Bree posted a link to Starbucks’ online coffee promotion - free brew-at-home coffee samples with the completion of a little flavor preference quiz.

While I definitely appreciated the nifty interactive interface for this promotion (Bree called it brilliant - I mean, who doesn’t want free coffee?), it’s actually a symptom of a much larger problem at Starbucks.

A BusinessWeek article published yesterday stated “Starbucks (SBUX) stock dropped 42.8% in 2007 and is down 14.7% since the start of 2008.” That’s cause for concern.

A result, many consumers are beginning to witness a massive re-branding exercise, aimed at improving Starbucks’ bottom line. This exercise began as far back as January when Starbucks re-elected company founder Howard Schulz as CEO. Immediately, Howard whipped up a “Transformation Agenda,” communicated to the public on their website as numbered announcements.

Here’s What’s Up.

Over a period of several years, Starbucks grew to become an Arcadia to coffee lovers. But, over the past couple of years, this paradise has begun to slip away from them.

Even though the company still maintains a loyal following (I know at least one person who goes their 2x per day every day), less loyal people are flocking to cheaper vendors who are now offering “premium” blends, such as McDonalds and Dunkin’ Donuts. A recent article even pointed out that McDonalds plans to launch espressos and mochas nationwide this year.

How Does Starbucks Plan to Regain Their Position?

Watching this Transformation Agenda come to fruition has been fascinating to watch. It’s a truly massive business, sales, and marketing initiative from top to bottom. The Agenda outlines the following courses of action:

• Slow the pace of U.S. store openings and accelerate internationally
• Discontinue warmed breakfast sandwiches at our North American stores (the smell interferes with the aroma of their coffee … Um, k.)
• Going forward, they will not report same store sales comps
• Reinvent partner training
• Reinstating regularly scheduled open forums in the field
• Bring back the Leadership Conference

Through the numbered announcements and other research, I was also able to identify the following.

• Adding Wi-Fi to all US stores (rolling out this service market-by-market to more than 7,000 Starbucks stores)
• In-store training for their more than more than 135,000 store partners in the US. (which included closing stores during this training)
• A reorganization that will eliminate 600 positions (mostly non-retail support folks)
• Introduction of the Park Place blend (the everyday Joe’s blend - smoother than most Starbucks blends that’s receiving very mixed reviews)

Ask the Customer

Throughout nearly every Agenda announcement written by Howard he stresses the importance to have a “laser focus” on the customer. This left me saying “but, are you talking to them yet??” Well, today I just discovered that the company is now soliciting feedback from customers through a CRM portal called “My Starbucks Idea.”

I’m not sure when it launched, but it is a pretty serious endeavor. Interestingly, the portal is powered by Salesforce.com - a sign of their commitment for this venture to be truly built around the customer relationship. Many ideas are very creative. Others are just painfully obvious - like frequent buyer cards. I suppose it never dawned on me, but Starbucks has never offered a buy 9 get one free card before!

Now, of course, what’s most important is what they do with this feedback. If they’re really “laser focused” on the customer, then the most important changes they make will stem from a consensus of pain points and ideas generated from My Starbucks Idea, in addition to the important business and organizational changes.

Going Back to Their Roots.

Another decision was made to - if only temporarily - bring back the store’s original logo, used on the coffee cup and sleeves.

It’s a strange double-finned mermaid thing (I should probably have known what this was, but I’m not up on my maritime mythical lore. Here’s what it is, if you’re curious. Funny, but I guess even the “new” logo is also this double-finned creature, you just see mostly her face). Anyway …. it’s not really the logo that matters. It’s symbolic of their commitment to bring Starbucks back to its roots - before they tried to be all things to all people. CDs, sandwiches, a shop on every corner…

What’s probably most promising is that this is clearly not a slapdash program. Howard and the rest of Starbucks’ leadership are executing on careful planning, and communicating to shareholders, the public, and their partners in a very systematic fashion.

