McDonald’s $300 Million Acquisition of Dynamic Yield Will Beef Up Its Personalization Efforts

It’s no deal from the Dollar Menu, but McDonald’s acquisition of Dynamic Yield, a personalization company, is ramping up its digital transformation. According to CNBC, the acquisition was worth more than $300 million and goes to show just how much of a bet McDonald’s is willing to take to increase its personalization efforts and to futureproof itself. McDonald’s plans on using Dynamic Yield’s technology in its digital drive-thrus and personalize it by recommending food based on the time of day or weather as well as showcase “trending menu items.” McDonald’s had previously rolled out menu boards that featured items based on the weather in 2015, the success of which likely led to this acquisition. It will first roll out in the U.S. this year and come to international markets in the future. McDonald’s is also planning on bringing the technology to its self-order kiosks and app. Industry experts said the acquisition shows the potential of what McDonald’s can do in the future while also filling in a much-needed picture of who its customers are. Brandon Purcell, a Forrester analyst who focuses on AI and customer analytics, said the deal fits with a larger trend in which brands are increasingly absorbing analytics vendors to better steer marketing messages and product recommendations. He pointed to Nike’s acquisition of consumer data firm Zodiac last year as another example. “Dynamic Yield fills a gap for McDonald’s: personalization across digital channels,” Purcell said in an email. “McDonald’s realizes that in the Age of the Customer, it can no longer offer a one-size-fits-all experience to its customer, who increasingly want to engage digitally.” The acquisition further showcases just how valuable data is to companies. Kelly Davis-Felner, head of North America marketing for marketing software company Bazaarvoice, said that with the acquisition, McDonald’s can now analyze actual customer data into actionable items that “reflect actual needs and desires.” “Taking the technology in-house to collect their own data may point to their leadership in delivering a personalized experience for the fast-food industry,” Davis-Felner said. “The key is using this data in meaningful and relevant ways that improve the customer experience.” It’s not just about personalization, Davis-Felner continued, but is a “large step to translating McDonald’s digital offerings to the customer experience.” Brendan Witcher, a Forrester analyst looking at consumer behavior and retail, added that the acquisition is supersizing its data analytics capabilities and moving forward other “digital initiatives” McDonald’s is likely planning. “Everyone’s going to be talking about Dynamic Yield’s personalization [but] ... the real value that Dynamic Yield brings to the operations [of] McDonald’s [is] to do better customer management and [provide] better insights into customer behavior,” Witcher said. Michael Provenzano, CEO and co-founder of digital out-of-home company Vistar Media, said the acquisition is indicative of how some retailers—fast-food included—are beginning to view targeted out-of-home displays as similar to shelf positioning in traditional stores. "From a marketer’s perspective, I think it’s really interesting for companies like Amazon or really any CPG-type partner to think about this idea that a screen is almost like a virtual store shelf where, at any moment, if you knew enough about the audience behind that screen and you had mobile data, you could change what’s displayed based on past purchase history or movement patterns,” Provenzano said. “It’s very similar to the way CPG clients pay for shelf positioning in retail." And make no mistake about it, this move from McDonald’s is similar to Amazon’s strategy, said Witcher, of taking all these touchpoints, whether it’s through an app or offline, and using that data to relate to customers better and win loyalty. “The future of retail is multiple connected touchpoints, and as those touchpoints become more evolved and they become more numerous, therefore customer management becomes more important,” Witcher said.