A M o d e l fo r P r e d ic tin g A d v e rtis in g Q u a lity

A s a K ey to D riv in g S a le s G ro w th

How Television Advertising Quality

Affected McDonald’s Sales Growth Over Six Years

CHARLES YOUNG The current research used McDonald’s data to explore the relationship between
Ameritest
advertising quality and sales growth. Based on a 6.5-year dataset involving more than
chuck@ameritest.net
180,000 consumer interviews, the researchers found that nearly half of McDonald’s sales
ADAM PAGE
growth could be explained by variables related to advertising quality. Specifically, the study
Ameritest
adam@ameritest.net found that factors such as sales momentum, the introduction of calorie content on to
quick-service restaurant (QSR, i.e., fast-food) menus, and variables related to key research
metrics—and, importantly, the right messaging strategy—can be effective in linking
advertising to variation in sales.

INTRODUCTION • providing a baseline for distinguishing between

An ongoing challenge to advertising researchers is
how to validate predictions about real-world sales
performance based on pre-testing metrics. Such
validations are important for three reasons:
• quantifying the contribution advertising can
make to return on investment (ROI),
• confirming the general construct of how adver­
tising "quality" works can be implemented as
a quality-control step in the creative process—
something once lamented as a "dream that will
never come to be" (Metzger, 2013), and
what is known and not known about how adver­
tising works is a critical element in evaluating
improvements in the research process.
Much previous research has found that the quality
of advertising matters in terms of perceived brand
perceptions and marketing efforts (Dahlen, Rosen-
gren, and Torn, 2008) and that it drives mind-set
metrics like cognition, affect, and experience that
can be linked to sales performance (Bruce, Peters,
and Naik, 2012). To the current authors' knowl­
edge, however, a large dataset analysis never has

• Quality of advertising creative is a major factor driving sales response. Marketing-mix models
attempting to quantify ROI are incomplete if they do not include a creative-quality variable.

• Relative performance of advertising versus the competitive may provide insight into one of the
fundamental questions facing brand marketers.

• A definition of creative “quality” needs to take into account the relationship between brand
positioning and brand image.

• The current study examined how emotional engagement with advertisements can be converted to
long-term brand memories.

DOI: 10.2501/JAR-54-4-393-397 December 2014 JD U R R A L OF R D U E R T IS in G RESEAR CH 393

