable growth. And the latter is very much dependent on the former.

A complimentary sample report is available to read here. WARC subscribers can read the report in full. 

Nestlé reassesses its approach to creativity

“Creativity can be more effective,” argues Nestlé’s global chief marketing and digital officer at DMEXCO – putting a particular emphasis on the words “can be”.

Why creativity matters

Aude Gandon added: “It can be more diverse, it can be more responsive, it can be more valuable, and it can be more effective – but it can only be [those things] if we know how to leverage these [digital] tools, if we know how to handle the opportunities that we have ahead of us.”

It’s significant that she refers to digital tools, noting that effective content around the world – and she cited the WARC Effective 100 in support of her contention – often does not include a TV ad anymore. 

Takeaways

• “Don’t get too enamoured by the plumbing” is effectively Gandon’s version of not being distracted by the latest shiny new thing. Tech is the foundation of marketing, not the end product, she said: success is about pairing your existing expertise in the fundamentals of marketing – which have never changed – and amplifying that with the tools of the time.
• For example, Nestlé’s Creative X tool, powered by AI, has freed up teams from a digital checklist and enabled a 66% increase in ROMI on Meta platforms.
• In one territory, Nestlé Content Studios was able to produce 5,000 different, personalised assets for a variety of platforms from seven master assets.
• “There’s no room for lazy marketing” in an era of ad blockers and ad-free subscriptions, argued Gandon: the bar for creativity and value is getting higher.
• Upskilling at scale is essential (and Nestlé is doing just that with its 12,000 marketers around the world) to enable proper use of AI and other digital tools in order to “unleash a whole new era of creativity”. 

Key quote

“Creativity is not dead. Creativity is being reinvented and it looks pretty exciting to me” – Aude Gandon, Global Chief Marketing and Digital Officer at Nestlé.

BEC

[Image: Nestlé]

Differentiation and the ‘deadweight’ economy

With recent reports suggesting that inflation may be stabilising, Gartner describes the new climate as a “deadweight” economy and it will involve businesses investing in differentiation to succeed, the research firm argues. 

Why differentiation matters

“Branding lasts, differentiation doesn’t,” argued marketing science guru Byron Sharp, but some thinkers are beginning to disagree. 

The debate between distinctiveness and differentiation has started to assume an “ideological” profile, as Mark Ritson put it, but the debate is vitally important to marketing and sets out the why and the how of the discipline. Getting around two incredibly similar words is tough, however. Check out this WARC Podcast on the topic featuring Ehrenberg-Bass’s Jenni Romaniuk and Northeastern University’s Koen Pauwels. 

What Gartner says

An illuminating new blog from Gartner’s finance practice breaks down the challenges facing finance departments at major businesses, all of which are interesting, but the big ones for marketers are:

• Zero-sum growth
• Waning pricing power

Where the debate comes in

Value rather than volume becomes important for marketers in an inflationary environment, as Dom Boyd, managing director, UK Insights and Effectiveness practice at Kantar, and Felipe Tomasz, of Oxford University, explained earlier this year. 

“You’ve got to design for difference in every way in your brand strategy; in your innovation, in your communications, in your experience – design for difference,” explained Boyd. 

For finance professionals, too, Gartner argues focusing company investments on points of differentiation or uniqueness in a battle for market share. 

Key quote

“The deadweight economy challenges an organization’s ability to meet corporate performance expectations by constraining traditional avenues for growth, pricing, investment funding, cost management, people management, and productivity gains, and deadweight economic conditions can be expected to linger through most, if not all, of organizations’ current strategic planning horizons” – Randeep Rathindran, distinguished vice president, research, Gartner Finance practice.

Sourced from Gartner, WARC

E-commerce the big winner from holiday sales period

US shoppers will be looking for bargains in the upcoming Amazon Prime Day and Black Friday/Cyber Monday sales – UK shoppers maybe not so much – so brands and retailers on both sides of the Atlantic will need to be alert to where their main opportunities lie.

What’s happening? 

A post-pandemic burst of spending has abated and with inflation continuing to affect consumer purchasing behaviour, sale days like Black Friday and Cyber Monday are likely to be more important than ever in this year’s holiday spending plans. Volume sales will grow, but the value of sales will increase at a slower rate than last year.

Retailers will need to pitch their offer accordingly, taking note of shifting patterns of demand, while those brands not being promoted by retailers can still benefit from driving traffic and being “retail-ready”.

