For now, the slumping coffee chain has bought a few print ads. A nationwide TV campaign could provide the real boost
As Starbucks (SBUX) grew into one of the world's best-known brands, it rarely advertised on television. It didn't have to. The chain was once so trendy and one-of-a-kind—remember Tom Hanks marveling at the detailed ordering process in 1998's You've Got Mail?—that customers knew what it was and didn't need the reminder to go hang out there.
The honeymoon is over. It isn't just that a "tall decaf cappuccino" sounds as common as coffee; millions of customers won't shell out for one, and the chain has had to go downscale with combo meals and loyalty cards. On Apr. 29, the company said sales in the quarter ending Mar. 30 had fallen 7.6%, to $2.3 billion, with foot traffic down 5% in stores open at least a year. Meanwhile, McDonald's (MCD) is building cheaper, Starbucks-inspired "McCafés" in its stores and carpet bombing the airwaves with a $100 million campaign to promote its new coffee drinks. Starbucks, with familiar products and major competitors, is now a mainstream brand with a mainstream brand's problems.
So shouldn't it employ the mainstream marketer's trustiest weapon, the big TV ad campaign, to lure customers back? Unfashionable as it sounds, TV is still the most efficient way to sell an everyday product to millions of people. Ask any marketing veteran. "The power of audiovisual on a captive audience is huge," says Joshua Spanier, director of communications strategy at San Francisco ad agency Goodby, Silverstein & Partners, part of the Omnicom Group (OMC). Even as more people fast-forward through ads using a digital video recorder, TV delivers a bigger audience than any other medium.
Warning Against Imitators
And unlike a viral video or outreach on blogs and social networks, which requires users to pass the message on, television delivers an advertiser's message to the most passive couch potato, guaranteed.
CEO Howard Schultz has his own ideas for drumming up business, of course; Starbucks says it has no plans for television now.
On Apr. 30 the company unveiled a new slogan, "It's Not Just Coffee. It's Starbucks," and kicked off a coffee-focused newspaper ad campaign in papers including The New York Times (NYT), warning against down-market imitators like McDonald's. "Beware of Cheaper Coffee. It Comes with a Price" reads one ad that ran on the back page of the Times' Sunday Business section. The campaign also includes a YouTube video, with Schultz asking fresh-faced baristas what they think of the other print ads in the new ad campaign, like one that reads "This Is What Coffee Tastes Like When You Pour Your Heart into It." Unsurprisingly, they rave. The Seattle chain also maintains a Facebook page.
TV Ads Would Be Tricky
But today the coffee chain is the kind of company that could benefit from reaching America's caffeine-addicted millions, not just the affluent urbanites who read the Times. It has 7,000 outlets in the U.S., in places as far-flung as Bismarck, N.D., and Waterville, Me. Though it's famous for $4 lattes, the prices of regular coffee and its breakfast sandwich combos are competitive with those of mass chains like McDonald's and Dunkin' Donuts.
Still, a successful TV campaign would take finesse. Starbucks' best customers are NPR-types who think they don't like ads (the smoothly intoned "brought to you by" messages on those stations from Archer Daniels Midland (ADM) and the John D. & Catherine T. MacArthur Foundation notwithstanding). Loud or gag-filled promotions would come off as too "fast food" and alienate those who still think of the ubiquitous chain as a cozy coffee shop.
Meanwhile, Starbucks can't match the resources of a mammoth competitor like McDonald's. Starbucks may be able to take potshots at Mickey D's in its newspaper ads, but in a head-to-head fight for consumers' attention it would get buried. In 2008, McDonald's spent $607 million just on U.S. TV ads—more than 20 times what Starbucks spent on total U.S. advertising, according to TNS Media Intelligence. "You can't out-McDonald McDonald's. You can't outmuscle them," says Antony Young, CEO of media buyer Optimedia.
Far from Fast Food
The key, say branding experts, is to skip the coffee comparisons and instead advertise what makes Starbucks distinctive—like how people enjoy hanging out there to read, write, chat, or unwind. "Starbucks is actually in the position of strength here. They are the premium brand," says Jeff Flemings of VivaKi, Publicis Groupe's new media advertising group. Peter Gardiner, chief media officer at ad agency Deutsch, says that if Starbucks does advertise, it should talk about the community aspects of the brand, and link to marketing that's more interactive than television spots. "If you look in a Starbucks, people are doing one of three things—talking, looking on a computer, or reading something—they're not sitting in front of a TV."
Even more important, the ads must not remind anyone of fast-food chain advertising. The brand should place bets on specific, upscale shows, not blast its messages across prime time. "Fight where you can win," says Spanier of Goodby. In particular, clever product placements could be an effective way to put the Starbucks brand in front of millions of TV viewers without coming off like a huckster. Spanier imagines host James Lipton sipping cups of Starbucks while he interviews famous actors on a show like Bravo Media's Inside the Actors Studio—giving off a vibe that's both cozy and upscale.
In other words, Starbucks could still use all the old tricks of television that chains its size and age have used successfully for years. So long as, of course, it doesn't come off seeming like every other old chain.