A MODEL FOR PREDICTING ADVERTISING QUALITY AS A KEY TO DRIVING SALES GROWTH
been performed to link advertising quality
and sales.
The current study explored the relation­
ship between the quality of McDonald's
U.S. television advertising creative product
and publicly reported McDonald's sales
figures. Advertising quality was measured
by a testing system created by Ameritest,
the international marketing-research firm
based in Albuquerque, NM.
Given the size and extended period
of the dataset, the authors believe that
the current analysis offers a "big-data"
approach to validation. They also believe
that they can explain nearly half of the
sales growth reported by McDonald's
during this 6.5-year period by examining
four variables:
• sales momentum;
• advertising-quality metrics;
• calorie variables (beginning when
M cDonald's began offering calorie
counts on its menus); and
• negative advertising quality (advertising
that failed to communicate its intended
message).
Importantly, each variable relates directly
to the quality of the advertising creative
work. Moreover, the size of the advertis­
ing investment was not a consideration in
the current study; McDonald's spending
data is proprietary information, and the
research team did not have access to it. One
benefit of this necessary omission is that it
sets this study apart from other marketing-
mix models that often tend to be driven
heavily by media spend. Another benefit
was that the researchers could establish the
importance of creative quality more clearly
without regard to advertising expenditure.
MCDONALD’S METRICS AND DATA
For a variety of reasons, the research team
found McDonald's to be a particularly apt
subject for a research-validation exercise.
394 J0URI1RL OF RDUERTISIRG RESERRCH December 2014
G iv e n t h e s i z e a n d e x t e n d e d p e r i o d o f t h e d a t a s e t ,
t h e a u t h o r s b e lie v e t h a t t h e c u r r e n t a n a ly s is
o f f e r s a “ b ig -d a ta ” a p p r o a c h t o v a lid a tio n .
For one thing, as quick-service restaurants
(QSR) tend to produce much advertising in
short periods of time, a television advertis­
ing investment likely would have a great
influence on sales.
In a typical year, the top 18 QSR brands
produce and place more than 300 thirty-
second advertisements on national tele­
vision. As the category leader, McDonald's
airs approximately 20 percent of the cate­
gory's distinct television spots each year.
With this kind of investment, McDonald's
management certainly would expect to see
a strong relationship between advertising
and sales.
Moreover, because of its fast-tempo
advertising strategy, McDonald's changes
out its creative product monthly, with
four to five new commercials airing each
month. As a result, the time frame for
seeing a direct advertising-to-sales effect
should offer a fairly narrow window for
analysis. This pace allowed the authors
of this study to have more confidence in
the variables they chose to use. In fact, due
to the rate at which advertising changes
in the category, sales theoretically should
change quickly in response to specific
advertisements.
Regular validation exercises are stand­
ard for most major pre-testing clients.
The results of such work, however, often
are proprietary. For the current study, the
authors used either publicly available
information or an Ameritest database of
syndicated creative scores.
The sales data used in the current
analysis are the monthly change in same-
store sales compared to the prior year for
McDonald's U.S. operations—information
reported to Wall Street and obtained from
Morgan Stanley by the research team.
The data covers 6.5 years, from January
2007 through May 2013. To test the stabil­
ity of the model, the authors first studied
the 5-year period that ended in 2012. They
then updated that analysis with data from
the sixth year. Essentially, the findings
were similar for both time periods.
The sample of advertisements used in
the study represented a virtual "census"
of all 30-second QSR commercials aired in
the United States in the past 6.5 years—or
almost 2,000 commercials—with 180,000
consumer interviews. Of these commer­
cials, 441 were for McDonald's, and 1,533
were for McDonald's competitors.
The creative metrics used were collected
continuously using a standard method­
ology developed by Ameritest over a
significant period of time and among a
controlled sample of consumers for a large
number of advertisements.
METHODOLOGY
A model predicting McDonald's sales was
built using multiple regressions. To keep
the model parsimonious, only four vari­
ables were used. The model related sales
for any given month to the performance
of commercials airing that month. This
four-variable model explains almost half
of the variation in sales growth, with an
R-squared of 48 percent.
The Model
Y = 0.50X1 + 0.39X2 + 0.20X3
- 0.39X4 - 0.826

