McDonalds Is On the Right Track, But Should Go Further

McDonald's and their creative agency have done a good job in responding to criticism, and seizing an opportunity to benefit their brand image by doing something beneficial for customers, in particular children.

You can read about it here, but the gist of the story is that McDonald's and Leo Burnett (a Publicis agency) are going to be putting books instead of toys into Happy Meals for a few weeks in November.  The books are original content, created by Leo Burnett specifically for this campaign, and they are children's books designed to teach them lessons about healthy eating.  This goes along with a continuing effort to improve the nutritional quality of the Happy Meal, and in doing so address the well-published opinion that they are basically terrible for their own customers (a model that tobacco companies have been making money with for generations).

You throw a kid a couple of apple slices and a book about how a dinosaur eats veggies, and you are good to go.  I don't think that anyone will object to giving kids healthier food, or books about eating right, even if those books are essentially promotional materials created by an advertising agency.  It's still better than nothing.

It's worth noticing that this is a two-pronged effort, though, aimed not only at nutritional learning/obesity, but also literacy.  The program is timed to coincide with National Literacy Day (Nov. 1), and McDonald's is teaming up with the non-profit group 'Reading Is Fundamental' to distribute more of these books outside of Happy Meals.  Great news, great aims.  There is nothing wrong with motivated self-interest when it brings corporations to the table to help combat the social ills that they at least in part might contribute to.  Consumers aren't all saints, and we shouldn't expect companies to be either.

But let's take this idea for a walk, shall we?  First, let's take a look at some issues surrounding McDonald's (and we will use them as metonymous for fast food in general), venturing into a little more depth than the usual conversation.

First, you can't talk about the issues of McDonald's and nutrition without branching into notions about poverty and urban development, and how they create food desserts.  So let's stipulate a few things:

- McDonald's, based on locations, offerings, and prices, caters primarily to the lower end of the economic scale (which isn't to say that rich people never have it)

- McDonald's did not create these food desserts, but they have certainly profited from them, and from socio-economic factors that make their food appealing to people who don't have the access or resources to eat fresh, healthy food often

There might not be anything explicitly wrong with a company exploiting a market that they didn't create, it's what companies do.  McDonald's dominates rest stops, oases, and highway pull-offs as well, and they are great at identifying a captive audience and offering them something that is tempting given a particular situation.

Stuck on the road and don't have anything else to eat?  Have McDonald's.

Get home late from a long day of work, and don't have the money or time to prepare a healthy meal for your family?  Have McDonald's.

They don't create niches, they fill them.  However, that doesn't absolve them of any responsibility, or mean that they don't stand to benefit from a symbiotic relationship with their customers.

So if we acknowledge that McDonald's has a large number of customers who are members of lower income brackets, living in areas that are often under-supplied with fresh healthy foods, then we can assume that many of those same customers, in this case children, also lack access to books.  Now, this isn't a good time to delve into the nuances of early education, but I think that everyone can agree that access to age-appropriate books is critical to the development of young minds.

By contributing to the learning experience of young people in the communities where their franchises exist, McDonald's can do something that not only improves the immediate quality of life for a young child who gets a book, but also improves the long-term prospects of the neighborhood by helping the cognitive abilities of its youngest inhabitants.

Why only do this for a few weeks?  There is no shortage of tiny, junky plastic toys in the world, but books are another story.  Make this switch permanent.  Additionally, don't just have an advertising firm create content around nutritious choices.  Provide real books that kids might actually enjoy reading, rather than a pamphlet just designed to get activist groups off your back.

This doesn't have to be pure altruism, as I said before.  By making a strategic, foundational shift in the Happy Meal offering, McDonald's would be creating a new value proposition for the real customers here, the parents.  Instead of bad food and a crappy toy, that is still attractive because of the convenience/price, they could offer decent food and a book, still at an attractive price.  Right now, a lot of people have to weigh the pros and cons of giving their kids McDonald's, but that doesn't have to be the case.

If they want to go a step further in terms of making a business case for this, publish the books in longer story formats, and run them as serials.  Have several different characters/story lines that the child can choose from, and put out the new volume each month.  This will help encourage repeat business, but is infrequent enough to avoid accusations of exploitation or encouraging unhealthy eating habits.

In doing so, McDonald's can create the elusive "virtuous cycle" in marketing, encouraging customers to return regularly while giving back something of value and building brand loyalty.

