MCD'S TURNS BACK TO LOCAL TV;BURNETT TAKES A HIT AS $150 MIL MOVES TO SPOT BUYS FROM NATIONAL

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McDonald's Corp., feeling the squeeze from competitive chains, is reversing last year's move to national TV, returning $150 million of its estimated total $450 million media budget to spot TV.

The move is a boon to local TV stations since fast-food is their No. 2 category of ad revenue, after automotive.

But it's a blow to national buying agency Leo Burnett USA, Chicago, already reeling from McDonald's appointment of Fallon McElligott, Minneapolis, to handle the $75 million Arch Deluxe launch in May.

The shift is due to three factors: flat U.S. sales; the December hiring of Brad Ball as senior VP-marketing USA; and an ambitious lobbying campaign by the Television Bureau of Advertising that targeted franchisees.

The fast-food eatery stunned local TV stations in late 1994, pulling all of its $150 million out of the spot market for 1995 with Burnett's encouragement.

"We're going to be getting more bang for our bucks. It's going to be much more efficient to buy prime time through one national agency," said one franchisee at the time.

The decision was a blow to McDonald's four "super-regional" agencies: Moroch & Associates, Dallas; Davis, Ball & Colombatto, Los Angeles; Fahlgren, Parkersburg, W.Va.; and Arnold Fortuna Lawner & Cabot, Boston.

After TVB failed to convince McDonald's corporate executives to reverse its move, the industry trade group switched tactics.

"We went to our sales advisory committee and decided that the key was to talk to local franchisees and emphasize to them what the loss of localism would mean," said Joe Tirinato, senior VP-corporate planning for TVB.

TVB Senior VP-Marketing Tom Conway made presentations last spring in Denver and Houston. TVB also sent a tape to member stations and more than 100 showed it to franchisees.

IMPRESSED FRANCHISEES

"We were really impressed," said one Denver area franchisee.

The presentation highlighted how the move out of local TV would hurt the franchisees' promotion and sponsorship of local events.

"The effect was staggering," said another franchisee. "We inundated McDonald's and Burnett and said, `Whoa, we think we have the wrong strategy here."'

Burnett will have a part in the local strategy, since it handles McDonald's Owners & Operators of Chicago & Northwest Indiana and buys local media for the approximately 20% of McDonald's stores that are corporate-owned.

While McDonald's has a reputation of responsiveness to franchisees, the pressure would likely have fallen on deaf ears if not for two other concurrent events.

MCDONALD'S SALES FLAT

First, McDonald's sales have been largely flat since 1989. Second was the hiring of Mr. Ball, who was president of one of the regional agencies hit worst by the move out of spot-Davis.

Mr. Ball and McDonald's Media Director Bruce Smith couldn't be reached for comment on the decision, first reported in a newsletter earlier this month.

A McDonald's spokeswoman, however, said there have been no media changes "at this time."

The marketing landscape is also shifting for struggling Hardee's Food Systems, which is unofficially reviewing the $75 million account now at Tatham Euro RSCG, Chicago. Hardee's has slashed marketing spending 10%.

Observers are betting on Lowe & Partners/SMS, New York, a favorite with Hardee's largest franchisee, Flagstar Cos., and a sister agency to Western International Media, Los Angeles, a contender for Hardee's media review.

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