McDonald’s Cooks Up Advertising With McTV

Golden Arches testing out in-store channel in California stores

   
McDonald’s Cooks Up Advertising With McTV

Want some little league scores with your Big Mac?

McDonald’s (NYSE:MCD) is adding TV to its menu with a new in-store channel that will feature original content including local news, youth sports and entertainment stories.

The new McTV offering will be introduced at select restaurants in California during the next few months, eventually reaching 800 locations in the region. If successful, the McDonald’s television channel could roll out nationwide soon after.

If you’re expecting clever cartoons of Ronald McDonald, don’t hold your breath. McDonald’s has partnered with BBC America and a California ABC news affiliate for the launch and has little interest in sharing the responsibility of creating content.

What it does want to share, however, is the advertising profits.

It’s not an original idea. Wal-Mart (NYSE:WMT) has its namesake Walmart TV. Numbers from the past few years are simply staggering at the big-box retailer — more than 125,000 screens in over two-thirds of all Wal-Mart stores, reaching a potential audience of more than 127 million shoppers per week and serving as many as 150 million ad impressions from sponsors. The profit potential is loud and clear.

McDonald’s is right to embrace this model simply for its reach alone. With more than 33,000 restaurants in over 100 countries, McDonald’s has quite a platform to serve ads to captive audiences. If this test in California proves successful, expect McTV at the Golden Arches near you.

But there’s also a clear tertiary benefit to an in-store TV network. McDonald’s has been working long and hard to rebrand itself as a comfortable destination; a place to hang out and linger with a McCafe coffee instead of just a drive-through window. McDonald’s has revamped store interiors to resemble Starbucks, installed Wi-Fi in many restaurants and continues to make its PlayPlace a popular hangout for parents with children.

Millions of Americans already sit mindlessly in front of the tube scarfing down fast food, so why not encourage them to stick around at the restaurant — and maybe get an apple pie for the road?

It’s unlikely this push will have any immediate impact on McDonald’s bottom line. The McTV campaign is just a test and will take years to roll out even if it proves viable. But after a red-hot run recently — MCD stock is up 250% since 2004 and has doubled since 2007 — it’s clear management understands that it has to get creative if it wants to keep up this kind of profit growth.

Will McTV be the next big thing? Maybe. If done right, patrons will get some quality local content as they wait in line, and McDonald’s can start to get a more local flavor in communities instead of being seen as a global corporate monstrosity.

Of course, if done wrong, it will just be one more annoying bit of advertising that consumers ignore — irritating diners and pushing them out the door of McDonald’s faster than before.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.


Article printed from InvestorPlace Media, http://investorplace.com/2011/10/mcdonalds-mcd-cooks-up-advertising-with-mctv/.

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