Starbucks seeks to add agency to its global roster

Starbucks is conducting a review to add an agency to its global roster, Ad Age has learned. While the full scope was not immediately clear, a person familiar with the matter said it may encompass both media and creative duties. Three major holding companies—WPP, Stagwell and Interpublic Group of Cos.—are said to have agencies in the hunt, along with an indie currently on the coffee giant's roster. Joanne Davis Consulting is handling the review, according to multiple people close to the situation. Joanne Davis Consulting referred calls to Starbucks, which declined to comment. Agency Review Tracker Stay up to date with the latest account reviews Click here SPCSHP, which recently rebranded from Big Spaceship, is Starbucks’ creative agency of record, according to its Ad Age Small Agency Awards entry. The agency is participating in the pitch, according to a person familiar with the matter. SPCSHP declined to comment. Starbucks also works with multiple Publicis Groupe agencies. Spark Foundry handles U.S. media for the coffee giant, while Leo Burnett Toronto is an agency of record in Canada. Publicis, which declined to comment, is not believed to be part of the pitch. A dedicated WPP team is in the running, a spokesperson for the holding company confirmed. VML and Landor are believed to be part of that team, among other WPP agencies, multiple people close to the situation said. VML declined to comment. Landor, which has previously worked on Starbucks’ packaging business, could not be reached for comment. Stagwell’s Anomaly is also participating in the review, according to multiple people familiar with the matter. Anomaly could not be reached for comment. Interpublic Group of Cos.’ FCB is believed to have been invited to the pitch, but the agency declined to comment. Times of change Last week, Starbucks replaced CEO Laxman Narasimhan with Chipotle CEO Brian Niccol. The pitch, which began earlier this summer, is continuing amid the leadership transition, multiple sources told Ad Age. Starbucks’ worldwide advertising expenses totaled $507.8 million, $416.7 million and $305.1 million in fiscal 2023, 2022 and 2021, respectively, according to the company’s annual report. In the U.S., it had measured media spending of $224 million in 2023, down from $376 million in 2022, according to Vivvix, including paid social data from Pathmatics. In its latest annual regulatory filing, Starbucks said its “continued success” depends in part on its ability to adjust its “marketing, promotional and advertising plans and pricing strategy to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences.” The CEO change and agency review come as Starbucks deals with challenges, including a slight net revenue drop in the last quarter. Sales in China and the U.S. have slumped in particular. North America same-store sales declined 2% in the fiscal third quarter, marking the second consecutive quarterly decline. The number of orders placed also declined by 6% and China’s same-store sales declined by 14% in the quarter, Starbucks reported. There have been multiple reasons linked to the sales slump, including a change in consumer habits as some cut back on spending, operational issues and boycotts related to Israel-Hamas war. Starbucks has also been linked to ongoing union negotiations. Former Starbucks CEO Howard Schultz called the Starbucks mobile app “the biggest Achilles heel” for the coffee chain during an episode of the “Acquired” podcast in June. Starbucks will also be looking to improve its in-store experience, especially during the morning rush. The speed of which mobile orders get filled is part of the issue. “Everyone shows up, and all of a sudden we got a mosh pit, and that’s not Starbucks,” Schultz said during the podcast. Prior to the CEO change, Narasimhan said the chain was focused on speeding up its service in stores, especially for digital orders. Despite those challenges, Starbucks’ mobile order and pay (MOP) revenue was up 10% year-over-year in the most recent quarter, and the number of MOP transactions increased 7%. Starbucks has also introduced new products. In April, Narasimhan said lavender drinks was one of the company’s most successful launches. Contributing: E.J. Schultz

Starbucks seeks to add agency to its global roster

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