Community Management, Digital Marketing, Brand Communities, E-Commerce, Integrated Marketing and Media

Is Starbucks the Most Dangerous Competitor to Facebook?

Today’s post is a collaboration with Clinton Bonner, community connectivity expert, futurist, and blogger at Everything to Everything.

Starbucks is not only offering free Wi-Fi in all stores come this fall, but also unveiling their Starbucks Digital Network that all in-store web and mobile users will have the opportunity to enjoy (it’s a partnership with Yahoo!). Why would Starbucks need their own digital network? What impact could Starbucks’ brand of wireless connectivity have on consumer behavior? Plenty.

Imagine a customer-only network chock full of ‘In Network’ freebies that you can ONLY get while on ‘location’ (in this case at a Starbucks). Free access to premium news sites such as the New York Times and Wall Street Journal, free iTunes downloads, and for the kids free access to Nick Jr. games that typically require monthly fees.

Does this change how you might browse the Web, with your physical ‘branded’ location determining how and how much you pay for premium online content? Does this change where you might go to get your next cup of coffee and how you come to discover music and other consumer products?

Working Together to Remove Money From Your Pocket

What used to be content intended for all end-users to access the same way is now possibly just a piece of the marketing puzzle to properly equip cross-brand, cross-vertical collaboration and integration. What was once ‘the end’ purchase: a physical newspaper, a cup of coffee, or a digital song download is now a key cog in the greater scheme of getting the consumer to fork over more dollars, more consistently. Here’s a post from Clinton all about the band No Doubt and their successful shifting of the meaning of ‘end content’.

In the Starbucks case, it’s even more powerful. The consumer might frequent the Starbucks more, spend more money and/or time, or might really enjoy having full access to USA Today and become a converted, paid member. All of this marketing and purchase value is delivered under the cloak of giving you a new, richer experience. And it does indeed, which is why it’s so powerful. We’re willing accomplices in our own marketing funnel.

What’s Next (Potentially)?

Imagine a Starbucks patron is reading a review in the free version of the New York Times about a Chardonnay and suddenly their iPhone buzzes. A text coupon arrives in your mobile inbox and you are offered $5 off a wine purchase of $20 or more from a local wine purveyor. The coupon has a timed code and expires in 3 days, nudging you to act. The era of the hyper-relevant advertisement is upon us. And that example is just scratching the surface.

The means to deliver the right branded message, via the most influential medium, in the exact right moment is coming VERY soon. Starbucks could use their SDN to reinvent themselves as a key member of any local community, and not as a coffeehouse, but as the best-possible advertising platform available in every city and town in the country. Because of the commerce potential (subscriptions, coupons) a Starbucks local ad network (possibly empowered by Yahoo’s sales force) might even be a revenue share, making it even more efficient for marketers than Google Adwords or Facebook ads.

It’s capitalism and marketing at its most brilliant. Unapologetic intrusiveness, warmly invited by the customer because the perceived value is high.

If you were Starbucks, how would you take advantage of this new network?

Facebook Comments


  1. Anonymous says

    This is an interesting move by Starbucks, but hardly a competition to facebook. Odds are that plenty of folks sitting in Starbucks would use the free wi-fi to actually surf facebook.

  2. Anonymous says

    Hi Kailashiyer, thanks for the comment. Can’t argue with your point and neither can Starbucks… BUT they can and are attempting to shift the way you ‘act’ aka surf while on ‘location’ at their venue. Free access to a WSJ article or a free iTunes song I can instantly download will have me (personally) seeing what the SDN offers first, THEN going back to my old stand-by(s). Factor in that Starbucks is experimenting with bringing local brews (yes BEER!) to their coffeehouses… Now, it’s 2 years later, you walk into your fave Starbucks for a few micro-brews, you’re handed an iPad (complimentary loaner if you don’t own one) and an iPad driven social ‘game night’ (think Trivia or other social games) sponsored by a local community business (or featured micro-brew) has you there for hours forking over $6 a beer. These social games are run on their SDN, keep histories that are shared socially, and afford winning teams valuable discounts for that store and local businesses. Sure, you might check facebook while you are there, but that’s the point … you just spent 3 hours at a Starbucks !!!

    Suddenly, having a physical location matters again … and in BIG ways.

    What do you think Kailashiyer ? Thx again for the comment !

  3. says

    Howard Schultz (Starbucks founder) was brilliant in his idea to become everyone’s “3rd place”. You can see that in their decisions, collaborations and design. What they have been able to secure more than Facebook (as folks demand more privacy settings) is permission. Starbuckers will likely happily accept an interruption coupon from Starbucks, yet be tentative with any other business. Carefully crafting and leading the consumer experience in-store and virtually, has earned the company trust and admirable loyalty. I’ve settled with trying to become the 5th place (my grandma would be upset if I didn’t throw a house of worship in there). Experience=trust + loyalty, the formula is simple yet solving it takes work.