What Do You Think?

So what does everyone out there think? What would you tell Tomer (our Director of Development) who has stock in Starbucks? Hang in there, or cash it in?

Everyone involved in digital marketing is well aware that every year — since, what, 2000? — has been named “The Year of Mobile.”

Without surprise, yet another year is coming up short.

AdAge came out with an interesting article (Why ‘08 Isn’t Mobile’s Year — Again [requires subscription to read]) that tackles the reasons why we have been prematurely forecasting every new year as THE year, along with fixes that make 2009 more probable.

AdAge’s outlined mobile’s challenges as:

CHALLENGE NO. 1: REACH (OR LACK THEREOF)
CHALLENGE NO. 2: MEASUREMENT
CHALLENGE NO. 3: COMPLEXITY
CHALLENGE NO. 4: THE MISNOMER OF MOBILE AS AD MEDIUM
CHALLENGE NO 5: THERE’S BEEN NO HALLELUJAH MOMENT

I think Ad Age did a really decent job of identifying the pieces of the puzzle that must fit together before THE year can happen. The biggest point is that the technology need to reach the masses is still not widely adopted.

“Of the 219 million U.S. wireless subscribers, just over 30 million are on data plans, according to M:Metrics. That means more than 86.1% still use mobile devices primarily for talk, which isn’t optimal for mobile marketing.”

Clearly, there is progress that needs to be made before mobile takes off. As AdAge suggests, beginning to define the elements that will create success now will serve us well when the audience is ready for it.

Atlanta’s Business to Business magazine published an article today called “The Millennials cometh” about the “next generation workforce” - people between the ages of 18 and 24, also called GenYers.

The article, written by Allison Shirreffs, was prompted by “a soon-to-be-published study by global professional services firm Towers Perrin indicates the things that make Millennials happy and engaged at work are also, give or take a little, what make GenX and Baby Boom-aged employees tick.”

It’s a very interesting article. But, I simply had to share it because our very own Amy Griswold is quoted and referenced throughout the article! In fact, our Recruitment Manager, Dave Church, is also quoted in this piece.

(Amy Griswold, Spunlogic Account Manager)

Give the article a read online, and we’d love to hear your thoughts on Millennials. Do you think their needs and interests in terms of work life are really all that different?

Spunlogic’s Vice President of Research and Innovation, Dr. Melissa Read, appears in 1to1 Magazine’s March/April issue, in the article “Can You Hear Me Now?,” which discusses how to capitalize on customer insights from research in order to build loyalty and customer satisfaction.

Dr. Read emphasizes the importance of setting expectations with customers, such as “letting customers know when asking for input that their feedback will be used to benefit customers like them - not necessarily just themselves individually - and that changes will most likely be made based on common issues that many customers experience.”

She also stresses the importance of collecting some open-ended, verbatim comments, since when leadership “sees customer problems brought to life in their own words, they often act quickly.”

In addition, she suggests that following through with those individual comments is something that should not be overlooked, for the benefit of the company as whole. As Dr. Read said, “Set up a system where feedback that is not relevant to your problem of interest is forwarded to the appropriate group in your organization. Don’t let somebody else’s valuable findings slip through the cracks or be discarded because they aren’t relevant to you.”

Read the entire article online. Registration is required.

MarketingVox just pointed me to a survey conducted by the Luxury Institute. Called the “WealthSurvey”, it uncovered that wealthy consumer membership in online social networks has reached 60% already this year.

This is interesting, but not as surprising to me as it was intended to be. I guess I would have thought that the wealthy - with their financial access to technology and desire to connect - would make them early adopters in social networks. But check this out: “consumer participation is up from 27% in 2007.”

That’s a pretty significant increase. This rise in participation among the wealthy set could represent a lot of opportunities for luxury marketers. The article suggests that luxury marketers should invest time and money in creating their own communities. However, I might suggest that existing communities - Facebook, MySpace, etc. - are equally if not more important, with communities like Facebook already leveraging the “influence” factor in their marketing programs.