Think about it this way: if your kid recently finished volume 2 of a space adventure, and is really enjoying the story and reading it him/herself, are you going to hit the Burger King just because it is on the way home, or go five minutes out of your way to McDonald's to get similar food AND a book that will educate and entertain your child?  Probably going to buy you a few minutes of quiet time when you get home, too (reading is a quiet activity, so the more your kid reads, the quieter he/she will be).

McDonald's is uniquely positioned to be a really powerful force for positive change in a lot of neighborhoods that suffer from systemic problems of poverty and urban blight.  By providing healthier food and reading material to underprivileged children they can combat two of the biggest issues that their neighbors face, all while building brand loyalty.

Now if they can just do something about their wages...

This Government Shutdown Actually Affects Normal People?

So by now you may have heard about the government shutting down.  Like most people, you probably think that it isn't going to really affect you, that this is just another example of a distant, ineffectual body politic squabbling with itself.  Life will go on as normal, and no one who isn't being directly furloughed will even notice.  That's the general feeling, anyhow.

We are now solidly a week into this problem, and for the most part, the world continues to turn as it did before.  Take a walk down Main Street, USA and you will still see people walking dogs, eating at restaurants, and shopping.  Nothing has changed, right?

Well, actually, wrong.  While the gears of the economy have not ground to a halt, this shut down is contributing to a pretty substantial slow down.  Let's think on a few things.

About 800,000 federal workers and contractors have been straight up shelved, told not to come to work because they can't get paid.

Assuming a very modest average salary for these people (let's say about $40,000 per year, to be very conservative), regular taxation and bi-weekly pay schedules, that would give us about a $1,250 paycheck.

So off the bat, that is a billion (with a 'B') dollars that won't be going into the economy next week.

But the much, much bigger issue comes from a general disconnect in terms of how the average American thinks about the budget and government spending.  We hear a lot about deficits and huge numbers that make it sound like those fat cats in Washington are literally just burning piles of freshly printed currency to keep warm.  The reality though, is that the deficit in Washington is money in the pockets of Americans.

Over $3.5 Trillion.  That was the 2012 budget.  Now, a bit of that went to paying the interest on government debt (a good thing), and a very small portion of it went to foreign aid of various types (questionable), but the majority of it goes to domestic programs, in agriculture, energy, education, infrastructure, etc..

Now, you can argue, correctly, that there is a lot of waste in government spending, but again, how we talk about "waste" is a big part of the problem.  You can say that the inefficiency in government contract sourcing means that they pay above-market rates for projects, and often be right, but that money doesn't disappear because it wasn't used in the most cost-effective way.  Here is an example:

Government spends $22.5 million for bridge repairs that should have only cost $18 million.  So where does that extra $4.5 million dollars go?  Based on the general conversation around budgets, it is "wasted."

Reality:

Extra $4k in overtime and holiday pay for construction workers who normally aren't supposed to put in for over 40 hrs a week to keep costs down for their employer, Dave's construction
     - They spend this money on shoes for their kids, a mortgage, gas, and maybe a few dinners out

Extra $800k for John's Concrete, who normally has to low-ball material costs in a tough market just to get contracts, hurting his margin
     - Not having to give a bottom-dollar quote allows Dave to also pay a fair price for his lime, stone, etc., sharing that money with his suppliers, who again spend that money down the line

Extra $20k for Steve the architect, who is going to finally get to put those new cabinets and floors into his kitchen
     - Meaning a bunch of that money is going to pay the woodworkers and wholesalers who fix
       kitchens...

You get the point.  Senators aren't just keeping all that money, it doesn't get shot into space or disappeared in an accounting trick.  That "waste" becomes walking around money for the average American.  Think of the government as a rich drunken sailor on a port call; it may not spend its money wisely, but when that ship pulls in, everyone in town knows that it's going to be a good week for business.

Too abstract?  How about this:

My company, like a lot of small businesses, relies on government contracts for a large portion of our revenue. 

Because of the shut down, contracts that were due to be renewed the first week of October, or new contracts that were about to be signed and processed, could not be finalized.  Our customer contacts in the government don't have the freedom to spend their budgets now.

This hurts our bottom line.  We are making less money as a company because of the shutdown, directly.

Moreover, we as employees, get compensated in large part based on the performance of the company, in the form of bonuses.  When the company does well. we get paid well.  When the company doesn't do well, our paychecks shrink.

This government shutdown is costing not just the collective taxpayers money, or costing just corporations money, it is costing regular people, who don't work for the government.


I don't work for the government, but the shutdown is affecting my paycheck.  In turn, I am not going out to eat as much, I am not buying the things I normally would, and I am not going to the movies.  In short, I, and millions like me, are not 'paying it forward,' as it were.  Consumer spending is still what drives the economy, and government spending is still a very large part of the liquidity that allows consumers to prosper.

