This is an edited transcript of the conversation between Morgan Flatley, Global Chief Marketing Officer and Head of New Business Ventures, McDonald’s, and Ann Marie Kerwin, Americas Editor, WARC.

Ann Marie Kerwin: Welcome to the WARC Podcast. I'm Ann Marie Kerwin, America's Editor and this is the fifth episode in our podcast series, Marketing Truths.

Here at WARC, we've been advocates for marketing effectiveness for more than three decades. And what we found, thanks to numerous research studies, is there is a set of principles of marketing effectiveness that have been proven again and again to work.

In the four episodes leading up to this one, I’ve had conversations with Analytic Partners Mike Menkes about how to measure effectiveness and set objectives as an organization. I then spoke with Colin Chow, of TwentyFirstCenturyBrands, about why strong brands can help bring clarity to the right balance for marketing plans by aligning internal and external teams. Next up was GSK’s Jim Delash who talked about how creativity is the one tool in a marketer’s toolbelt that is fully within the control of the CMO. And last month, I was joined by Ilana Wiles of Ally Financial to talk about how and where your messages should show up. Each of those components of effectiveness, measurement, balancing for long-term and short-term goals, deploying creativity, and getting your messages in front of audiences all combine to create a flywheel of marketing effectiveness, a virtual cycle of brand-building.

This week we’re exploring our fifth and final marketing truth in this series, building brands is much bigger than advertising. And today I’m talking to Morgan Flatley, CMO of McDonald’s, one of the most well-known brands on the planet.

McDonald’s is a great example of how an organization focused on brand building can link that directly to business growth.

Morgan Flatley, CMO, of McDonald’s, has said that “Creativity can transform your business. And for us at McDonald’s, it’s brought the excitement, the energy, the swagger, the pride, back to our organization – not just within the marketing organization, but across the entire organization.”

McDonald’s has done something that no other company has achieved before: ranking in the top 3 across each of WARC’s annual rankings. Having placed 1st for effectiveness since 2020, this year it also placed 3rd in both our creativity and media rankings. As an organization, McDonald’s is a great example of how harnessing the power of brand and embracing creativity, can have significant rewards.

Welcome to the WARC Podcast, Morgan.

Morgan Flatley: Hi Ann Marie, it's great to be here with you.

Ann Marie: I'm so glad you were able to join me. So let's jump in. Marketers spend a lot of time thinking about brand, but other teams within companies and organizations often think that brand means TV ads or logos or signs. How do you think about brand and how can a company harness a brand's power?

Morgan Flatley: It's such a great question because despite being in marketing and spending a lot of time thinking about brand, I actually don't know if we think enough about what exactly brand and marketing means. So for me, brand is all of the interactions a consumer has with our business. So as you mentioned, advertising and signs and logos are certainly a piece of it. But I also think about every way that a consumer experiences our restaurants, from their interaction with our restaurant teams, their interaction on our app, their experience going through our drive-through, their experience with our food. And, in my mind, every single one of those interactions is what builds and contributes to our brand and how consumers think about the McDonald's brand, and how we build resonance and ultimately advantage with the McDonald's brand. So it's much, much broader than how it can be defined around just marketing communications.

Ann Marie: At WARC, we really advocate for companies to harness the power of the brands that the work of brand building has to be cross-functional. It's not just the CMO and the marketing team, but the entire C-suite really has to drive that. And that was a key component of work support building a culture of creative effectiveness. So how have you worked to pull in other teams to support brand building?

Morgan Flatley:  I believe in that too. I was reading some of your report and the reference to it being a team sport. I really think marketing is a team sport and the culture that we create, especially at McDonald's, the culture that we've created is what has really helped us harness the brand, the creativity and drive true growth over the last few years. And I think about it as a team sport, it's not only the teams you would naturally default to, our product teams and our creative teams and our agency partners, but it's also, as you said, it's in my mind, all the functions who sit around the leadership team table. So, I feel my job is about building advocacy and support with the C-suite. I often think our CFO is one of my biggest partners in how we think about creativity and how we think about the business. Similarly our segment presidents our chief supply chain officer, because if we don't have our food and our supply chain really solidified, it impacts the experience customers have with our brand. Our chief restaurant officer and our operations teams, every single one of those individuals help the marketing organization ultimately deliver the best experience for the brand with our customers. So it is shared across the entire cross-functional leadership team. And it's part of why this job has become so fun because it's so multi-disciplinary and requires real cross-functional partnership across the organization.

