Coca-Cola spends $2.5 billion on advertising. Nike spends $1.7 billion. Starbucks, at $87.7 million, is a different story.
While McDonald’s was lovin’ it, Coca-Cola was the real thing and Nike wanted us to just do it, Starbucks was throwing parties instead.
The coffee retailer, based in Seattle, takes an unconventional approach to marketing, choosing parties and other in-person encounters over big national advertising campaigns.
“So much of the relationship with the company exists between you and that barista behind the bar,” said Brad Stevens, Starbucks’ top marketing executive. “We haven’t been able to conceive of a way for TV advertising to repeat that, to capture the heart and soul of the company.”
Starbucks runs occasional ads for certain products, and toward the end of each year it buys holiday-season advertising. There’s also a full-page ad in The New York Times every Sunday focusing on subjects such as environmental awareness.
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But those are exceptions, and Starbucks spends far less on advertising than other large retailers and consumer-products companies. It doesn’t even pay for big play, called product placements, in movies such as “The Devil Wears Prada” and television’s “The West Wing.”
In fiscal 2005, Starbucks spent $87.7 million on advertising, which includes billboards, online advertising and signs at Safeco field. That’s about 1.4 percent of its 2005 revenues.
For comparison, Coca-Cola spent $2.5 billion, and Nike spent $1.7 billion during their most recent fiscal years, each about 11 percent of revenues.
Starbucks’ events are not included in its advertising budget, and it does not disclose how much the parties cost.
Some are large, like an outdoor samba party in Miami this summer celebrating a Miami Art Museum exhibit called “Big, Juicy Paintings” and the launch of Starbucks’ first juice-based Frappuccinos.
Some are glitzy, like a shindig at Trump Tower in New York City this past spring where celebrities such as Miss Universe mixed banana coconut Frappuccinos using stationary bicycles fitted with blenders.
Sometimes Starbucks is not the main host. It co-sponsors local events, such as Bumbershoot, Seattle’s annual music and arts festival.
Nationwide it participated in the literacy nonprofit Jumpstart’s “Read for the Record” campaign by selling copies of “The Little Engine That Could” and holding readings of the book in stores.
In April, it helped Elle magazine throw a party in Los Angeles for the unveiling of its Green Issue, including serving green tea Frappuccinos to guests that included Julia Louis-Dreyfus and Rosanna Arquette.
Free brew went to regular folks as well on March 15, when Starbucks hosted a nationwide coffee break, giving free coffee to customers who visited any U.S. store from 10 a.m. to noon that day.
It is one of many companies, including automakers and Procter & Gamble, using nontraditional marketing to reach customers, said Ed See, chief operating officer for Marketing Management Analytics, a Wilton, Conn.-based marketing-effectiveness consulting firm.
In some ways, Starbucks’ approach is a throwback to the way businesses appealed to customers before the mass media came along, he said.
“At the end of the day, advertising has been a poor substitute for community communication,” See said. “Starbucks went back to basics, and they’ve approached the basics with a science and intensity that no one has ever done before.”
The company measures success differently for each event, and Stevens said the point is not to save money.
For some parties, like an all-day coffee festival this summer in Reston, Va., it was enough to have entertained the 5,000 people.
Other events, like the national coffee break, make the local or national TV news as well, which Stevens figures is more valuable than paid advertising.
“It’s a real event, not a preplanned message that I think consumers oftentimes have blinders to,” he said. “This is a real thing that happened. It’s intriguing, it’s fun. … That’s why I think it’s more valuable. It’s just more authentic.”
Melissa Allison: 206-464-3312 or firstname.lastname@example.org