The marketer appears ready to give its business to Fallon McElligott, Minneapolis. Former BBDO West executive David Lubars, who was credited with winning the high-profile but low-budget account for BBDO, last April became creative director at Fallon.
Mr. Lubars has been courting the coffee company for months, said one agency executive who asked not to be identified. Fallon could not be reached at press time; BBDO declined to comment.
A Starbucks spokesman confirmed a move, but would not say if it was awarding the account to Fallon.
"We're in a transition right now, and we will be moving the business," he said. "I don't have any more details to share at this time."
Starbucks has made a national name for itself with virtually no traditional advertising. The $1.3 billion company did test the waters with three TV commercials in spring 1997, but there has been no TV since then.
That campaign, a $7.5 million effort from Goodby, Silverstein & Partners, San Francisco, ran in 11 spot markets. Ads were tagged "Starbucks, purveyors of coffee, tea and sanity."
Just four months later, Goodby -- Starbucks' first agency of record -- lost the account to BBDO.
Since then, Starbucks has spent little on advertising, and has depended instead on local promotions and in-store materials to market the brand. It spent a mere $2.9 million on measured media through June, split among outdoor, print and spot radio, according to Competitive Media Reporting.
MAY HAVE TO INCREASE ADS
Industry observers said that as Starbucks continues to expand its brand beyond its 1,500 U.S. retail cafes to supermarket aisles and abroad, it may be forced to step up broadcast media efforts.
"They continue to go at 100 miles an hour without a lot of advertising, [but] at some point they are going to have to start," said Kevin Keller, a professor in the graduate business school at Dartmouth College. "They've broadened their market so much you would think in some ways it would just be cost-effective for them to be broader in their communication."
A major new project for Starbucks is a marketing link with Kraft Foods to expand distribution of its bean coffee into supermarkets. The brand is now sold in some 3,500 supermarkets.
Kraft will have marketing and advertising responsibility for the brand's packaged coffee. Ogilvy & Mather, New York, handles Kraft's Maxwell House coffee brand, but it's unclear what agency would create Starbucks advertising.
Ann Fudge, president of the Maxwell House & Post Division of Kraft, told Wall Street analysts meeting at Starbucks' Seattle headquarters late last month that she doesn't envision heavy TV support for the line.
The Starbucks spokesman said it's "too early to speculate" on future ad efforts.
Contributing: Mercedes M. Cardona, Alice Z. Cuneo