Ann Marie: One of the issues that CMOs often deal with is trying to figure out how to get that right balance between long-term brand building and short-term activation sales goals. And that really has to start with the business objectives. So how do you work with those other team members on the C-suite to set out those objectives?

Morgan Flatley: One of the things that has been a huge advantage for us is when we look at our corporate strategy which has been in place since 2020, I believe. The last four years McDonald's corporate strategy actually has marketing at the heart of it. We talk about our business strategy as accelerating the arches. And there are three growth pillars that sit within that strategy, and they're defined as the three Cs, and the Ds. And it’s about maximizing our marketing. The first pillar in our growth strategy is all around, how do we continue to get more out of our marketing? That includes how we grow our brand, how we continue to grow the health of our brand, how we think about great creativity, how we ensure our value perceptions are maintained with customers. The middle is around our core and how we grow our core, which is ultimately our product brands, Big Mac, McCrispy Chicken, McNuggets, things that you're very familiar with, I'm sure. And then the last, the Ds are what we call the four Ds, which are around digital, development, drive-through and delivery. So it's more how customers experience our restaurants through various channels. So it's interesting because our business strategy has marketing at the heart of it, it has helped ensure that the conversations with the business leaders are around marketing. I will say, I feel very fortunate to sit in a company where marketing is one of the critical growth enablers for the business. That being said, there are a number of things we've done to facilitate those conversations with business leaders. And there are probably three that I would say have been particularly valuable. One is we measure our marketing. So measurement, what gets measured has attention on it. We have put in place really important, consistent measurements around our marketing. So that's one piece. The second piece, which I think you all talk about in some of your report, is we have a consistent language. That has happened over the last few years, really building a consistent language around how we talk about great marketing and the inputs to great marketing and now how we talk about great creativity. So there's consistent language, there's consistent measurement. And then the last piece that I think we've done that has really helped drive alignment and discussion across the business leaders is just the focus and attention we put on it. So with our top sixty leaders from around the world, we talk about marketing and creativity. The more you talk about it in those business forums, the more it trickles through the organization on the importance and the role that marketing, brand creativity ultimately plays in driving our business. I feel like I'm in a really fortunate position to be at a company that puts marketing front and center of our growth plans.

Ann Marie: Earlier in this Marketing Truth series, I spoke with Colin Chow of TwentyFirstCenturyBrands and he noted how a company's brand can really be a guiding force inside a company as well as outside a company, that it can really help employees understand what decisions they should be making because the brand attributes kind of give the clue of like what the company would want to do. Do you want to talk about how McDonald's has done over the past few years to renew its brand swagger and how that's helped internal efforts.

Morgan Flatley: This has been one thing that has been so fun to see and so energizing for all of us in the organization, but I'd say especially for me as the champion of marketing here. And it's interesting just hearing Colin's quote, because there are two ways I think about it that his reference just triggered. One is, we are a business that exists across over 100 countries around the world, 40,000 restaurants. I think it's close to 2 million employees across the entire McDonald's system between our owner-operator restaurants and our owned restaurants. Understanding the brand and what the brand stands for and then also our values, which have been really critical to the transformation we've been on, but ensuring that our restaurant teams around the world understand what the McDonald's brand is about and our ethos is so important because they're ultimately the direct interaction with consumers. Some of what we've really focused on along with our core values, which have been really central to this, but is what our brand stands for. We talk about it as making delicious, feel-good moments easy for everyone and bringing bubbles of joy and happiness into people's lives. We talk about the brand being democratic and joyful and playful. As our frontline employees, our restaurant teams, our restaurant managers start to understand that they can actually embody that and deliver that experience to customers, whether it's how you receive your order or in many of our markets where birthday parties are still front and center, how those experiences come to life for kids, the play places, et cetera. That's certainly a piece, but the other piece that has been really special to see as we've gone through this is the creative renaissance over the last few years, which has brought tremendous pride and swagger to our employee base. It's not just the employees that I sit with here in Chicago in our headquarters, but it's the employees around the world that I have the opportunity to go out and meet. And again, it's our restaurant teams and the pride that they feel to be part of a brand that is actually in the zeitgeist and in culture. I had this great experience going to, Brazil, probably, it was a year and a half ago or two years ago, maybe a year and a half ago. And just meeting the restaurant teams and the employees in that culture and seeing their pride to work with this brand is so energizing. A lot of that is because of how we've started to drive consistency in how the brand comes to life, making sure we're connecting back to that ethos, and also getting our brand in the middle of culture. We had an event four weeks ago, which is our worldwide convention, and we bring together, it was probably 10,000 to 12,000, people who across all of our system. It's amazing. It’s our supplier teams, our company teams, but it's also our owner-operators, our franchisees and their restaurant teams. And just to see and experience across all of those different stakeholders, the pride that they have in this brand. And again, the consistency in which it comes to life and their role in delivering that was just amazing. It was really, it's part of what all the work is for, but to see it translate through all those different individuals was really, really powerful.