  4. says

    Brilliant point Mike. The trust they’ve built up makes it a lot easier for them to market directly, as long as that marketing is in context.

  5. says

    Interesting because some Starbucks are banning people with Computers during peak hours to increase table turn over.

    My one retort to your posit here Jay because it is a good one, is don’t we already have such networks available to us as proprietary networks and websites online. Isn’t every MMORPG also a threat in a similar manner? And isn’t this what AOL was all about?

    I would posit that Facebook has much more competition than the Ad Industry, Social Media Industry, or people scared of Facebook’s growth would have us think. Including this move by Starbucks. And Myspace has proven that we will invest major sweat into an identity online (way more than anyone has invested on Facebook) and left at the drop of a hat for something better. So on this note, Starbucks is a threat, and Facebook should feel threatened every single minute of the day because it will happen to them sooner or later.

  6. Anonymous says

    Nice points Mike but I would counter that the tentative will erode as the hyper-relevant emerges. There is a tipping point when an interruption becomes a welcome knock and the era of hyper relevancy will get us there. Starbucks will do this cautiously and correctly.

  7. says

    In theory, yes. But the difference is that Starbucks exists in the real world, making it more easily able to connect with real world advertisers to serve up offers and opportunities to customers. And per the comment above, Starbucks has a level of trust that AOL and MMORPG don’t enjoy – at least widely.

    I agree about Facebook in general. In 1999, Yahoo had 67% of the search engine market. You never know….

  8. says

    I also wish to add from a Business Management viewpoint one reason Starbucks has faltered is they left their core competency, which is the Coffee Experience and lost focus offering so many things they forgot who they were or why customers kept coming. So it is a risky, but potentially high reward move. I myself give them credit for the effort. Time will tell on the pay off.

  9. says

    It’s a risk that a lot of successful companies run. Saying “no” is so much harder than saying “yes”. Where would Yahoo! be today if they wouldn’t have abandoned search as a core competency back in the old days?

  10. says

    As someone who sometimes takes advantage of working in the “Starbucks” offsite office, I would love this concept. Wonder if they’re planning to offer goodies like “checkin” points toward lattes, etc? If I were Starbucks, I would get creative with the platform in all sorts of ways….imagine sitting at your table and ordering your drink/food from your laptop, and having it delivered? Imagine opting into a “crowdsourcing” activity when you log into your local joint….”everyone here today is working on an idea to help alleviate the litter problem downtown…want to join?” The possibilities are endless, and I’m intrigued as a marketer and as a consumer!

  11. says

    And what’s wrong with that? All this time, it’s been YOUR choice. Your choice to stay or not. Your choice to try out their network or simply use the free wi-fi to check Facebook. Your choice to buy a beer and/or play social games.

    Personally, I think this is brilliant on Starbucks’ part and I’m sure other coffee chains will be quick to emulate the formula. What I’m curious to know is how they leverage the cost of someone who spends 3 hours there using the network and only buys a cup of coffee. But then, I guess they’ve considered this.

  12. says

    Fascinating idea to develop a walled garden inside the store where content keeps you engaged and your butt firmly planted in a seat where another beverage or two will help you comfortably pass the time, a.k.a. Third Place. The original coffee houses started centuries ago in Vienna, Austria that launched the infrastructure to support cafe society. Its early traction came from providing a social setting where issues and concerns of the day and era could be shared and discussed. Expanding on that idea, could Starbucks create a form of branded journalism in its own news platform, complete with contributors and editors to develop content that’s not just valuable and engaging but also relevant to the environment where its consumed?

  13. says


    This would be a great move by Starbucks to be able to capture the folks who work from home/coffee shop workers to see what interests them (ie the WSJ or NYT for free, etc). Sure they may be searching FB but the amount of time that is spent will tell the real story.

    Starbucks can capitalize on this and take it to the next level; so long as they do not over saturate and give too many choices. FB is starting to hit that tipping point where there is too much and we know that too many choices, people walk away. Starbucks will have the eyes and ears of their audience and coupons/incentive-reward based deals will be well received so long as again there are not too many of them.

    Someday we will go to restaurants, bars, cafes and coffee shops and there will be ipads or something of the like. Remember when TV’s first hit the out of house scene? It is coming … who will be the first to take the risk?

  14. Anonymous says

    Hi Suzanne, wanted to reply to you. Tyranny of Choice as you’re describing is a real concern, but if it’s less about, here’s 22 offers choose one!!!, and more wisely about a specific offer to YOU based on what content you were reading and sharing AND what location you are at physically … ‘choice’ is actually eliminated and replaced by an invisible hand of marketing relevancy. Can they pull it off? Can they get THAT relevant, yes, but not sure how long it will take to do it properly. Thx so much for your comment!

