Chicago-based Burnett reportedly stands to gain an additional $160 million to $200 million in media billings from the move, while local agencies are losing commissions for a large portion of TV spot buying. Those agencies apparently will keep only spot radio and outdoor buying responsibilities.
"A few years ago we switched kids advertising from spot to national and improved the effectiveness of our advertising," said a McDonald's spokeswoman. She added that local agencies will continue to handle some spot TV, but couldn't specify which assignments.
Franchisees formerly contributed roughly 4.25% of monthly sales to their co-ops; 44.7% of this money went to the national advertising fund, while the rest funded local programs.
Now, 68.2% of that money will go to the national fund, with only 31.8% toward local marketing.
Franchisees in many markets are voting to increase their marketing contributions to ensure that local programs don't fall by the wayside.
Franchisees are reportedly displeased with the need to contribute more money but have been forced to do so by the intensely competitive fast-food market.
"Most local agencies are still trying to determine what franchisees need," said one local agency executive. "So many important local promotions include media buying that there will still be some opportunities for us."
McDonald's has been pruning its roster of local agencies for more than a year. The decision to funnel most local media dollars through a national buying service agrees with the marketer's larger plan to standardize most of its future promotions.
In the fall, the Glennon Cos., St. Louis, resigned the co-op in that area. McDonald's main Midwestern agency, Kragie/Newell, Des Moines, later picked up these billings, estimated at $3.5 million.
And last month, DBC Advertising, Los Angeles, picked up an additional $7 million in billings from several Western co-ops formerly handled by smaller agencies.
The first quarter of 1995 will include only a few national promotions, including a big NBA push and possibly a tie-in to the old Negro Leagues. Such moves contradict earlier reports that the marketer was planning to run a handful of promotions in its five sections nationwide.
Always attempting to broaden its network of creative ideas, McDonald's is asking its seven or eight most important local shops to contribute ideas for national promotions, giving national agencies Burnett and DDB Needham Worldwide, Chicago, even more competition.
Arnold Fortuna Lawner & Cabot is McDonald's largest regional agency. Its position on the roster was strengthened last summer when the Boston-based shop teamed up with DDB Needham to service and handle co-op billings of nearly $50 million that had been at McCann Universal, a retail unit of McCann-Erickson Worldwide.