In fact, the entire study appears to be based on existing communities: “Participation levels in leading social networks are: 16% for MySpace, 13% for LinkedIn, and 11% for Facebook. The wealthy average membership in 2.8 social networks, with an average of 110 connections.”

The article goes on to say “We are pleasantly surprised at the rapid acceleration in the over 55-year-old wealthy consumers whose participation increased five-fold, to 49%.” Now this is interesting and makes me wonder how much of this age group - wealthy or otherwise - is participating more heavily in social networks.

I’d like to get my hands on the full study, but perhaps this is only for the wealthy - hm, maybe somebody on A Small World can hook me up?

Here’s a quick snapshot of the study’s methodology:
I’m sure our Behavioral Research department would love this part (and be interested in knowing more details)

A national sample of 805 wealthy American consumers, with an average income of $287K and average net worth of $2.1 million, was surveyed online. Survey results are weighted to match demographic and net worth profiles of the same audience according to the latest Survey of Consumer Finances from The Federal Reserve.

By way of their AdWords blog, Google just announced that they will be penalizing companies whose landing pages load slowly; it will become an additional factor into Quality Score. Essentially, if you receive a low Quality Score as a result of a slow landing page you’ll receive higher minimum bids (it’ll cost you more).

Here’s their reasoning for adding load time criteria:

“Two reasons: first, users have the best experience when they don’t have to wait a long time for landing pages to load. Interstitial pages, multiple redirects, excessively slow servers, and other things that can increase load times only keep users from getting what they want: information about your business. Second, users are more likely to abandon landing pages that load slowly, which can hurt your conversion rate.”

Naturally, I see a lot of value in this - as we are an agency focused on the user experience. It seems like such a natural thing to weight this along with other criteria, and it will certainly improve the AdWords experience for the end user.

However, this does mean that folks - and their agencies - using AdWords need to pay some attention to their load times. Now, Google is giving you a chance to improve before they toss penalties at you. They will be offering time evaluations and providing a huge 30-day window to make adjustments.

Last night’s Atlanta Interactive Marketing Association’s (AiMA) event - “How Virtual Worlds are Impacting Interactive Marketing” - featured an exceptional group of speakers and really fascinating content.

The event’s panel was moderated by Del Ross, VP of Distribution Marketing (Americas) for InterContinental Hotels Group – and one of our very favorite-ist clients! The panelists included:

• Christopher Klaus / Founder and CEO for Kaneva
• Mike Donnelly / Director Worldwide Interactive Marketing for Coca-Cola
• Rhonda Lowry / Vice President, Emerging Technologies for TBS
• Paul Greenberg / Director of Consumer Marketing for The Weather Channel

This event was special not just because Del wore his best jacket-tie combo, but because it was actually simulcast in-world. So people attended the real-life event and others logged into Crowne Plaza’s The Place to Meet island in Second Life to see it broadcast.

Check out a quick video of how this looked from Second Life:

Attendees were treated to great insight from leading brands who have done more than just dabble in virtual worlds. A few interesting take aways:

Coca-Cola has been active in virtual worlds for five years, taking a very deliberate approach to how they engaged in this medium. They wanted to allow their fans the freedom to enjoy the brand while at the same time providing some structure around doing so. For example, one of their projects was a contest - allowing users to submit ideas that would satiate their fan’s thirst for “an experience” (a play on words). The result was creative - and very brand adherent - ideas.

The Weather Channel is one of the most popular island’s in Second Life. They took a gaming slant in their space. This has led to a tremendous amount of sports-related activities on their island, such as mountain biking and surfing. Residents have even taken it upon themselves to hold surf contests!

