Internal memo from McDonald’s new ad agency reveals why the world’s biggest fast food chain bucked industry trends to reshape its marketing strategy

McDonald's took a 180-degree strategic turn this month by naming independent agency Wieden + Kennedy to lead its creative advertising business in the US after an extended review.

According to an internal memo that Wieden leadership sent out to all staff when the news went live on Friday afternoon, the win marked a repudiation of the biggest industry trend in recent years, where agencies hyped their ability to use consumer data as the key factor in creating and targeting ads.

Read more: McDonald's bought an AI speech company to take the human interaction out of drive-thrus

In the memo, agency co-presidents Colleen DeCourcy and Tom Blessington positioned the win as a victory for "the power of creativity," arguing that the quality of their team's creative concepts, in combination with "insight" and "intelligence" drawn from internal market research, beat out the numbers and algorithms presented by Big Four holding company Omnicom.

McDonald's is the world's largest fast food chain by revenue, but its marketing efforts have not earned the industry plaudits of rivals like Burger King, which scored the top prize at this summer's Cannes Lions Festival of Creativity for the "Whopper Detour" campaign that let customers buy a Whopper for one penny — but only if they visited a nearby McDonald's first.

Omnicom's stock price has fallen by about 3% since news of the loss went live on Friday.

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Portland, Oregon-based W+K is best-known as the agency behind Nike's ubiquitous 30-year-old "Just Do It" campaign as well as Old Spice's "The Man Your Man Could Smell Like," and, more recently, Bud Light's "Dilly Dilly."

W+K defeated Omnicom-owned competitors TBWA\Chiat\Day New York and adam&eveDDB in a nine-month review that began as a pitch for a single project but evolved into a race to lead McDonald's ad business in the world's biggest fast food market.

A sign of the significance of W+K's win is that incumbent We Are Unlimited, a Chicago-based entity that the holding company created to service the McDonald's account in 2016 after beating out rival Publicis, was not involved in the pitch at all. We Are Unlimited is part of Omnicom's DDB Worldwide network, and CEO Wendy Clark and former McDonald's CMO Deborah Wahl described it at its launch as the "agency of the future." It promoted itself as having "digital and data at the heart" and included "embedded teams" from companies like Facebook, Google, Twitter, and Adobe working alongside its own employees.

In an uncharacteristically sharp rebuke to the competition, W+K's memo stated that We Are Unlimited has now been "relegated to an operational role" on the McDonald's business, though it will retain a small portion of the work it previously handled for the client.

"We remain a proud partner with McDonald's and are working closely across both the McDonald's and We Are Unlimited teams to ensure we remain focused on our shared goals and priorities," read a statement from a We Are Unlimited representative after Business Insider asked for a response to the W+K memo.

In a press release announcing the change, McDonald's CMO and former PepsiCo executive Morgan Flatley thanked the team "for their work over the last three years supporting key moments in our transformation and operational excellence."

The chain also abandoned past policies in agreeing to share an agency partner with rival KFC

According to sources with direct knowledge of the business, the final section of the memo, which is cut off in the version obtained by Business Insider, discussed how Wieden + Kennedy will manage an apparent conflict between McDonald's and another longtime fast-food client, KFC.

These sources said both companies agreed to allow W+K to participate in the review — a significant strategic shift among fast food brands. Traditionally, such companies forbade their agencies from working with direct competitors. To avoid potential overlap, one source said the two accounts will be strictly separated by office, with W+K Portland handling KFC and W+K New York working on McDonald's. Unspecified "IT safeguards" will also ensure that the brands' accounts do not conflict with one another.

McDonald's declined to comment beyond its own press release, and representatives for KFC and parent company Yum Brands did not immediately respond to a request for comment.

According to data insights company Kantar Media, McDonald's spent $765 million on advertising in the US last year.

See the memo below.

Business Insider

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