Effects of Starbucks Digital Network to Come this Fall

On August 26, 2010, wrote:

Having read Jay Baer’s blog post about the Starbucks Digital Network to come to all stores this fall, I became quite impressed with Starbucks’ movement towards material or person-to-person community, local-business support, and access to non-local news and entertainment sources, all for “free” or, rather, with the expectation of purchase.  I gain a sense that apartments with close-location to Starbucks may become a bit more desirable to those who may have previously frowned upon the purchase of cappuccinos stained by capitalism.  As Baer questions, “…does this change where you might go get your next cup of coffee and how you come to discover music and other consumer products,” he considers the shift in the meaning of ‘end content.’  Yes, I think this will affect where someone will buy their next coffee for a full sit-and-enjoy session, but not for those in and out purchases. And sure, this will affect people who already search and buy music from iTunes music purchases, but not for those who simply illegally download music or buy used.  By offering a never-ending place for purchase opportunities, that is, a free New York Times read with your coffee, a possible coupon text from a local business, those iTunes downloads, etc., you are offered exposure to typically fee-requiring sites in a particular setting and timing is to their advantage.  Baer articulates, “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.”

shot of starbucks digital network

Instead of paying the typical fee for access to news sites, you pay for coffee and get the news, iTunes music, local business text offer, among the plethora of other not yet discussed items to be had.  The exchange is no longer through monetary value but a “personalized” trade.  Your desired hot beverage, your choice of location of enjoying said beverage, and the combined length of these two things will determine your access to said opportunities, i.e., the trade.  The marketing scheme of Starbucks’ Digital Network is turned onto us.  It is not giving us a “newer, richer experience”; it is giving us a choice upon which we make more personal choices, which we would have done a bit more separately before.  While reading the newspaper at your local coffee shop is an established activity, Starbucks is now the Wal-Mart of coffee shops while retaining its small sized shops with infinite locations.  Baer points out the hyper-relevant advertisement aspect of Starbucks Digital Network using the, ‘while reading a New York Times wine article you receive a text from a local wine shop for a valid 3-day only discount on wine.’ example. This is the sort of purchase opportunity that is a part of the trade.  Any coupons, discounts, freebies to draw you in, etc, are offers that are meant to catch you.  Ordinarily, I take the deal for the things I buy with or without a discount and I presume this is quite similar for many others as well, which is why it appears a trade.  The trade is specific to what you want, are looking for, are offered; you gain a sense of personalization to your Starbucks Digital Network experience, even offline.  You are in the Starbucks you prefer, may encounter other locals you know or maybe recognize from other visits, see that familiar barista, etc.  Starbucks Digital Network is the bulletin board for those available puppies and wanted babysitters, on Internet; i.e., the platform for advertising.

“…The perceived value is high” (Baer), because it is our own volition and within in a community setting that articulates purchase opportunities, the value of which we feel like we give it because we participated in the “experience” of going to a place, buying one thing (coffee), and basking in all that single coffee can offer us, as a happening, an event. Creating the sensation of an event is why people go to a coffee shop instead of making at home in the first place. It is a part of the social package that we will come to expect more and more as things go online, companies claim their location, and re-quantify the concept of its product purchase to gain money from leasing out access to resulting customers as outside marketing opportunity for other companies.

The reason why I don’t see this as a threat to Facebook or other large social networking sites is because Starbucks Digital Network is built from a physical location with a purpose independent of online networking, that is, selling legal addictive stimulants, whereas Facebook is an online space with no independent product.  Facebook’s product cannot be singularly monetized as Facebook users determine the qualification and thus the quantification of Facebook space and the interactions that occur in it.  The thing that Starbucks Digital Network and Facebook may have in common is the value other businesses will pay to access users, except even still Starbucks Digital Network is not the website upon which things happen, it is larger as it is the acting connector to an infinite source of sites.  Social networking sites fall within the Starbucks Digital Network, and the Starbucks Digital Network is the connector between physical commerce activity, the buying of material items, physically consumable and addictive nonetheless, and the horse-sized pill of purchase opportunities that is the world wide web, sugar-coated with both realms of the social experience.

I am not sure if its just because I am too much of an obvious-connection maker or not but the first thoughts of competitors that comes to mind are other material locations, brands, companies that most likely already have WiFi that will attempt to also quantify their connection as well.  What would be interesting is if social networking sites worked towards what Starbucks has but backwards.  Social Networking Sites already build the bridge between people’s interactions and their physical locations, but why not act like Starbucks and quantify their space, materially?  People already create meet-ups, events, post real-time updates of their location; this again leaves the value of the physical actions to be determined by the involved social actors.  Social Networking Sites would have to try to gain ownership over the physical transactions developed online and in doing so the Sites could “sell” access to these physical transactions to advertisers, other businesses, that is, the companies that will be ultimately working with Starbucks first.

This is a post written by our social media intern Genevieve Costello

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One Response to “Effects of Starbucks Digital Network to Come this Fall”

  1. Joe McCarthy says:

    I share your enthusiasm for new opportunities that might emerge at or near the convergence of online and offline networks and communities.

    However, I don’t share your – or Jay Baer’s – conviction that Starbucks is getting (or will get) this right. In Howard Schultz’ recent interview at TheGrill media and entertainment conference, he made much of the “captive audience” and the various media partnerships (SnagFilms, WSJ, NYT).HSchulte did mention “local news” and – of course – “third places”, but as I wrote in a related blog post on The Starbucks Digital Network, Engagement, Enlightenment and Third Places, I think the increasingly engaging online experiences that Starbucks is promoting through its Digital Network will ultimately lead to greater disengagement and disconnection among those physically present in the stores, diminishing prospects for the enlightening and serendipitous conversations and connections in coffeehouses that Steven Johnson talks about in his recent TED Talk.

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