2.4% PR agency revenue growth
Starbucks has reached out to agencies in the hopes that it can grow its grocery business and is also set to begin a review for its media business, Ad Age has learned.
According to people familiar with the request-for-information, Starbucks is seeking a shopper-marketing-oriented agency -- one with a heavy digital bent -- for Starbucks' packaged products such as bagged coffee, Via instant coffee, K-Cups, Starbucks Refreshers and its bottled Frappuccino. The search for agencies on this front is significant, suggesting that Starbucks is looking to more aggressively encourage consumers to consider its products in grocery stores, drug stores and club stores -- a major portion of Starbucks' business. The search is being led internally.
The chain has reached out to agencies for a second project, looking more vaguely for creative ideas about the brand, possibly including experiential and digital ideas, though according to executives who were contacted, it was not clear whether the focus was brand work or product work. According to one person, some agencies had the option of participating in one or both potential initiatives.
Starbucks has also sent media agencies a request for information as its prepares for a review there. Omnicom's PHD is the incumbent on the media business.
The coffee giant is no stranger to tapping agencies beyond its lead creative agency, Omnicom's BBDO. Last fall, a handful of months after Sharon Rothstein joined the company as global CMO, Starbucks reached out to agencies for potential work -- a move that resulted in a relationship with MDC Partners' 72andSunny, whose first work included the recent campaign for Starbucks' new Oprah chai.
More significant new-product campaigns are expected to come from the agency in the near future, but Starbucks has said that it still maintains its relationship with BBDO. Other agencies the company has been working with are Swift and WPP's Blast Radius for digital, and Edelman for PR.
A Starbucks spokeswoman did not offer much detail on the moves, but said in a statement: "Starbucks works with a variety of agencies and we regularly assess our agency roster to plan for future creative resources for our growing business."
The company has continually reported strong sales growth in recent quarters. In April it announced it most recent quarterly earnings, which shows 6% growth in global comparable as well as U.S. sales. The chain's U.S. system-wide sales in 2013 were $11.7 billion, up a whopping 10.3%, making it the third-largest chain in the country behind McDonald's and Subway, according to Technomic.
Starbucks has been aggressively working to grow its business in its stores as well as the grocery aisle with everything from tea to its bakery case to lunch and even wine and snacks in-store. In recent years it has acquired bakery brand La Boulange, tea brand Teavana, juice maker Evolution Fresh. It is also getting serious about carbonated drinks with the advent of its Fizzio brand. At home it has gotten serious about single-serve coffee with its Verismo coffee machine.
Despite all its success, Starbucks is not a big measured-media spender, although from time to time, the chain will trot out big TV campaigns around the holidays and in the summer. In 2013, the company spent about $95 million on U.S. measured media, according to WPP's Kantar Media, up from $85.5 million in 2012. In 2011, the company spent about $109 million on U.S. measured media.
Contributing: Alexandra Bruell