Ann Marie: Wow, that's amazing. It's like an entire country, McDonald's.

Morgan Flatley: It really is. It was really fun. It's very special.

Ann Marie: Getting a working organization of that size, global, franchisee models, multiple agency partners, to align on what good creative looks like and how you vet creative ideas and how you talk about great creative and what it should achieve, that's has got to be a huge lift. What have you done to socialize those concepts with internal and external teams?

Morgan Flatley: I would be lying if I said it was easy or if I said it was done. I mean this is certainly a journey. And I think we're still early in our journey. When you think about the number of markets we operate in and from my chair, the variability in the creative across 100 markets, 100 plus markets, there's still a lot of variability. There are a number of things that we've done. And again, I think we're probably, if it's a marathon, we're on like mile two. So we're still very early in this journey, just because of the breadth and the size and the scale of the business. But one thing is, we have built this consistent language in terms of how we talk about great creativity. The global organization spends a lot of time out in markets with our marketing teams and our agencies because they're ultimately a critical partner in this. Doing workshops, reviewing creativity, talking about the tools. We have a whole suite of tools that we have standardized, though there is certainly some flexibility, but around how we think about, the process to getting to great creativity, how we unlock great creativity, how we evaluate great creativity. We spend a lot of time out in markets, talking about work together, because ultimately, this is a people business. When you do great work, it involves people coming around a table to get to great outcomes. We spend a lot of time out in the markets. And then I spend a lot of time

really shining spotlights on what great creativity is. Like many other companies, we have our own internal annual awards program, which I think is one of very hotly contested across the markets. I review all of that work with the team, we shine spotlights and award the best work from around the system, which has become quite coveted. Also, I mentioned this convention that we just had where I featured some of the best examples from around the world on stage. To that multi-stakeholder audience, we talked about and showcased the best work from around the world. And then I meet with our agency partners with some consistency to

push them behind the scenes on expectations around great work. And the great news is I have the support of the business leads on continuing to push and continuing to raise the bar on what great creativity looks like that ultimately drives our business and how we evaluate it and award it. So it takes a lot of work given the size of our business, but.I will say, this is part of the fun of the job. And then when you see the payoff, as we were talking about, in terms of the swagger and the pride and how it translates through the entire organization, it's certainly well worth it.

Ann Marie: That's an amazing community to lead, the size of that community is something. I was told that one of the changes McDonald's made a few years ago was to call your creative briefs feel-good briefs, which was to get to what feeling did you want to evoke in consumers viewing your campaigns. So what did you say after you started focusing on emotion and feel-good marketing?

Morgan Flatley: That has been another big change. And it goes back to this point we talked about earlier around language. We talk about the feel-good briefs, our awards are called the Feel-Good Marketing awards. And it comes back to, it's like where we started the discussion. Our brand positioning is around delicious, feel-good moments and making those easy for everyone. So the accessibility of our brand is a big piece of it and the ease of our brand. But we really feel part of McDonald's DNA, this feel-good piece, the bubbles of joy, the happiness that we bring. And that's a real differentiator for us, we believe. And it's really fundamental to our brand. And it goes back to ultimately the product experience. If you think about just even opening a Happy Meal and the joy and the feel good that that brings, we have started, and that was a big shift in terms of our marketing was really going from product very functionally driven marketing to marketing that's ultimately still about selling product and selling visits, but is tied up in this emotion that we create with the brand. And we've used phrases like bringing emotion to the promotion. We feel one of our big differentiators is the emotion that McDonald's can bring to our brand, to our business, to someone going through the drive-through to our products. There's been lots and lots of research that reinforces that feel-good work or emotional work is ultimately what gets retained by customers and drives that brand's salience. The other piece that it's worth mentioning that has been another big shift of ours, so one is this focus on feel good. The second, and I was in a meeting with creative agencies yesterday, so this is very fresh. The second is what we talk about as fan truths. And over the last four years, this really started four years ago, it's now embedded across all of our agencies and across the system, this concept of instead of talking just about consumer insights, we talk about fan truths and we talk about our consumers actually as fans. Just think about the change that starts to have when instead of thinking about them as a monolithic consumer, which feels like a little scientific and cold, you think about them as a fan and a fan of McDonald's and just the richness that that language has started to unlock when we get into starting to build and come up with consumer insights. But thinking about them as fan truths has really changed the way we're getting to this feel good marketing and getting to real rich, special specific insights that fuel killer creativity. There are a few tweaks that we've made in terms of language over the last few years that I think has been part of accelerating this. And I'll even say one of the things I love is now around the table when senior leaders talk about our fans and that's become so embedded in the language we use. That's when you start to see the real change across the organization as large as McDonald's.

