In a conference call in which the company said the economy appears to be damping consumers' affection for the $3 latte, Starbucks CEO Jim Donald said the coffee retailer is trying to "to reach out to a broader audience" with the campaign from Wieden & Kennedy. The push, he added, is "very culturally sensitive, product driven."
Red Cup campaign
Starbucks had long believed that its miles of storefronts and its cups, as well as the lifestyle experience found in its shops, was the core of its marketing. A number of years ago, it experimented with an effort that involved placing magnetized Starbucks coffee cups on the roofs of taxis, making it look as if passengers inadvertently left them behind. The cups, of course, stuck to the roofs when the cabs drove off.
The concept spread to an annual Red Cup holiday campaign, done regionally, that expanded to the web and other events and was given a holiday theme, urging consumers to help one another. This year's effort, from Wieden & Kennedy, is also centered on a "Pass the Cheer" concept and includes an elaborate website at itsredagain.com, where visitors can post stories about their experiences with passing on cheer. One post, for example, discussed how a man felt differently about the homeless after hearing a homeless man had saved a pedestrian from being hit by a passing car.
Added this year to the mix of web and outdoor is Starbucks' first national TV effort. The first of three animated 30-second spots will break on cable networks tomorrow, followed by two additional spots. Two subsequent spots launch Nov. 26. Some of the spots are expected to run on network TV.
"I wouldn't read into the advertising initiatives to much," Founder Howard Schultz said in response to the question in a conference call. "I think it's a natural evolution of the maturity of the brand and the experience. And the fact that we think we can get enormous leverage gaining the national footprint we have in major markets as a result of a TV campaign."
Starbucks announced the campaign today, along with a decline of 1% in the average transactions per store in the U.S. It cut its fiscal-year forecast, which sent shares down 6%.
Mr. Donald acknowledged to analysts that the company is beginning, like other retailers, to feel the effects of rising fuel prices, the credit crunch and other elements curbing consumer spending. He insisted, however, that Starbucks has not reached a point where it had too many stores and outlets. Starbucks plans to open 1,600 stores next year, 100 fewer than originally planned. However, he said, the "saturation comment's overblown."
The news of the national TV campaign comes a few days after a Starbucks spokeswoman indicated the company was bringing part of its advertising back in-house. "Wieden & Kennedy continues to do outstanding work for Starbucks and we're very happy that they're our agency of record," the spokeswoman said. "What we're doing now is bringing the regional work in-house so they can focus their talents on helping us grow and develop our brand around the globe."
A Wieden & Kennedy spokeswoman did not return calls for comment.