Searching for Deep Meaning in Starbucks’ Ad Campaign

What does it mean when a company and brand that has sustained incessant growth for more than a decade strictly on word-of-mouth and in-store marketing decides to launch its first TV ad campaign? Let’s have a virtual symposium:

Only fair to give Howard Schultz, Starbucks’ chairman, the first bite. The Wall Street Journal has this quote:

“We need to recognize that the category is evolving,” Mr. Schultz told analysts on a conference call Thursday. “And as the leader, we have an opportunity to make sure that our voice is heard through the all-important medium of television.”

And this, from the Seattle Post-Intelligencer,

Without mentioning by name rivals McDonald’s and Dunkin’ Donuts, Schultz said consumers over time would not be satisfied with a “commoditized experience or flavor” and they would trade up to the company that built the industry.

“And that, ladies and gentlemen, is Starbucks,” Schultz said. “You can be assured we are deeply, passionately committed to preserving our leadership position.”

This is the classic marketing paradigm. Build a brand through PR, defend your citadel with advertising.  The McHordes are coming!

Investor-focused bloggers see ominous signs, however. Blogging Stocks says:

Investors should be extremely skeptical of this move. Generally, a company embarking on a strategy that it has resisted for decades is a sign of desperation. Wal-Mart (NYSE: WMT) grew without acquisitions forever — now, desperate for growth, the company is becoming a buyer.

And Starbucks, also scuffling, has decided it needs to advertise on television. Think about it: Starbucks knows advertising like that will be bad for its brand — otherwise it would have done it a long time ago.

The ad campaign is a sign of desperation: And owning desperate companies is rarely a good idea.

Motley Fool offers a related point:

One of the things I liked about Starbucks was its ability to manage incredible growth without falling back on traditional advertising methods to get the word out. What are you? McDonald’s (NYSE: MCD)? Gap (NYSE: GPS)?

In this day and age, TV advertising seems old-school and ineffective, and many big companies are resorting to methods like Internet advertising and viral marketing to get the word out. It makes me wonder whom Starbucks is setting out to woo — people who live under rocks?

After all, who doesn’t know Starbucks? The company said the ad campaign will illustrate how the company is differentiated from the competition, but in this lowly shareholder’s opinion, it sounds like it could end up being a waste of good money to me.

The Wall Street Journal’s story this morning said Starbucks advertising agency of record, Wieden + Kennedy, originally had an edgier idea, but agreed to run warm and fuzzy holiday spots for now. However, next year, don’t be surprised if you see something like this, according to the WSJ:

…Wieden + Kennedy has also been developing an edgier idea for about six months. The proposed ads would show Americans discussing issues of importance to them and depict Starbucks coffee shops as the living room of the national conversation.

In a pitch meeting, the agency showed a short reel of consumers talking about the war in Iraq and health care, says one person familiar with the matter. The agency also showed images of what people were talking about, such as a picture of pop singer Britney Spears the day she shaved her head and a picture of a U.S. soldier.

Interesting. Sounds like a twist on product placement. Viewers would be drawn into the discussion, and oh, by the way, this conversation is happening at Starbucks. Wasn’t the Russian Revolution planned in coffee shops?

The Los Angeles Times quotes a financial analyst and a branding strategist agreeing that the ad campaign is out of touch with Starbucks customers’ biggest worry — paying the bills.

Many Americans are cutting back on affordable luxuries such as fancy coffee beverages, said Howard Penney, an analyst with Friedman, Billings, Ramsey & Co. And as customers curtail their visits, Penney and others said, Starbucks should be offering promotions.

A touchy-feely ad with a winter theme won’t lure people back, they said, because it doesn’t offer any incentive.

“People are becoming very price-conscious,” said Alan Siegel, chairman and chief executive of branding strategy firm Siegel & Gale. “Without making any kind of an offer, I’m not sure Starbucks is addressing the problem.”

In digging around for quotes for this post, I looked for something from the marketing writer Al Ries, and I found this interview, in which Schultz is quoted:

Al Ries: Yes, all the recent brand successes have been PR successes, not advertising successes. Red Bull, Starbucks, Harry Potter, Linux, Palm, The Body Shop, JetBlue, and Google.

Steve: Examples?

Al: Starbucks spent less than $10 million in advertising its first 10 years. That’s less than one million a year, a trivial amount for a national brand. Here’s what Howard Schultz, CEO of Starbucks, has to say about advertising. “It is difficult to launch a product through consumer advertising because customers don’t really pay attention as they did in the past. I look at the money spent on advertising and it surprises me that people still believe they are getting returns on their investments.”

That was then. This is now.

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One Comment on “Searching for Deep Meaning in Starbucks’ Ad Campaign”

  1. Rick Carpenter Says:

    Has Starbucks not read anything about social marketing? Of all companies, which even boasts free WiFi at their locations, don’t you think that they would see an opportunity in finding ways to reach their loyal clients through social networks? Why television?

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