Ann Marie: I think about a campaign like Famous Orders and what that did and talk about like appealing to fans, like that dual fan, like the fan of the celebrity and the fan of McDonald's. I'm assuming started as a campaign idea. But then it had to require that there were specific meals added to the menu. And the rollout must have been one that needed to involve the entire organization to make it work. Similarly, Grimace's birthday just introduced a new flavored shake for a limited time. So how do you get buy-in from the rest of the company when you have an idea like that, to change menus and you have to get franchisees on board and communicate with frontline staff? What's the process to get all of that through?

Morgan Flatley: It's definitely not easy. I wish I could say it was easy. The famous orders example is a great one to talk about. And then probably similar with Grimace Shake. But Famous Orders, so if you think about this fan truth language, and it started with a fan truth, which was no matter how big and famous you are, everyone has their go to McDonald's order. So if you think about the sell-in process on that program, everyone understood it. And the sell-in process here does involve franchisees. There's a marketing franchisee committee who was involved with that idea. Certainly operations certainly the finance team, because there were some financial components of it. It was a multifaceted program that involved, supply chain was heavily involved, you know, that involved all the C-suite leaders around the table in the US. But I think when you start with an idea that is so clear, like this fan truth insight was a great articulation. The first one was Travis Scott, you know, Travis Scott has his go-to McDonald's order, and it's what he orders all the time, and there is history and relevancy and authenticity behind it. Everyone could understand that idea, so it certainly helped with the buy-in process. The great news was I had key stakeholders, including my partner who led the marketing committee, who is a franchisee. She and I were hand-in-hand through that process. I had big advocates who were helping to bring their bases along. The other beauty of the famous orders, and it's the same with Grimace Shake, is although it was slightly different.

The beauty of Famous Orders, in almost all the cases, is the meal is one of our core items with a couple of tweaks based on how the celebrity loves their product. So that helped too. It wasn't a net new, highly complicated menu item. And I do think that's been a lot of the success we've seen as a business over the last few years, we've brought marketing fire and cultural relevance and creativity to actually thinking about our biggest scale equities in new ways. And so we brought fire to these big-scale brands that we have. We have $17 billion-plus brands around the world. So they're sizable, scalable. And if we can bring fire to them, you get real impact out of that. Famous orders, the first one was Travis, there was definitely complexity in selling it in. It was a multi-month process, but there were a few things that really helped us in doing it from the fan truth to building off of a core item. And then what's interesting is that program was so successful that the next one and the next one and the next one was much easier to sell in. And the next program, which might have been a tweak on that idea, like the Grimace Shake celebrating birthdays, because who doesn't love a birthday party at McDonald's, was easier to sell in because we've built kind of credibility in, you know, the marketing programs that we deliver that kind of intersect our core icons with kind of a cultural truth, a fan truth, and then something that's going to get it caught in the cultural zeitgeist.

Ann Marie: I would imagine once the teams get used to this is how we roll something out, the processes are in place, it makes it easier to like roll it up next time to like roll it out. You've had an amazing mile up to mile two is what you said. You've made it to mile two. What do you see for the rest of the marathon? Big, well-established brands do have an effectiveness advantage, but if you take your foot off the gas and coast, you know, a brand can lose its power. What do you consider that next big challenge and opportunity and what are you going to do to get the next generation of fans in?