The variables are defined as follows (Y—
Monthly change in same-store sales):
• XI: A "mom entum " variable—the aver­
age of the prior three m onths' sales
growth—that accounted for longer-term
effects of advertising
• X2: An advertising-quality metric com­
prised of executional performance met­
rics and communication metrics
• X3: A "calorie" variable—in this case, a
dum m y variable set to 0 and to 1—that
allowed the research team to account
for the period beginning in late 2012,
when McDonald's began offering calo­
rie counts for its products on its menus
• X4: A negative-advertising quality vari­
able that identified any advertisements
that had failed to communicate a rel­
evant strategic message to consumers
other than the default consumer infer­
ence of "convenience."
Further Explanation of the Variables
The m om en tu m v ariab le (XI) w as
designed to reflect the idea that m onth-
to-month changes in sales were not inde­
pendent of one another but rather built on
one another over a period of time.
The advertising quality variable (X2)
was a composite index:
Ad Quality = Execution x Strategy =
Creative Idea x Relevant Message =
(Ameritest Performance Index)
x Messaging
The Ameritest Performance Index (API)
consisted of "Attention," "Branding," and
"M otivation" (intent to visit restaurant),
which are standard pretest "report-card"
measures.
The messaging metric (X3) is the top-
rated message from the group of ten
fast-food messages collected in the brand
ratings. To calculate the composite creative
index score for each month, the research­
ers exam ined the m essaging of each
A MODEL FOR PREDICTING ADVERTISING QUALITY AS A KEY TO DRIVING SALES GROWTH
advertisem ent and included only "effec­
tive" advertisem ents that scored at (or
above) average (index greater than 100) on
at least one strategic message.
The API scores for these qualifying
advertisements were multiplied by the top
message rating scored by that advertise­
ment. From those data, the authors were
able to calculate an average creative index
score for the num ber of effective advertise­
ments running that month.
The negative-advertising quality vari­
able (X4) was calculated in a way that was
analogous to X2, except that only adver­
tisem ents that communicated "conveni­
ence" as the top-rated message were used
in the average for each month; advertise­
ments with low and high API scores were
included.
The Research Model
The m om entum variable (XI) is the most
im portant of the four variables examined
in the study and accounts for about a third
of sales grow th, w ith an R-squared of
34 percent.
The advertising quality variable (X2)
is the next m ost im p o rtan t, w ith an
R -squared of 9 percent. Of course, this
p a rt of the analysis accounts only for
advertising's contribution to short-term
sales and is not tied to long-term b rand­
b u ild in g effects th at m ay resu lt from
advertising used to establish a brand
p o sitio n in g and im age. These types
of effects w o u ld be contained in the
m om entum variable.
The advertising quality variable (X4)
that accounts for ineffective advertise­
m ents that fail to contribute a strategic
message also enters the model in a nega­
tive w ay—w ith a negative beta coeffi­
cient—to increase the predictive power of
the model by another 2 percent.
Finally, the dum m y variable marking
McDonald's decision to communicate calo­
rie content (X3) adds 3 percent to the model.
December 2 0 1 4
FINDINGS
The Importance of Strategic
Communication
In one seminal analysis, com munication
was found to occur only w hen a particu­
lar message is selected from a set of pos­
sible messages th at m ust be know n to
both sender and receiver (Shannon and
Weaver, 1949). For the QSR industry, these
messages include such ideas as taste, vari­
ety, health, and a family-friendly atmos­
phere, and each message can vary in its
creative expression and degree, (e.g.,
Dahlen et al., 2008).
By contrast, Subway's strategy is quite
different: Its m essaging has focused
entirely on health claims, as the QSR has
attempted to position its brand against the
entire fast-food category, which often is
perceived as unhealthy.
The presence of a strategic m es­
sage by itself is not enough to explain
ad v ertisin g 's im pact on M cD onald's
sales growth. In combination, however,
w ith industry m easures of executional
strength—"attention," "branding," and
"m otivation"—it is possible to assess
how the quality of the creative product in
advertising may drive sales.
The Impact of a Failed-Message Strategy
One way that advertising can fail to be
effective is by not communicating a mes­
sage that supports the strategic positioning
of the brand. As the authors of this study
observed in certain McDonald's messaging
strategies, this kind of failure may do dam­
age that extends beyond the lost invest­
ment of misplaced media dollars. Creative
work that strays too far from w hat the
brand stands for in the mind of the con­
sumer can blur the brand positioning and
damage the brand image.
An example: A M cDonald's advertise­
m ent that rem inds consumers of only the
convenience of eating at M cD onald's.