Takeaways

• Deloitte is forecasting a 3.5%-4.6% increase in US holiday sales this year, or around half that of 2022, although e-commerce sales are expected to grow three times as fast as the bottom end of that range.
• It’s reported that TikTok will be offering sellers, in its recently-launched-in-the-US TikTok Shop, subsidies of up to 50% as it seeks to win over holiday shoppers.
• In the UK, a minority (14% in a consumer survey by It Works Media) are regular hunters of Black Friday deals; most people (58%) believe Black Friday deals are not good value for money, so retailers could be better off focusing their holiday marketing efforts outside of this date.
• Previous research has shown that a strong seasonal campaign can positively frame brand experiences to build stronger business results beyond the critical Christmas months to the following year.

Sourced from Deloitte, Bloomberg, It Works, WARC

‘Marketing at the speed of consumers’ as the AI wars heat up

The use of AI in marketing can help marketers respond more effectively to consumers, even as consumers themselves are finding that AI helps them get through their own tasks more quickly. 

Why AI matters to marketing

Everyone understands that AI is a game changer. In the words of Google’s Gaurav Bhaya, speaking at DMEXCO in Germany, the current situation is an inflection point when “it finally became possible for marketers to market at the speed of consumers”. And for those consumers, he also holds out the welcome possibility of no longer showing them ads for a particular product once they’ve bought it.

Takeaways

• Google reports that using AI in its Performance Max platform helped airline Lufthansa increase new bookings 59% while at the same time reducing cost per acquisition.
• Simple AI-driven techniques such as flipping horizontal video to vertical for different platforms can drive up to 13% more conversions. 
• At the same event, Microsoft’s Mascha Driessen reported that 72% of people coming to Bing Chat arrive via Google Search; one-third of them have never used Bing before. “We’re extending our reach with this,” the regional vice president for advertising, Continental Europe, said.
• Bing Chat users tend to be younger and they complete their tasks in half the time of traditional search.

Key quote

“You’re not competing against AI. You’re competing against other marketers who are using AI. The sooner you start practising and experimenting with AI, the greater the advantage you have over your competition” – Gaurav Bhaya, VP & GM Google Ads, Measurement. 

BEC

Why brands should rethink social for Gen X

Despite their numbers and spending power globally, Gen X consumers are often ignored by brands and the advertising industry, particularly across social media advertising, according to new research from Wavemaker. 

In Finding the Gen X Factor, the media agency highlights a huge untapped opportunity for brands, especially when it comes to how they interact with this age group on social. 

Why Gen X matters

Gen X accounts for around a third of the global population (31%) and more than a quarter of global spending (27%), but only 4% of the ad industry’s research into different generations includes Gen X. 

Takeaways 

• Gen X is on track to be the most affluent generation of all time, as $70tn of wealth is passed to them from Boomers.

• 92% of Gen X use social media every day, half of them use TikTok.

• Gen X represents almost a third (28%) of TikTok’s user base but only 5% of brand spend on influencer campaigns.

• Only 13% of Gen X feel represented in the social advertising they see, but when they do see their generation represented it doubles their preference.

• Influencer campaigns tested performed far worse with Gen X than with Gen Z and millennials – 30% lower retention rates, 20% fewer interactions with the content and 47% lower impact on brand opinion. 

• Posts from Gen X creators performed better with that audience and are on average three-quarters (75%) longer than posts from Gen Z (10-25s) or millennial (25-45s) creators.

Key quote

“Gen X are more brand loyal, have longer attention spans and are more engaged on social media, ultimately proving to be more valuable consumers than their younger counterparts” – Zoe Bowen-Jones, Senior Insight Director at Wavemaker. 

Sourced from Wavemaker

Instagram forecast to hit $71bn revenue by 2024

Instagram is set to recover faster than other social media rivals following Apple’s ATT and a wider weakening of the digital ad market to reach $71bn by 2024, as consumers and brands look to the image-sharing site’s social commerce future. 

WARC Media’s latest Platform Insights report provides an overview of the key datapoints that advertisers need to know about the platform, spanning investment, consumption and performance. The full report – with evidence-based insights on Instagram's challenges and opportunities – is available to WARC Media subscribers.

Why Instagram matters

One of the jewells in Meta’s crown, Instagram has not only remained important but is becoming more influential. Nearly a third (30.4%) of consumers now look to Instagram when searching for brands, according to GWI. As a result, retailers are set to invest $9.1bn in the platform across 2024 alone.