Let's get this government open again, shall we?  I want to go back to supporting the economy.
 

Ballmer Doesn't Get Microsoft/Bing's Problem

So, outgoing (as in leaving, not friendly) Microsoft CEO Steve Ballmer fired off some parting shots while unveiling the new Bing logo and design during the company's financial analysts meeting, aimed primarily at Google.  Unfortunately, despite the fact that he was addressing a very pertinent topic with a lot of room for discussion, he came off as simply bitter and out of ideas.

[edit: I didn't get around to finishing this post in time, so I am going to focus on some of the less time-sensitive aspects]

Basically, the problem boils down to a lack of identity and direction.  On one hand,  Microsoft is asking people to switch from their default search engine, without realizing what a big thing that is.  In terms of customer loyalty, most CPG, QSR, or durable goods manufacturers would KILL to get the kind of consumer loyalty that Google has.  So saying, "come on, just switch search engines" isn't such a casual request.  Thus, in order to tempt those users and get them to break away from a product that has served them well, you would think that Microsoft would work hard to differentiate themselves from the competition, and hammer their USP (unique selling proposition).

Does Microsoft do that?  No!  They consistently, including in this recent rant by Ballmer, point out that their algorithms are pretty similar to Googles, and can usually return almost the same results. 

Okay, and... 

Oh, you were done?

So their big pitch to break entrenched consumers out of their searching habits boils down to, "We're pretty much as good as the one you are using now."  Very compelling.  Maybe you want to try that again?

Remember the recent commercials (part of a huge (and largely unsuccessful) advertising blitz over the last few years by Microsoft to steal market share from Google), during which a catchy song plays while comparing the boring Google homepage skin to the awesome, 'picture-a-day' element of the Bing homepage?  Yeah, that's better.  Use Bing for reasons that have nothing to do with the service it provides, but because it has a better background.  Fail.

What else ya got?

Perhaps the most absurd thing about Ballmer's recent comments was his attack against Google for having a monopoly, and suggesting that anti-trust action should be taken against them by the government.  For one thing, Microsoft accusing anyone else of using monopolistic business practices, or having effective control of too large a portion of any market, is just ridiculous on its face, given their own past in that respect.

But it also speaks again to the company's, and Ballmer's, complete 'forest-for-the-trees' lack of understanding of the environment they are in.  Google doesn't control the end-to-end supply chain the way that Microsoft did, nor have they forced adoption of their service by setting up harmful deals with all of the hardware suppliers, or abused foreign markets.  Google separated themselves early on in a crowded marketplace and have given users a reason to stay with them along the way.

Google has given us a search engine, e-mail service, cloud storage and collaboration capacities, blogging platform (this one), video hosting service, maps, calendars, site analytics, and so much more, all free to the user (depending on how you value things like user data and captivity).  Microsoft has given us Bing, and then a bunch of products that they want to sell us (operating systems, phones, etc.), all while doing very little to actually entice me to spend time on their platform. 

Instead of improving their product though, Microsoft has decided to just stamp their feet and declare the whole system to be unfair.  Now, as a marketer, I have had my problems with Google (especially as they hide organic search keywords), but as a user and observer, I wouldn't say that fairness is the issue in terms of the search product.  Maybe their marketing practices are heading in that direction, but as a search business they have been pretty heavily scrutinized by governments in North America and Europe, and haven't been hit too hard yet.

Microsoft assumed that just being their huge selves would be enough to climb into the search market and succeed, and they have done nothing but miscalculate at every juncture. 

Since they are facing a leadership vacuum right now, here is a little free advice (consider this my application for Steve's position):

- Offer something of value to the consumers you want to court.

- Being an alternative is not, in isolation, a value proposition.

- Understand that a single platform isn't enough anymore, you aren't competing with Google as a search engine, you are competing with Google as a service provider.

- Provide a range of free services, even if you have to buy them.

- Along those lines, buy Intuit and link Bing to Mint.  Or buy Twitter, and expand your partnership with Facebook.  Or buy Hulu, and make it free (get rid of premium) to signed in Bing users.  Or buy LinkedIn.  Get the picture?

- If you are going to compete for marketing dollars, you need reach across platforms, and a broader range of ad formats that you can bundle.

Maybe not all of those are feasible, but you have to do something, since your current strategy of doing nothing isn't working, and whining about it turns people off.

You know that when Google releases their OS (and it's a 'when,' not an 'if'), it's going to be free.  Think about that the next time you try to give my computer what is basically a virus and charge me $499 for it.