McDonald’s Seeks Extra Value in Consolidation

Fast-Food Chain Mulls Assigning National Ad Duties to 1 Shop
CHICAGO–McDonald’s U.S.A. president Alan Feldman is considering a reduction in the number of agencies handling the chain’s national advertising and promotions accounts. Feldman has told agency executives he is interested in cost-savings opportunities from a consolidation, but a definitive move is not yet certain, sources said.
DDB Needham here has handled creative duties on most of McDonald’s nearly $450 million national ad account since 1997, when Leo Burnett’s role was reduced to targeting children and teens and providing Hispanic media buys. DDB handles all other national media chores.
Feldman is mainly interested in savings that might be gained from consolidating national advertising at one shop, sources said. A single agency–where resources such as research would be centralized–could receive less in compensation than the total McDonald’s now pays both shops, but more than DDB or Burnett receives individually.
So far, Feldman’s interest in a consolidation has been “more a warning than a timetable,” one source said.
McDonald’s promotional efforts are handled by Simon Marketing in Oakbrook Terrace, Ill., which develops the concepts, and Frankel, Chicago, which produces creative work.
African-American agency Burrell Communications in Chicago and Hispanic agency del Rivero Messianu in Coral Gables, Fla., would likely be unaffected, sources said, because the their fees are comparatively small. Eliminating them would realize only minor savings and be unpopular with operators.
Larry Zwain, whom Feldman last week named senior vice president for U.S. marketing, said he expected “no revolutionary changes” within the McDonald’s agency structure. Zwain said he has good relations with DDB and Burnett, and the former’s “Did somebody say McDonald’s?” campaign has proven successful. Feldman could not be reached.
Zwain and Feldman are “not necessarily wedded to the [McDonald’s] tradition” of pitting agencies against one another to ensure that each stays on its toes, said one source.