“Buoyed by innovations in AI targeting helping it to offset the impact of ATT and improved monetisation of Reels, it is only a matter of time before Instagram surpasses its Meta stablemate Facebook to become the world’s largest social media platform by ad revenue,” explains Alex Brownsell, head of content at WARC Media. 

What’s happening

WARC Media forecasts quarterly advertising revenues of $17.7bn in Q4 2023, up 25.8% year-on-year, and predicts its global ad revenue to reach $71bn in 2024. 

Following a flat 2022 off the back of a digital advertising slowdown and the ongoing effects of the Apple Ad Tracking Transparency (ATT) measures, which hit Meta’s ability to track campaign performance for clients, the platform is now going from strength to strength. 

Aside from brands spending directly on advertising with Instagram, it remains the most popular platform for influencers (used by 90% of influencers versus the 63% who use TikTok).

“The recovery of Meta’s ad business in 2023 has been one of the most notable media industry stories of the year. Twelve months ago, commentators were warning of a ‘reckoning’ for Big Tech, with platforms like Instagram hurting from signal loss resulting from Apple’s ATT policy, alongside a broader slowdown in digital ad investment,” adds Brownsell.

Reels is key to Instagram’s resurgence

Campaigns on Reels reach nearly twice the audience as those on TikTok, according to data from Emplifi, while nearly a third (30.4%) of consumers turn to Instagram when searching for brands.

According to Emplifi, Reels outperformed all other content types on Instagram, generating 55% more interactions than single-image posts and 29% more interactions than standard video posts.

More on WARC’s Platform Insight reports

Platform Insights: Instagram follows the recent release of Platform Insights: YouTube, a new series of reports exclusive to WARC Media subscribers, which include an overview of platform investments, media consumption and performance insights.

Disney mulls sale of Indian operation

Disney is expected to harden its focus on its core Disney+ service in Western markets, amid reports of a sale of its Indian streaming and television business to potential buyers including Reliance Industries. 

Why Disney’s India business matters

Despite the huge addressable market in India, recent evidence of its price-consciousness could push Disney to focus on markets in which it can defend higher prices with less costly properties than sport. 

What’s going on

Bloomberg first reported news of talks based on sources close to the action. It is unclear yet whether the entire Disney Star business or just a selection of assets are on the table. 

The news follows the loss of important digital sporting rights in the country, not least the IPL, which dampened its most recent results as many viewers looked elsewhere. This left its TV-only pitch to advertisers wanting, according to some observers.

Since then, Reliance’s advertising-first model saw viewers switch to a mobile-only deal, while Disney has also shifted its cricket strategy, but it now appears to be rethinking the whole endeavour.

In context

Elsewhere, the company is reported to be exploring the offload of some of its linear channels like the US-based ABC to local broadcast company Nexstar. 

A pivot to streaming makes sense, given the company’s heavy investment in the channel and the slowing of linear television. But it would likely entail some pain in the short term, of the kind seen during its extended dispute with DirecTV, now concluded, as broadcasters resist a shift to streaming paywalls. 

Sourced from Bloomberg, The Streamable, WARC

Aligning ads with video content boosts brand impact

Ads that align with the video content being seen have a stronger impact with viewers, increasing ad memorability, brand impact, and other metrics, a new study from Integral Ad Science finds. 

The Mind on the Stream, conducted in partnership with Neuro-Insight, measured the brain activity of 137 participants in a controlled environment that simulated an ad-supported streaming experience to understand the impact of context matching and ad repetition on CTV. 

Why ad alignment matters

The research showed that viewers have lower interest in ads with increased repetition on CTV. While little to no drop-off was seen in brand impact upon the third viewing of a CTV ad, a fourth viewing started to show significant decreases of -26%.

But ads aligned with the video content can mitigate the impact of repetition and perform better among viewers, despite increased frequency.

Key findings 

• There was a 14% increase in brand impact when ads matched the tone of the content being viewed on CTV. 
• There was a 39% increase in brand impact when ads matched the context of the content being viewed on CTV. 
• There was a 49% increase in brand impact when ads matched both tone and context of the content being viewed on CTV.
• Ensuring ads with increased frequency match both context and tone of the content can help improve brand impact by up to 82%.

Sourced from Integral Ad Science 

Marketing categories differ in how they impact business relationships

The demands of different business categories can have a profound impact on marketer and agency teams, according to new research from Aprais.

