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McDonald's intention of producing pan-European advertising could

confuse a lot of people. Thanks to Quentin Tarantino's Pulp Fiction,

everybody knows that a quarter pounder with cheese does not exist in

Paris because of France's use of the metric system. And, given the

cavalcade of abuse directed at many things European in recent weeks, it

is difficult to imagine an ad for "le Big Mac" going down too well in

the UK either.

But the big burghers at McDonald's know their market and have chosen

advertising for its Happy Meal range for children as their first foray

into Europe-wide activity.

The company will decide between Leo Burnett, DDB and TBWA to work on

developing pan-European creative for its Happy Meal range, the

children's product that is pivotal to driving the chain's overall

sales.

There are a number of reasons why a range-specific, pan European pitch

makes sense. First, sales to children are vital in driving wider traffic

since the youngsters arrive with whole families in tow. It is for this

reason that McDonald's restaurants are geared toward creating an

exciting environment for children, as opposed to Burger King, which

seems to offer a more adult experience.

The nature of the Happy Meal advertising - often linked to large-scale

promotional tie-ins with international companies such as the toy giant

Mattel - also makes it an obvious area for McDonald's and its chosen

agency to identify common themes across European markets.

However, some sources suggest that the Happy Meal brief is a way for

McDonald's to test each of its three networks with a view to handing the

chosen one briefs across other product ranges.

Leo Burnett currently holds the UK account, BDDP@TBWA runs the Happy

Meal account in Paris and DDB has been McDonald's preferred network

across the majority of markets since it won the US account in 1997.

If this is the case, then the pitch is certainly a threat to Leo

Burnett's hold on the £42 million UK account. McDonald's has

promoted its UK marketing chief, John Hawkes, to the post of European

group marketing officer and has tasked him with developing increasing

levels of pan-European work. Hawkes has a close working relationship

with Leo Burnett stretching back more than a dozen years but there have

been signs of tension in recent months.

Sources close to Leo Burnett say that the agency had become frustrated

with churning out a succession of campaigns linked to McDonald's

promotions rather than executing creatively driven brand

advertising.

Equally the client became concerned that its advertising wasn't driving

sales forward in a difficult market. However, the signs are that the

relationship is improving. McDonald's was said to be happy with Leo

Burnett's Christmas brand campaign which featured the line "our silly

lights are on all year round" and the current McChoice menu campaign is

an improvement on other promotional campaigns.

The suspicion is that Leo Burnett was being made to suffer for problems

outside its control. McDonald's is growing rapidly in some key markets

but this growth is slowing and led to profit warnings and a drop in its

share price toward the end of last year.

Figures from Mintel show McDonald's had 577 UK outlets in 1995 and now

has 1,200. This growth of more than 100 per cent is set to slow as

McDonald's scales back its investment in opening new outlets. Globally

it will add around 1,300 restaurants this year, 200 fewer than last

year. Sales in the US for the first 11 months of last year were up by 2

per cent - disappointing when the stock market expects double-digit

growth.

In Europe sales were up by 4 per cent, poor when analysts had been

predicting global growth of 12 per cent, and in Asia sales were down.

Jack Greenberg, the McDonald's chairman and chief executive, described

the market conditions as "challenging".

The picture is similar for other fast-food chains. Burger King has also

experienced a period of phenomenal growth in the UK (growing from 373

outlets in 1995 to 630 by the end of 2000). BK's global sales rose by

close to 5 per cent between 1999 and 2001 but it must also face the

issue of market saturation in many key countries.

Despite the general market conditions, however, McDonald's claims that

the potential remains for global growth. Each day it serves one per cent

of the world's population, leaving the other 99 per cent untapped. New

markets represent the solution.

In this context, a pan-European campaign that can be extended to

relatively new territory makes sense. However, it will be a great pity

if McDonald's creatively led approach in the UK suffers because of this.

Its Happy Meal activity has not just been about specific promotions

(although McDonald's does run a major summer promotion each year).

One of Leo Burnett's best commercials for McDonald's, the "brotherly

love" spot, backs the Happy Meal range. This 1999 spot, featuring a

young lad who attempts to cheer up his sister by emptying his piggy bank

and buying her a Happy Meal, is identified by McDonald's as one of the

four best ads the agency has developed for it (the other three being

"the birds and the bees" from 1995, "carpet" from 1996 and "clever

daddy" from 1997).

The "brotherly love" spot is an example of the type of brand-led work

McDonald's is likely to want to run alongside more promotionally led

activity.

McDonald's will not talk about the advertising review apart from to say

the process is underway but no agency has yet been selected. However, it

is clear that the Happy Meal pitch represents a significant shift in its

approach to advertising.

Sources suggest that for the time being, at least, local agencies will

continue to produce local work on other product areas as well as

corporate campaigns. However, if and when an agency has started to

produce successful pan-European advertising, who is to say that it won't

be tasked with further briefs? Such a move could erode the status of

agencies in local markets and, as such, is viewed as both an opportunity

and a threat by Leo Burnett.

Whatever the outcome, it is likely to be a test of the agency's hard-won

creative reputation.