In practice, the QSR never w ould run
J 0URI1RL Of RDUERTISinG RESERRCH 3 9 5
A MODEL FOR PREDICTING ADVERTISING QUALITY AS A KEY TO DRIVING SALES GROWTH
advertising w ith the prim ary messag­
ing intent of the categorical attribute—
"convenience"—w hich so often has
negative connotations of poor quality
and poor nutrition throughout the com­
petitive set.
When looking at the distribution of
McDonald's advertising by messaging,
the authors of the current study found
that 60 percent of commercials con­
veyed a primary message of one or more
strategic benefits {i.e., taste or variety).
However, for 30 percent of McDonald's
advertisements, the primary or only mes­
sage com municated by the advertise­
ment was "convenient." In the absence of
any stronger conveyed benefit, "conveni­
ence" becomes the default message taken
away by the advertising. The remaining
10 percent conveyed none of these stra­
tegic QSR messages.
As the meaning of a McDonald's adver­
tisement defaulted to convenience—or to
nothing at all—the quality rating declined
accordingly. More specifically, in looking at
the correlation with "motivation" scores,
when convenience was the only message
of an advertisement, the correlation was
negative (-21 percent) but could be a posi­
tive (+26 percent) when convenience was
couched with other relevant messages.
Thus, in the current model, the authors
found evidence not only that the quality
of the advertising creative product was an
important variable in driving sales per­
formance but that unfocused advertising
actually could hurt sales.
Additionally, the authors discovered
that finding a strong strategic message was
important to ward off competitive attacks.
In months when McDonald's communi­
cated a stronger strategic message than
its competition, sales tended to increase.
During months when competitive spots
more effectively communicated a strategic
brand message, McDonald's sales growth
stagnated or even declined.
396 JD URnflL OF RDUERTISIRG RESEARCH December 2014
A d d i t i o n a l l y , t h e a u t h o r s d is c o v e r e d t h a t
f in d in g a s tr o n g s t r a t e g ic m e s s a g e w a s
im p o r ta n t to w a rd o f f c o m p e titiv e a tta c k s .
This finding highlighted the need to be
aware of the competitive set in the mar­
ketplace. In fact, when McDonald's had
an execution in the top-three performers
among QSR advertisements for any given
month, average sales were half a percent
higher than when McDonald's did not
have a top-three advertisement. And that
half-percent may amount to hundreds
of millions of dollars, underscoring how
important it is for McDonald's to know
where it stands versus the kind of adver­
tising its competition is running.
Long-Term A dvertising Effects
Judging from the betas in the model,
the authors of the current study found
that the m om entum variable (XI),
w hich described effects th at p er­
sisted longer than a single m onth,
was m ost im portant. This variable
sum m arized a variety of m arketing
inputs, including changes in service
operations, changes in product offerings
and, of course, the longer-term contribu­
tions of advertising to the McDonald's
brand.
The link between memory and expe­
rience is clear but multi-faceted (Kah-
nem an, 2011). A consum er's "brand
memory" of McDonald's, therefore, is
complex, composed of all past expe­
riences (real or im agined) that the
consum er has had w ith McDonald's,
including engagement with advertising.
To fully understand how advertis­
ing drives sales, it is essential to under­
stand that the "brand" is nothing more
than a memory. An effective McDonald's
advertisement transcends the simple stim­
ulus response of sales promotions and thus
can be expected to have an effect on sales
for some time after it has aired.
To demonstrate how advertising persists
in memory, the authors of the current study
performed a simple experiment with five
highly effective, attention-getting fast-food
commercials. Tested among three differ­
ent consumer samples per advertisement,
the authors measured memory—frame by
frame—20 minutes after commercial expo­
sure, 24 hours after commercial exposure,
and seven days after exposure.
Not surprisingly, the greater the amount
of time consumers had to forget, the less
they remembered. While an average of
77 percent of images from these com­
mercials were remembered after 20 min­
utes, after a full day, only 62 percent were
remembered. After a week, consumers
remembered 52 percent of the images from
the commercial.
Importantly, when the researchers
looked across the five commercials, they
saw similar patterns with the rhythmic
peaks and valleys of the memory map. The
images that were peaks after 20 minutes
remained peaks after longer time periods.
In other words, the images that were key
to predicting breakthrough scores or com­
mercial engagement were the same images
that lodged most strongly in long-term
memory to build a brand's image.
As these images persist over time in
consumer memory, they likely form the
emotional basis of consumer loyalty to
complement a more rational basis for loy­
alty (Reynolds and Phillips, 2005). And

