Quality ads lift McDonald's sales

Warc, 9 May 2014

NEW YORK: Quality of advertising creative was a major driver of same-store sales at fast-food group McDonald's over a six-year period, new analysis has established.

Research into the variance of the company's same-store sales from January 2007 to May 2013 found almost half (47%) could be explained by the relationship of direct advertising quality to purchases.

The study, "Predicting sales from ad testing: A McDonald's case history", was carried out by Charles Young, the founder and CEO of Ameritest, the Albuquerque-based research firm, and Adam Page, its associate research and analytics director.

It was discussed at the recent Re: Think Conference 2014 organised by the Advertising Research Foundation and the authors said they used four ad quality-related variables to assess McDonald's sales performance over the period.

This covered sales momentum, calorie communication (when McDonald's started showing calorie content on its menus) plus two advertising quality variables that assessed messaging strategy and breakthrough/branding/persuasion.

They found that in the months where McDonald's average ad quality was high on "Branded Attention" – a combination of breakthrough and branding – and "Motivation", sales on average were 47% higher than in the months when both of these metrics were weak.

Quality advertising with a strong strategic message – for example, conveying the idea that McDonald's is an enjoyable place rather than just convenient – confirmed that quality advertising is an important component to sales growth, the authors argued.

Young and Page said: "Marketing mix models attempting to quantify advertising's contribution to ROI are incomplete if they do not include a creative quality variable."

Significantly, they also discovered that sales went down if the advertising quality was negative – for example, ads that communicated convenience over more positive messages.

"This validation confirms […] that the right message is critical to avoid missteps in airing content," Young and Page said, adding this made pre-testing research a "vital tool" in assessing an ad's performance.

"The fact that this [fast-food] is a category that does not pre-test ads indicates that brands that adopt such a research discipline are more likely to gain a competitive advantage in the marketplace," they concluded.

Data sourced from Ameritest; additional content by Warc staff