There are very few people in the world who haven’t heard of McDonald’s. It is one of the largest fast-food chains across the globe. Running its franchise in almost 120 countries, it has over 37855 restaurants. The company was founded in California, 1940, by Richard and Maurice McDonald. Now it has a net worth of $163 billion. Therefore, it stands to be the world’s largest fast-food restaurant franchise. Their advertising tactics are the reason they could reach out to the humongous number of customers. It takes a great deal of planning, and an extended budget to manage it. Let’s get into it then, how are they managing the advertising costs.
Advertisement Cost Analysis
McDonald’s has always been one of those companies that take full advantage of advertisement facilities. They go all the way through to advertise their franchise and reach out to the maximum number of people. They pursue all the advertising methods, such as newspapers, radio, Billboard, pamphlet, TV commercial, social media advertising, brand ambassador, posters, and the rest. Advertising through all of these all year long is a bit of money profligate without a doubt.
According to McDonald’s annual report, in 2019, McDonald’s has spent quite a bit on advertising. Well, why won’t they! Their creative and effective advertising has a great contribution to their success. Let’s look at some data to understand their advertising cost better.
Advertisement Expenses and Revenue Relation of McDonald’s
In 2019, the franchise spent roughly $447.3 million on worldwide advertising. In this cost, they spent $365.8 million on contributions to advertising cooperatives and rest on media commercial production.
In the previous years, the advertising expenses were 2018-$476.8 Million and 2017-$633.1 Million.
In the very years, their revenue stood to be:
- in 2019- $21.08Billion,
- in 2018- $21.03Billion and
- in 2017- $22.83Billion.
From the data, we can see that the company has reduced its advertising cost every upcoming year. They collected the highest amount of revenue in 2017, where they have spent the most on advertising. Their revenue generation dropped over $1.8 Billion in 2018, when they decreased their advertising cost. So, it is safe to say that they are doing some cost-cutting in their annual budget. But by 2019, they cut advertising costs even more and collected more revenue (+.05 Billion USD) than the previous year. So, they are trying to pursue a cost-effective advertising budget plan. It seems to be working for them so far.
It may seem like a little imbalanced operating system as they spend a huge amount of money on just advertising. But it is important to remember that McDonald’s operates in 120 countries and puts its business against thousands of other fast-food restaurants. So, if they do not catch their customers’ attention, it would not take long to run out of business. They did not create a company which became the largest fast-food chain without putting a strong and appealing approach system. And a high budget advertising is the way they did it
Large advertising costs led them to full exposure in the domestic and international markets. It helped them to create customer value and a dominant approach in the food and restaurant market. Every kid smile when they hear the name of McDonald’s. It is an in-budget food for everyone. They reach out to over 69 million customers every day through their effective yet creative advertising. So, it can be said that their advertising cost is money well spent. 2020 has been stiff so far. But in recent years, the fast-food market has become more intense. McDonald’s has fought through it and held its position on the top of the chart. And they did all of it with providing amazing customer service and extensive yet substantial advertising.
Related: How Much Costco Spends on Advertising?
Reference
- https://corporate.mcdonalds.com/corpmcd/investors-relations/financial-information/annual-reports.html
- https://revenuesandprofits.com/mcdonalds-net-worth-2019/#:~:text=Net%20Worth,estimated%20%2416%20to%20%2418%20billion.
- https://en.m.wikipedia.org/wiki/McDonald%27s
- https://notesmatic.com/mcdonalds-advertising-expenses/
- https://www.ukessays.com/essays/marketing/mcdonalds-advertising-and-marketing.php
This is Tabassum Nusrat Soti and she is a content writer from Bangladesh. She has been a professional writer for over 5 years now. and she has been working with The Strategy Watch for over 3 years now.
Writing is Tabassum’s passion. Let it be SEO-efficient blog posts, analytical articles, reviews, news articles, or ghostwriting stories, she has worked and thrived in all sorts of writing. She has always had a way with words and intends to write for a prolonged unforeseeable future.
Currently, she is doing her honors (BBA) at the University of Dhaka. Majoring in the background of Tourism & Hospitality Management, she is a skilled and proactive third-year student. Her business studies background helps her write business analytic articles for The Strategy Watch. She will always keep learning and achieving new levels of content writing because of her passion for writing and creating words.