Morgan Flatley: I will say I'm probably my toughest critic. The team might say we're on mile 12, but like, I still feel like I'm still getting going. There are probably two things. I mean, I'm sure there are a lot more, but there are two that I'll touch on. First of all, we can't ever become complacent. the industry we operate in is highly competitive as are most industries, complacency will be the death of us. One of the things that we keep pushing on is, so what's next? As we think about culture and great creativity that drives the business and grows our brand, what's the idea that we haven't yet seen? And it's a question I ask the agencies all the time. Who's bringing me the next big idea that's going to blow all of our minds and, you know, how are we selling that in? How are we building alignment? One is how we continue to push ourselves and challenge ourselves and be restless around this area of creative excellence that drives the business that we've built. The second piece, which I'm super excited about and is this whole new frontier, is, what I would call the intersection of digital, customers and creativity. And we've built these muscles around culture, creativity, social media, social engagement, influencers. But today, more and more consumers are interacting with brands on their phones, making purchasing decisions on their phones. And, you know, at McDonald's, we have the privilege of having built an incredible engaged digital consumer base. We have just over 150 million engaged digital customers who are active with our brand around the world. And so what I get really excited about is, okay, how are we going to continue to engage with them in new, more personalized more creatively inspired ways and how do we start to translate these muscles that we've built in terms of creativity into this digital ecosystem that we're building with our engaged fan base to continue to build that love and engagement and top of mind brand salience that ultimately drives trips into our restaurants. It's a totally new way to think about marketing as we get to know those consumers better and think about how we can engage with them in their own ecosystems. So that is as I sit in my chair and think the next three to five years out, that is very much what is on my mind. And how do we transition from being in a more traditional marketing environment to one that is much more personalized in how we connect with consumers in an individual way on their terms in their ecosystems. It's one that I'm learning a lot about and I'm really excited and energized about.

Ann Marie: I think the interesting thing about everything becoming digital is it has sort of compressed all of our experiences to like one or two screens. And we get everything from there, which is so such an interesting change from the way I absorbed media when I was a kid. Not to say I'm an old lady, but it is a change.

Morgan Flatley: That's a huge change for me. I still have to print my papers up. I can't read them on a screen. So I'm dating myself, but...

Ann Marie: I know! We do have a next generation coming up that we'll have to understand, so that makes sense. So what advice do you have for other CMOs who are looking to embrace creative courage and get their organizations to come along with them?

Morgan Flatley: My first piece of advice would be find stakeholders, advocates, partners on the journey that aren't just marketers. Some of what has helped me throughout my career, I've befriended the CFO because they make me much smarter and how I ensure marketing plans are actually translating to drive the business. Because at the end of the day, this is all about growing the business. I've also had real thought partnerships and mind melds with our business leaders and often our, what I would call our zone leaders or our sales leaders in other organizations to understand.

Okay, everything I'm talking about from a marketing perspective, how does it actually translate down into the restaurant and into the business at that localized level? So my first piece of advice would be to build relationships, friendships, advocates with other functional heads who can help support you on the journey and give you advice and challenge you, but really help support.

The second piece is, I do think this piece around language is really important, language and measurement, and I kind of use them together, but getting to consistent measurement that's bought in across the C-suite and then consistent language for how you talk about performance metrics, creativity, how you build consistency in that language.

And then the last piece of advice is take big swings, you don't drive the change out of small base hits. You drive change out of taking big swings that actually get recognized across the organization and have huge impact. And when I've really wrestled with big things we've done here and I've really wrestled with them. They've been the best decisions I've made. Now we've vetted them. I had my other functional leaders around the table giving me advice, helping me make sure they were right, helping me make sure they were going to be impactful, helping me pressure test the risks in them. But it was what fundamentally changed the way marketing was viewed here, through some of the big, big bets that we took that everyone noticed and made a big difference in terms of the business.

Ann Marie: Well, that's great. And this has been such a great conversation to wrap up our marketing truth series. Thank you for being here with me. I know you're going to appear on stage in a few weeks at the Cannes Lions Ad Festival and you're bringing the CFO Ian Borden and the president of International Operating Markets, Jill McDonald. So we'll get a view of how the C-suite friends work together.

Morgan Flatley: Yes, you'll be able to see it firsthand there. So I am bringing some of my friends, which some of my marketing friends have gotten a good laugh out of, but I do think it'll be a really important conversation between marketing, finance, and a business leader. And I'll just say, Ann Marie, I really appreciate you all having me on. It's been a real honor. It always feels indulgent to talk about the work we're doing at McDonald's, but it's been a real honor to share it with you all. So thank you for inviting me and I hope I will see you and a bunch of other people at Cannes.

Ann Marie: I'm looking forward to it. Thank you so much for joining us, Morgan. Thank you.

And for those listening, if you have examples of US companies that are doing great, effective marketing and want to highlight that, or if you have an opinion on what works or doesn't work, we at WARC are eager to hear from you. I'm Ann Marie Kerwin, America's editor. The WARC podcast is available wherever you get your podcasts. Be sure to subscribe so you never miss an episode. Thanks for listening.