After a Much-Debated Sponsorship Last Year, McDonald’s Is Coming Back to SXSW

Activation includes virtual reality and startup contest

McDonald's raised more than a few eyebrows last year when it sponsored South by Southwest Interactive in Austin, Texas. Aside from activations like a food truck and a big-tent event, the fast-food chain ran into a PR debacle after it asked indie bands to play for free.

Despite the backlash, the company says social engagement during last year's event increased 196 percent versus its daily average. And interactions—the number of clicks and likes on posts—were up 261 percent.

On the eve of the chain's SXSW activation this year—which will include a virtual reality experience and a contest pitting startups against one another for the chance to work with the golden arches—Adweek spoke with chief digital officer Atif Rafiq, who shared lessons learned from last year and how the company is finding its groove at one of the world's most important digital gatherings.


        Atif Rafiq, chief digital officer, McDonald's

Adweek: What was the feedback to last year's sponsorship, and why are you returning to SXSW this year?

Atif Rafiq: Last year, I think people were very curious about the role McDonald's was looking to play as a SXSW sponsor. We feel it was really effective and well-received around McDonald's being relevant to the tech ecosystem. If you look at something as simple as the digital and physical worlds coming together, who better than McDonald's to showcase what that might look like?

You're setting up a loft in downtown Austin to show off new technology. Tell us about it.

We're planning a really cool [virtual reality] experience where people get to transport themselves into a giant Happy Meal box. They can get creative with it and use different tools like a paintbrush and balloons to come up with a custom design—they'll be able to print [it]. This is meant to showcase how we think the world is going to unfold and the role that we play within it. How this will roll out at McDonald's could be different—this is really a teaser, if you will. Our intent around the loft is to bring together food and entertainment and show how digital can make an everyday experience even better. We'll also have Wi-Fi—that's an important part of our retail experience.

For the second year, McDonald's is asking startups to pitch their ideas for a chance at working with you.

We're learning to create environments where we can think fast and try things. The difference between now and a year ago is that we now have a way to do it that we simply didn't have a year ago. We don't know yet if they'll work for our customers and our business, but by coming into contact with entrepreneurs early on, we find a good reason to actually begin to try them.

What kinds of startups are you looking for this year?

We've picked three areas. The first is mobility or on-demand. The second is retail innovation—things like payments may fit in there, but there may be other things, [such as] how to make the drive-through better. For example, location awareness may fit under there. It's just things that take out steps in getting your food. The third category is the Internet of Things. With everything in the world connected, we can be a lot smarter about how everything works.

What happened with SnowShoe, the smart plastic company that won last year's pitch contest?

At any given point in time, we're talking to 100 companies, many of them startups. I don't know specifically about SnowShoe, but it's less about one particular company than about knowing how to work with a young company that is in a position to try things quickly. We see firsthand that our ability to try and experiment is a lot better, and it's becoming stronger.