Turner has also been involved in virtual worlds for quite some time. Their CNN brand allows Second Life users to be in-world reporters (a version of the real life iReporter). Another one of Rhonda’s more interesting case studies was about tapping into an existing Myst Uru fan base of hundreds of people in Second Life as a way of promoting their own Myst Uru world outside of Second Life.

Finally, Kaneva’s Christopher Klaus provided his perspective on what he believes will shape virtual worlds in the future. His belief is that many people will look to virtual worlds as a social outlet, which is why Kaneva is built to support this kind of culture. His stance is that while many of the worlds that are more fantasy-based will always have a core fan-base, others would be wise to create an environment that fosters social networking.

I’m a frequent Adfreak reader. Yesterday, I came across a post that made me laugh.

A Northwestern University report (”If It Catches My Eye“) discovered something *unbelievable* — “Teenagers find online news troubling and a reminder of the world’s dangers. Meanwhile, time spent on YouTube or social networking and music downloading sites as a treat.” No way!!??

The study goes on to suggest that “news organizations should cultivate teen audiences by learning what appeals to them and diminishing their angst.” Seriously? Trying to diminishing teen angst would be like trying to tell salmon not to swim upstream.

But before I was tempted to tear further into this study the way Adfreak did, I did some reading. What I found was a 56-page study, a product of Northwestern University’s Media Management Center - a “qualitiative, in-depth study of a diverse group of 65 Chicago-area teens in 2007, seeking to identify what drives the online news consumption of teenagers.”

The purpose was to help news organizations more effectively attract and serve teens. 65 is a small sample size, yes. But, it does offer some insight into the thoughts, reactions, and behaviors of teens using the web on a daily basis.

My thoughts relate directly to one of my recent blog posts (Another Teen Community?) where I talked about the genuine importance of the teen population as an indicator of future marketing practices. We would be foolish to ignore a study that could provide valuable insight into the behavioral patterns influencing our next generation of adult consumers.

Some key findings from the study:

• Researchers repeatedly heard the phrase, “I will read it IF IT CATCHES MY EYE.”
• Few said they look purposefully for news. Rather, reading news is usually something they do if they happen upon it while doing something else.
• They look at news online an average of two or three times a day on weekdays.
• Teens tend to get news more from giant news aggregators and portals than from traditional destination products or news brands.
• They find the news stressful, not enjoyable.
• Teens don’t seem to differentiate between sites that generate news stories and sites that aggregate them.

My final thoughts:

They’re teenagers. In time, news will be more more interesting to them. The key question is what behavioral patterns will have developed by then that will influence their consumption of news and media?

News organizations - heck, any marketers - need to be thinking about how teens take in information, as this will likely be translated in many ways in their adult life.

The study said “when it comes to news, most teens are grazers.” This is important. Really all of us are grazers right now. In today’s digital society, we consume information very differently than even 10 years ago - we check news and email from mobile devices, we skim RSS feeds for top headlines, and watch headline news channels to gather snippets of the day’s top stories.

Understanding how teens consume information now is critical to marketing and selling to them 10 years from now as adults. The report also provides some interesting and detailed recommendations for news organizations trying to reach teens that as marketers should sound pretty familiar. One such recommendation is “go where they are” - a concept we often discuss when it comes to social marketing and online media.

One simply has to marvel at a man who, in Microsoft, has built an unquestionable empire. However, nowhere in my years of following Bill Gates have I thought “I’d like to watch football and have a beer with that guy.” He has, in fact, always been portrayed as a man with no personality (if not an evil one). Think back to Pirates of Silicon Valley.

Tangent: I actually just had a conversation with a couple of co-workers last week about Geeks being the new Cool. It’s true. I remember somewhere around 6 or 7 years ago watching an episode of Buffy the Vampire Slayer (shameful, I don’t know why I just admitted that) where Buffy called a group of kids at her school “geeks.” These would be the computer lab-frequenting, Internet-savvy group of future business moguls she was referring to. I was insulted on behalf of all “geeks.”

