Allen Media Group Sues McDonald's, Alleging Discriminatory Ad-Buying Practices
- by Karlene Lukovitz @KLmarketdaily, May 21, 2021
Byron Allen’s Entertainment Studios Networks Inc. and Weather Group LLC have sued McDonald’s Corp. for $10 billion, alleging that McDonald’s is damaging Black-owned media companies through discriminatory ad-buying practices.
The lawsuit, filed in Superior Court in California, charges that McDonald’s has discriminated against these two divisions of Allen Media Group through its contracting process and refusals to advertise on the media properties.
The complaint alleges that less than $5 million, or 0.31%, of the approximately $1.6 billion that McDonald’s spent on U.S. TV advertising in 2019 was spent on Black-owned media.
It also alleges that McDonald’s has refused to advertise on Allen’s Entertainment Studios’ twelve-year-old lifestyle networks while making significant ad buys on similar, white-owed networks.
The suit claims that McDonald’s has created a tiered advertising buying structure. The fast-food giant spends most of its advertising on media defined as falling within a "general market" tier, while an "African American" tier has a much smaller budget and less favorable pricing and other terms.
McDonald's contracts with a separate ad agency, Burrell Communications, for the African American tier, "thereby creating separate and unequal tracks for Black-owned media companies to earn advertising revenue," the suit charges.
According to the lawsuit, McDonald's relegated Entertainment Studios to the less-favorable African American tier even though the companies own and operate television networks that have general market appeal and do not specifically target African American audiences.
Allen Media Group/Entertainment Studios produces movies and, in addition to The Weather Channel, owns more than a dozen TV stations and 10 digital TV networks, including Comedy.TV, Recipes.TV and CarsTV.,
On Thursday, McDonald’s announced a commitment to increase its spend with "diverse-owned" media, content and production companies from 4% to 10% of its national advertising investment by 2024, including an increase from 2% to 5% for Black-owned properties.
“We've been making serious commitments that are guided by our values, and with this latest move, we're taking action to advance diverse-owned companies across the marketing supply chain," stated Morgan Flatley, chief marketing and digital customer experience officer at McDonald's USA. "We're using our resources to support these platforms and businesses, which keep the brand at the center of culture while creating deeper relationships with our diverse customers, crew and employees."
Interesting read, as McDonalds commercials seem to be highly focused and directed at a black audience, so much so that Caucasians seems to be an afterthought in their advertising (No judgement about that, just a viewer impression). They may be spending their ad dollars elsewhere, but the black community is certainly not being underserved or under-represented by McDonalds in their advertising. All their ads have strongly diversified demographics represented and obviously using their marketing data to validate their media buys. Is not the ultimate commercial message more important than where they make their media purchases? Apparently not.
Byron Allen always seems to sue for billion dollars which he isn't going to get I hope McDonald's holds its ground. I just see this as a shakedown I have seen many Mickey D's ad's and it seems to target a black audience to me as Jonathan said as well.