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Coffee Chain Reaps Big Returns on Election Day Promotion

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CHICAGO ( -- Only at Starbucks could a single broadcast spot, an online ad buy and a product giveaway -- all of which cost well under $1 million -- pay off with a chunk of the Election Day news cycle.

The java giant aired its first TV spot in a year, from BBDO, New York, on Nov. 1 during NBC's "Saturday Night Live" presidential-election special, offering a free coffee to anyone who said they voted on Nov 4.

Starbucks election giveaway ad
Easy as 1, 2, 3: Giveaway boosted positive buzz 26 percentage points.
The company won't say how many cups of coffee were given away or disclose the cost of the promotion. Participation seemed to vary wildly by area. One downtown Chicago Starbucks reported giving away more than 300 coffees, while a nearby location estimated the giveaway at about 100. Some New York-area locations seemed to have tepid responses, and at least one location in Virginia was charging customers for coffee if they didn't ask for it for free.

John Moore, a former Starbucks marketer, estimated that between 12% and 15% of customers are drip-coffee drinkers, and that each of the company's 7,100 locations serves about 800 people a day. Those figures would set a conservative giveaway estimate at 568,000. Starbucks' cost per cup is about 30ยข, according to several executives familiar with the matter, which would put the cost of the giveaway at about $170,000.

Muffin with that?
However, about one in every five or six Starbucks customers buys food, executives said. If that held true during the giveaway, and each of those people spent even $2, the company could have made money on the promotion. Starbucks has said 75% of its sales are beverages sold in-store, and most of the remaining 25% are food sold in-store.

An executive familiar with the matter estimated the "Saturday Night Live" spot could have cost as much as $350,000. But the value of coverage relating to the giveaway -- from The Wall Street Journal, CNBC and Newsweek, to name a few -- as well as rampant blog chatter likely superseded the chain's investment. Many of those organizations, including the Journal, posted the Starbucks commercial along with their stories.

The giveaway tactic also boosted the company's buzz rating, according to Brand Index. Starbucks' positive buzz rating jumped from 25% on Oct. 31 to 51% on Nov. 5. "This was a strong and well-timed promotion," said Ted Marzilli, senior VP-brand group at Brand Index parent YouGovPolimetrix, in an e-mail. "There has been huge interest in this election (as measured by the voter turnout) and likely a lot of positive word-of-mouth, particularly given that the promotion ran on Election Day (a workday), when many people could spread the word to their colleagues."

Not a bad return on the first big pitch from BBDO creative chief David Lubars, who had presented the idea to Starbucks CEO Howard Schultz and his marketing team less than a week before. "It's probably more likely to get done that way," one executive said of the last-minute planning. "Because Starbucks is such a consensus-making decision environment, the more time it has to sit around, the greater the chance it won't get done."

The executive said Mr. Schultz has wanted his company to be part of Election Day for years.

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Contributing: Bradley Johnson and Abbey Klaassen
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