The consultancy looked at more than 26,000 relationships between marketers and their agencies for a study that identifies the differences between the two and reveals how teams working in specific categories can improve against their most highly evaluated peers.

Why client-agency relationships matter

Understanding the nuances and challenges of particular categories can help agencies better appreciate its dynamics. Agencies can adapt their approach, acquiring specialised knowledge and developing tailored strategies to navigate specific category demands. Ultimately, this builds trusted and effective partnerships with existing clients and helps to win new clients in target categories.

Key insights

• Among 11 categories studied, pet care, confectionery and non-alcoholic drinks have the most positive ratings of each other.
• Categories such as personal care, healthcare and finance score their teams lower, which is perhaps related to the often sensitive, technical and highly regulated nature of the work.
• Highly competitive categories such as retail and telecoms show remarkably similar scores for the client and agency teams.
• Automotive has the greatest opportunity for marketers and agencies to improve relative to their best-in-class peers.
• Across all categories, trust is the highest-scoring behaviour, underlining its universal importance in relationships. 
• Deep understanding of the specific category is critical to building trust and maintaining a good relationship between the marketer and the agency teams. 

Sourced from Aprais

India readies for increased brand and consumer spending

India’s consumers are ready to spend in the upcoming festive season, a period which coincides with the ICC Cricket World Cup in India that is expected to draw in advertisers. 

Why the consumer mood matters

During a major cricket tournament, general entertainment channels worry that core advertiser spending may be hit as money is diverted to sports channels. But with people in an optimistic financial mood ahead of the festive season, that seems less likely. 

Takeaways 

• 70% of Indians are ready to spend more this Diwali, according to recent research by The Trade Desk – that’s double the figure of a year ago.
• Around half of consumers believe their financial situation has improved (53%), and they are ready to celebrate a lot more this year (49%). 
• More than half (58%) consider themselves to be planned shoppers; just under half (45%) says brand trust is an important factor in Diwali shopping decisions.
• 61% say they will do more product research if they like ads on OTT platforms.
• Separate research from Redseer projects 20% growth in e-commerce sales this year as 140 million shoppers purchase online at least once during the festive season. 
• The ICC Cricket World Cup is expected to attract Rs 20-22bn in ad revenue on TV/digital platforms combined, according to market research company Elara Capital.
• Total spending by telcos during the tournament is projected to be around Rs 175 crore – similar to the amount companies like Hindustan Unilever and Mahindra & Mahindra will be spending individually. 

Sourced from Economic Times, Campaign Asia, e4m

Gucci’s awaited rebrand is met with excitement

Gucci, the Kering-owned luxury brand that accounts for around half of the company’s sales and most of its profit, is awaiting a major refresh as it chases rival LVMH. 

Why Gucci’s rebrand matters

Rebrands are difficult for major luxury brands, which trade on and derive their profit from their brand strength. Gucci has perhaps suffered, not from remaining the same, but from changing too much. 

Observers are now looking for more consistency from a brand that needs to speak to its traditional customers seeking quiet luxury. Meanwhile, expectations of the new launch at its upcoming runway show at Milan Fashion Week are high, with buyers and investors looking to get excited about the brand again.

The situation

Gucci is preparing to launch its first collection under the new creative director Sabato de Sarno. 

Kering’s H1 ‘23 saw only a 2% increase in sales compared to 17% at LVMH, according to the Financial Times. Gucci remains, however, among the biggest in the category with over €10bn in annual sales. 

• Analysts speaking to the FT note that its appeal has focused on younger rather than older, wealthier customers. Others note that the brand tied itself strongly to fast-moving trends at a time of quiet luxury. 
• Elsewhere, the brand appeared to find itself in a strategic bind (made worse by the pandemic) of focusing on China’s fast-growing luxury market, which struggled to rebound after lockdowns, rather than servicing the American super rich. 

Lessons from the WARC archive

Relaunches are difficult because they require a lot of investment and thought. They are beset with risks, not least eroding a brand’s distinctiveness as it chases a fashion that would leave it looking like everybody else. 

But the benefits can be enormous. As WARC’s guide to the practice notes, a relaunch can turn a complacent established brand into a challenger, reawaken its connection to its roots and reposition itself among a critical target audience. 

Find the full WARC collection on brand relaunches here. 

Sourced from the Financial Times, WARC. Image: Gucci