In an effort to cut costs, McDonald’s consolidated its local advertising business this summer with just seven agencies, a sharp decline from the 58 it used to employ, according to sources with direct knowledge of the situation.
One person, who spoke on condition of anonymity, confirmed that the agencies chosen were longtime partners Lopez Negrete, Bernstein-Rein, Moroch, Davis Elen and H&L and newcomers Doner and Zimmerman. The latter won the lion’s share of the business.
Another reliable source confirmed this lineup, which was first reported by AdAge, and added that Zimmerman has since lost an unspecified portion of the business—which amounted to 19 regional co-ops including Ohio. The chain’s 180 cooperatives had been consolidated to 50 prior to the review. Each then chose an agency partner from the list of 7.
It’s unclear why Zimmerman lost a portion of its responsibilities.
“Building the modern, progressive company that we aspire to be involves changing the way we do business,” a McDonald’s spokeswoman wrote in an email to Adweek. “In order to accelerate our efforts to engage customers across all platforms to advance our brand vision, we aim to streamline and modernize our local marketing efforts in 2018.”
She declined to comment further.
Zimmerman also declined to comment, deferring to the client. The agency had not previously worked with McDonald’s, but the primary source said McDonald’s relationship with Omnicom—centered on the dedicated agency We Are Unlimited—played a key role in the chain’s decision to assign the work to the Florida agency.
The decision to consolidate came from McDonald’s executives, who are being pressured to deliver on a pledge they’ve made to produce $300 million in cost savings over the next five years, according to the primary source.
McDonald’s CEO Steve Easterbrook has been laser-focused on what he calls a “velocity growth plan” to reduce costs and streamline operations as the fast-food chain invests heavily in new technology and works to return capital to shareholders.
Per a Kantar Media report, McDonald’s spent $791.3 million on advertising in the U.S. in 2016 and $350.7 million in the first half of this year.