How McDonald’s is Using AI in Marketing to Better Understand Customers’ Needs
Even though McDonald’s is one of the largest fast-food brands in the world, the company only released its mobile app three years ago.
While some might say McDonald’s missed an opportunity, the company would beg to disagree. Corporate was concerned that if McDonald’s produced a generic app, customers would fail to engage with the content.
So instead, McDonald’s waited until it could produce an AI-driven app that provides customers with personalized deals based on their purchasing history. In other words, McDonald’s bet on quality over quantity. This, of course, is just one of the ways that AI presents opportunities and challenges alike in regards to martech.
As we’ve previously noted, as AI adoption increases, brands are searching for a competitive edge. McDonald’s is no exception to this, and a look at how the company is using AI is instructive as to the opportunities AI presents for other firms.
In some ways, McDonald’s is just another brand looking to leverage tech to increase sales. A total of 92% of organizations plan to increase their digital transformation activities in the next few years, so in some ways the company is typical.
In other ways, it is not. One of these is scale. McDonald’s outlets are present in 38,000 locations across more than 100 countries, and according to CEO Steve Easterbrook, the company serves about 68 million customers every day. That’s a massive amount of data.
“How do you transition from mass marketing to mass personalization?” asked Easterbrook in an interview with Wired magazine. “To do that, you’ve really got to unlock the data within that ecosystem in a way that’s useful to a customer.”
McDonald’s was an early adopter of AI-based data acquisition technologies and has long used these to drive innovation and sales across outlets. Decades ago, the company was using datasets collected from region-specific advertising campaigns to gain insights on a local basis. It then moved to using drive-thru data to optimize menus.
Then, last year, McDonald’s acquired Dynamic Yield, a “decision logic” technology provider. That sale was rumored to be worth about $300 million and surprised some in the sector. It seems that McDonald’s, not content with merely using data generated from stores, wants to become a leader in how this data is collected and processed.
If that’s the case, Dynamic Yield seems a natural choice. According to a Gartner study, companies that fully embraced online personalization enjoy a 30% sales advantage over competitors. Gartner also named Dynamic Yield a leader in its report.
Consistency and personalization
There is one major task for which McDonald’s needs AI: personalization. The company collects an enormous amount of data across an equally huge number of stores, but it appears to recognize the value of AI to improve personalization.
You don’t have to look far for examples of this. Back in 2018, for instance, the company saw an opportunity to delight customers by offering the Egg McMuffin all day long instead of just for breakfast. But before it could make this change across 14,000 US locations, McDonald’s needed to be sure customers were on board.
By partnering with Sprinklr, McDonald’s was able to sift through social conversations dating all the way back to 2008 and pinpoint mentions of all-day breakfast. Once the chain saw that demand was out there, it prepared to launch an All-Day Breakfast campaign.
In this kind of campaign, McDonald’s is attempting an extremely ambitious outcome: a truly national campaign, but one driven by local, personalized advertising. Achieving this relies on a number of technologies.
For example, the company makes extensive use of content delivery networks (CDNs), which is one of the fastest methods for ensuring that content can be delivered to people using a site or mobile app from another part of the world. If McDonald’s customers are interacting with the company’s site or mobile app from a country on the other side of the globe, the load time will be dramatically reduced so long as the information from the site is cached in a server in the customer’s city with the aid of a CDN.
Other technologies, like AI systems, appeared more recently but are just as critical. As Jon Markman, investment advisor and senior contributor for Forbes, noted last year: “This is a competitive advantage that’s much larger than marketing muscle. It’s the ability to influence what customers order, in real-time, across the entire network of stores.”
Challenges, of course, remain. McDonald’s suffered a major data breach back in 2017 when the personal information of more than 2.2 million customers was leaked, and in 2019 the app was linked to fraudulent food orders where hackers would hack into other accounts and place massive orders.
McDonald’s has reassured customers that the data it is collecting is used fairly and kept safe, and with the company’s focus on artificial intelligence in regards to both data security and personalizing the customer experience, the company will aim not to become the victim of more data breaches in the future.
Gary Stevens is a front-end developer and copywriter who specializes in writing about cybersecurity, blockchain, and tech trends.