  15. Bobby Hewitt says

    An extension / digital upgrade to offering free newspapers and magazines, stay around longer and you’ll get a second or third cup.

  16. Bobby Hewitt says

    An extension / digital upgrade to offering free newspapers and magazines, stay around longer and you’ll get a second or third cup.

  17. Bobby Hewitt says

    An extension / digital upgrade to offering free newspapers and magazines, stay around longer and you’ll get a second or third cup.

  18. says


    Ohh you bring up such a great point here. As marketers this is sensational. The search engines know what we are searching, FB with the like button knows where our loyalty stands so it makes sense that a brand will take a risk and develop their own network. I think it is the natural progression of the world of online.

    I think that Starbucks can pull it off as they have already changed the way that we order and drink coffee. They created an entirely “new” language (not literally of course as it is italian) for sm, med and lge that was sexier but also unique to them in the US. That was powerful. This is on a much broader scale. Sure some folks will be checking the FB but the amount of time that they will be spending on it, the amount of time on other sites will really tell a bigger story.

    Thank you so much for commenting back. I saw this one way as with choices and did not really consider that this would eliminate the choices.


  19. David says

    I’m not sure who is actually getting a better surge of energy from this deal, Starbucks or Yahoo. One thing mentioned that caught my eye is the idea of the kids relating to both brands. I can envision, as I see it almost every Starbucks visit, and I’m sure the research teams at Starbucks have seen it, kids playing online games while the mom’s are chatting – so the moms play aneffeective role in building the brand the experience of Yahoo and Starbucks for the kids. I think Starbucks (or better yet Yahoo) should provide the keyboards and screens! Then there are the Starbucks located next to the high schools. Might the juniors and seniors with smart phones (in keeping with your article’s point of mobile phone ads) receive messages with offers around 11:15 a.m., just before lunch break. Maybe a hello from a rock star introducing a discount off a CD, umm,.. with the endorsement of the local high school mascot? For each Grande Mocha you buy we’ll give .25 cents to the school fund. Maybe an invite to an after school study hall – caffeine experience optional. None of this poses a danger to facebook, because nothing the Starbucks site has is as addictive as a global reaching, member directed loyalty, ever growing, strongly habituated facebook experience. Let’s get real. If anything, Starbucks should up their product advertising on FB to support the launch of their new service?

  20. says

    We’re not big coffee drinkers but the Starbucks Digital Network might bring us there for meetings. Just came across your blog and love it. Keep up the great content.

  21. Anonymous says

    Awesome and precisely the point. Might appeal to newbies, can certainly keep regulars there longer/purchasing more, and those on the fencers who might go to DnD or McD or elsewhere for their cup, will probably say, “Yup, would love to read some free WSJ, I’m going to Starbucks.” … and that’s the surface … thx for your comment and how it may affect your consumer behavior, much appreciated!

  22. Anonymous says

    A little Grooveshark, a little Groupon. And a splash of re-targeting. H’mmmm. Will users be able to log into the network when they’re not at Starbucks because, believe it or not, some people can’t work all day in coffee houses (though I love how the one in town is always playing Sam Cooke).

    If they can tie it in with a killer content sharing network and, even better, an app, then Facebook would have issues.

    And Yahoo!? So, is that Bing instead?

  23. says

    Wow, that’s totally true. That’s an entirely different business model for Starbucks and potentially many more companies. I bet many more companies will start creating partnerships to advertise each other’s companies at the right time/right place.

  24. says

    Interesting post – and great signal-to-noise ratio in the comments!

    I have to say that I was initially interpreting your perspective as a negative one, perhaps misinterpreting your references to “unapologetic intrusiveness” and “willing accomplices in our own marketing funnel”. In one of your replies to another comment, I see you also say “There is a tipping point when an interruption becomes a welcome knock and the era of hyper relevancy will get us there. Starbucks will do this cautiously and correctly.” So I guess you see the Starbucks Digital Network as a positive development.

    I recently wrote a related post after watching a video of Howard Schultz at TheGrill media and entertainment conference, immediately after watching Steven Johnson wax poetic about the innovative culture of “liquid networks” in coffeehouses during his most recent TED Talk. In the post, The Starbucks Digital Network, Engagement, Enlightenment and Third Places, I raise questions about the costs of greater online engagement, especially to the probable diminishment of offline engagement and serendipitous connections that Schultz used to espouse in his advocacy of Starbucks as a third place.

    I have no doubt that Starbucks and its partners will profit handsomely from their unapologetic intrusions, but as a proponent of third places, and the conversations and community they promote, I am disillusioned with this latest announcement. Based on other comments on this post, including your own, I suspect this is a perspective not widely shared here.

  25. says

    The one advantage that Facebook has over the Starbucks network (admirably extrapolated in the post) is that in a recession-addled world, #fb is free, and not geographically limited in scope. However, I do agree with the general thrust of the post that the idea clearly has potential to sell more stuff.

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