The Real Reason McDonald’s Is Acquiring Dynamic Yield

McDonald’s is buying an Israeli startup called Dynamic Yield that provides personalization software to brands and publishers – but this acquisition is about a lot more than tailoring menus based on the weather or serving up customized content.

The deal, announced late Monday, is the first major acquisition McDonald’s has made in around 20 years, and it wasn’t off the dollar menu. The company is reportedly plunking down around $300 million for Dynamic Yield, which will continue to serve existing clients and operate as a standalone company under McD’s.

McDonald’s says it’s planning to use the technology to speed up its digital transformation, personalizing the customer experience by changing drive-thru menu displays based on real-time signals, such as the time of day, trending food items or current restaurant traffic, or cross-selling customers based on their current order.

But there’s a lot more to personalization than that, said Brendan Witcher, a VP and principal analyst at Forrester.

“Personalization is about making it personal for me as an individual,” he said. “The ability to really know that it’s me, to know my shopping behavior across channels – that is how you get to great personalization, not because you recommend an apple pie at dinner time but not when it’s breakfast time.”

That’s why McDonald’s’ move is a customer data play, Witcher said, “an attempt to understand the customer in a world that’s becoming more and more digitally ubiquitous.”

Dynamic Yield combines analytics and data management to bring personalization to a fragmented customer experience, using a decisioning engine that employs machine learning and predictive algorithms to create real-time customer segments.

Think of the technology as a way for McDonald’s to start building a connective tissue across channels – what Liad Agmon, Dynamic Yield’s CEO and founder, called “personalization everywhere” in a previous interview with AdExchanger.

“Historically on the web, personalization was mostly used by the marketing team – but we’re seeing companies start to recognize that personalization can be strategic,” Agmon said. “We’re seeing product and engineering teams that want to bake personalization into the core experience.”

But a company like McDonald’s, despite being one of the largest restaurant brands in the world, likely has trouble really knowing its customers. People come in, often pay with cash, and usually don’t even get out of their car to order food.

“McDonald’s is everywhere, but they probably don’t know their customers everywhere, and this is an Amazon-like move to know the customer better,” Witcher said. “The main story isn’t personalization, it’s the unsexy thing that’s actually quite sexy – and that’s how this acquisition could enable a great data strategy for McDonald’s, like building a foundation.”

McDonald’s tested the Dynamic Yield tech in a few restaurants across the US in 2018 and plans to start rolling it out as part of the drive-thru experience at more locations this year, followed by an international expansion. The plan is to also start integrating the decisioning technology into the brand’s other digital customer experience touchpoints, including the McDonald’s app and self-order kiosks in brick-and-mortar stores.

Dynamic Yield has raised $77 million, most recently a $32 million Series D in August. Founded in 2011, the company has around 200 employees and a client roster that includes Sephora, IKEA, Lacoste, Urban Outfitters and The Hallmark Channel.

McDonald’s declined to comment for this story.

1 Comment

  1. Israeli tech once again... These guys can sell great companies that's for sure.

    Reply

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