South by Southwest

McDigital: Are millennials lovin' McDonalds at SXSW?

McDonald's had a prominent presence at this year's SXSW in Austin, Texas.
Harriet Taylor | CNBC

McDonald's has come to the land of farm-to-table artisinal BBQ and cutting-edge startups. For the first time, the fast food chain is an official sponsor of SXSW. The festival has long attracted big brands trying to cultivate the affection of hipsters who flock to Austin for panels about startups, back-to-back bands, and indie movie premieres.

The fast food giant is the latest to do so, aiming to get the early adopters and taste-makers who attend the festival on board with its brand.

In Austin this week, the golden arches are everywhere. They're emblazoned on a charging station in the convention center. There's a McDonald's food truck, offering fries, Shamrock shakes on St. Patrick's day, all-day breakfast for hungover partiers, as well as wi-fi. The company also hosted a private cocktail party on Saturday and a musical showcase.

For a city with a penchant for local restaurants rather than big chains, the giant logo seems even more out of place than the other big corporations with a presence at the festival.

But McDonald's is trying to communicate that it's interested in more than just upgrading its image. It's looking for new ideas to change the way it does business. McDonald's hosted three pitch competitions, targeting start-ups on areas where the company wants to innovate: "Reinventing the Restaurant Experience," "Advancing Content Creation," and "Mobilizing Transportation and Delivery." The prize: a trip to headquarters to pitch a concept to McDonald's senior team.

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The winner of one of the competitions was particularly apt: Hello Sponsor, which helps brands manage and track their event sponsor activity. Hello Sponsor CEO Greg Kubin said he thinks his company can help McDonald's tap into local communities and initiatives.

"I'm really excited to pitch the c-suite at their headquarters," said Kubin. "It's an incredible opportunity, and it's something where I think we can add a lot of value to the organization." Does McDonald's sponsorship of SXSW make sense? It's "a really good opportunity for them to really engage with cutting-edge innovation," said Kubin.

Aat its lounge at the Hilton near the convention center, McDonald's is targeting entrepreneurs with panels on topics totally unrelated to fast food: "Leveraging the Gray Area Between Digital and Physical," "Wire-free and Worry-Free: The Time for Wireless Charging is Now," and "How Your Scale and Reach Can Change the World."

It's all part of new CEO Steve Easterbrook's strategy to rebrand, innovate, and better compete with the likes of Chipotle, which has won over millennials with humanely-sourced meats and a more eco-friendly reputation.

The week ahead: SXSW week

The question is whether McDonald's attempt to win over cutting-edge types could backfire. (Does a cocktail party with Maple-Bacon Burbon Old-Fashioneds make sense for the brand?) There are also rumblings that it's a sign that SXSW, which earned its indie street cred screening Super Size Me, a documentary about the poisonous effects of eating too much fast food, has gone one step too far.

Backlash started even before the festival did. The company was publicly shamed by a band it booked because it hadn't planned on paying for the performance. It was forced to reverse its policy and agree to pay all the bands it's working with. The critique on social media was that the burger giant was trying to exploit an indie band.

The folks CNBC talked to at McDonald's various events were reluctant to bash the brand on the record, but on background a number of people commented that the burgers couldn't hold a candle to the tacos down the street.