Years later we live in a time where you’re not “with it” unless you have a Facebook account, the latest and greatest smart phone, and know who John Hodgman and Justin Long are. Even better, the more somebody knows about technology - the cooler they are.

Anyway … back to Bill. Jeff Hilimire forwarded me this video:

On the brink of departure from his day-to-day job at Microsoft (set for July), Bill decided to have some fun during a keynote at CES 2008 by showing a scripted, yet very entertaining video where we get a glimpse of how cool and fun he can actually be.

In a parody of what Bill’s last day on the job at Microsoft might be like, he endlessly pokes fun at himself - from workouts with Matthew McConnaughey where he’s told he’s “not ready” to take his shirt off, to an awkward experience with JayZee where his hopes of a rap career are dashed.

Sometimes the coolest people are those that embrace the parts of themselves that others might pick on. I had a blast watching this video!

If you haven’t already heard, it was announced in the last week or so that HarperCollins & MySpace have partnered to create an online community for teens. The Computerworld article I read says: “The community will allow teens to create their own profiles, including photos. The teens can also post their own creative writing stories for review by other teens.”

Certainly there are already hundreds of online communities for teens already?? So, I did a quick Google on the obvious search term “teen community,” which provided dozens of pages of results, including Teenhut.com, Teen Second Life, GreenTeen.org, and many more. I even found an online magazine, Teenink.com, written entirely by teens. Heck, even MySpace and Facebook should count as a teen community (even though old people like me can get in).

Is HarperTeen really just another teen community?

It’s always been my belief - and certainly that of all people in the interactive marketing industry and beyond - that teens are the predictors of future behaviors, technology, and marketing. Unlike folks in my generation - who took a typewriting classes in high school and had a party line (not as fun as it sounds) on their home phone - this “next generation” is a population of people who have literally grown up with technology.

My 9 Year Old Son.
I have a 9-year old son; and while he might not be a teenager, he is an excellent example. Jeffrey has schoolmates who actually have cell phones (and nicer ones than mine at that). He has multiple gaming stations, hundreds of channels to surf on the satellite dish, an active email address, surfs the web in school, and is a member of the Webkinz online community.

Teen Influence.
Beyond the definite edge these teens will have as they wave into the business world, this group has powerful influence right now. In fact, a recent report by Pew Internet and the American Life Project, found that “content creation by teenagers continues to grow, with 64 percent of online teenagers ages 12 to 17 engaging in at least one type of content creation, up from 57 percent of online teens in 2004.”

And, as my Jeffrey example suggests, teenagers have a wide variety of communications options. Because these teens are tech-savvy, they lean heavily on communication methods like instant messaging and social networks. The report shows that “39 percent of online teens share their own artistic creations online such as artwork, photos stories or videos, and “26 percent of online teens remix content they find online into their own creations.”

Bottom line, teens aren’t just waiting around for their turn to influence the development of technology when they “grow up;” rather, technology is constantly being created for them.

HarperCollins & MySpace.
This partnership makes a lot of sense. HarperCollins is one of the world’s largest publishing companies; reaching out to teens now is a wise move. Giving users something unique, and freedom in their participation is what they will need to be successful.

I did dig around a little on the site, and I have to say that it is actually fairly nice - not something I would typically say about a MySpace page. Both the style and functionality are appealing. And, they have 19,212 friends … not too bad.

HaperTeen is also holding a writing contest for MySpace members through January 7th, with a $5000 prize. Certainly HarperCollins has conducted many writing contests in more traditional models over the years. However, this contest does have a not-so-surprising spin, the final winner will be decided on by HaperTeen members. The good news is that people really do seem excited, with nearly every comment relating to the contest, and all of the user-created forums dedicated to it.

From my perspective, the biggest challenge for HarperTeen will be maintaining interest after the contest ends. So I’ll be keeping my eye on this, I’m curious to see how well they are able to foster community over time.