that emotional bond suggests the mecha­
nism for advertising's long-term contri­
bution to the momentum variable in the
current model.
IMPLICATIONS AND CONCLUSION
Marketing managers seek to understand
the relationship between advertising qual­
ity and sales growth. This McDonald's
analysis—with a 48 percent R2 on sales
growth by using advertising quality met­
rics—demonstrates that this link is not
only possible but highly important to a full
marketing-mix model.
The authors of the current study
believe the link between the quality of
creative work in advertising and short­
term sales growth is clear. This high­
lights the ever-evolving need to generate
strong insights about creative quality,
so a marketer can both understand the
"whys" of his or her advertising and take
this into account when making a sales
forecast. Linking strong creative quality
with established marketing-mix model
principles, such as sales momentum and
new category information (e.g., as in the
case of McDonald's calorie content com­
munication), should give the marketing
manager a clearer picture of the market­
place and expected results.
To improve understanding of the link
between advertising and sales growth,
marketing managers should take note of
the following conclusions the authors have
drawn from this study:
• Independent of media-spending levels,
the quality of the advertising crea­
tive product is a major factor driving
sales response. Marketing-mix models
attempting to quantify ROI are incom­
plete if they do not include a quality
variable for the creative work.
• Relative performance of advertis­
ing versus the competitive set is
A MODEL FOR PREDICTING ADVERTISING QUALITY AS A KEY TO DRIVING SALES GROWTH
im portant—one of the "fundam en­
tal questions facing brand marketers"
(Reynolds and Phillips, 2005). The
authors believe, therefore, that competi­
tive testing and awareness is a necessary
component in the analysis of fluctua­
tions in sales figures. Such analysis can
lead to the identification of areas where
the brand needs to position to fend off
competitive attacks.
• Creative "quality" is a composite of mes­
sage communication and executional
variables. This distinction parallels
two common ways of thinking about
a brand: "positioning" versus "brand
image." A brand manager's structural
composition of an advertisement and
messaging strategy, therefore, needs
these two elements to be linked at opti­
mum levels to ensure that both position­
ing and brand image can be understood
completely by the consumer. Also, one
cannot be traded off for the other; com­
municating a relevant message is as
essential to the advertising story as the
executional pieces needed to hold that
message together.
• Longer-term effects of advertising on
sales need to be better understood and
quantified. Much previous research
has focused on "emotional engage­
m ent." Research suppliers consist­
ently have introduced new products
and services—among them biometrics
and facial response techniques—that
measure the emotional response of the
consumer.
Even in the face of such metrics, the
authors of the current study believe that
the importance of "brand memory"—as it
relates to loyalty and consumer trends—is
a missing part of the emotional equation.
Future research should shift attention
to the study of how these emotional
December 20 14
engagement strategies connect with
advertisements to create long-term brand
memories. flJT)
C harles Y oung is founder and ceo of Ameritest, a global
research firm , based in Albuquerque. NM. Young
invented the firm ’s Ameritest’s Picture Sorts technique
th a t analyzes visual components of advertising.
Previously, he was research partner for Euro/Tatham
and a new-product consultant for Leo Burnett. In 2004,
Young won the Advertising Research Foundation's Grand
Ogilvy Award for a case study conducted with IBM. He
is the author o f The Advertising Research Handbook
(Ideas in Flight Publishing, Seattle, WA, 2008).
A dam P age is an associate research and analytics director
at Ameritest, in which capacity he has developed
statistical models for a number of Ameritest clients.
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D ahlen , M., S. R osengren , and F. T orn .
"Advertising Creativity Matters." Journal of
Advertising Research 48,3 (2008): 392-403.
K ahneman , D. Thinking, Fast and Slow. New
York: Farrar, Straus and Giroux, 2011.
M etzger, G. "In Search of Advertising ROI: The
Impossible Dream versus 'Bounded Rational­
ity.'" Journal of Advertising Research 53, 3 (2013):
251-253.
R eynolds, T. and C. B. P hillips. "In Search
of True Brand Equity Metrics: All Market Share
Ain't Created Equal." Journal of Advertising
Research 45 (2005): 171-186.
Shannon , C. E., and W. W eaver. The Math­
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University of Illinois Press, 1949.
JO U R IE OF HDUFRTISIOG RESEHRCH 397
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