I have written a couple of times (here and here) in the past about Starbucks and the rationale for utilizing digital signage strategically in their stores. Perhaps writing about Starbucks is an unhealthy obsession, but their recent unveiling of the Starbucks Digital Network (SDN) is worthy of examination. Many folks have had a chance to contemplate it, experience it and review it at this point. What I’d like to do is try to explore whether this is an initial foray, a precursor to something grander, or a just one-off splash.
The SDN is a curated, content rich experience available only within Starbucks stores. The company has been offering free WiFi for some time now, and has a very good handle on how many of its customers come in, connect and dwell in the cafe for a period of time. Now it wants to “enhance the experience” of those users by offering premium content, and they have attacked that in a big way. With partners ranging from the Wall Street Journal and the New York Times to Yahoo and Foursquare, just to name a few, Starbucks has enlisted top shelf content providers. The SDN is not the only thing that WiFi users inside the stores will have access to. Customers will still have access to the rest of the web from their various devices.
I find the approach interesting for a couple of reasons. First, it is notable that Starbucks has taken a content-first approach, and have a well-considered content strategy. They have selected content that is consistent with the image they portray as a premium provider of coffee, food and curated music. It makes sense. Mark Walsh, blogging for MediaPost, wonders aloud whether it does anything for Starbucks besides adding cost. He asks whether SDN will attract incremental customers that WiFi alone does not, and that is a reasonable question, and one that may provide a clue to an overall strategy. Hold the thought.
The second interesting aspect of the SDN is that Starbucks has offloaded the cost of the network endpoints to the customers. All of those laptops, iPads and smartphones don’t cost Starbucks a penny. There is no media player on site serving content, as it is all web-based and hosted by Yahoo. It is pull, not push. They are effectively saying to the customers: if you want access to relevant, high quality content, here it is, bring your own device. All of the costs to Starbucks are centralized, and when allocated across their thousands of stores probably do not amount to a huge blip on the radar. Think about it for a moment. It is like television in a way. The channels are there, all you need is your own TV to watch them.
I find it ironic that we endure so much constant braying in the digital signage community that “content is king”, yet when the ideal poster child for digital signage embraces that approach, it ends up being being part of a strategy for avoiding the deployment of digital signage. That is why I think that in the end, the SDN as it exists today will actually be a first phase of what will be an emerging digital content approach that WILL include digital signage. All of the content will be measured by web analytics, so Starbucks and their partners will be able to understand what is most relevant to the community. Most of it could easily be translated to a larger screen. Today, the SDN is purportedly ad-free or nearly so, but its appeal is highest to people who have already made a purchase and settled into a chair or couch. It will be difficult to impact decision making of transient customers via their mobile devices. Ultimately, taking the best of the digital content (including music) and marrying it on digital screens with Starbucks-centric messaging as suggested here may turn out to be the best route to moving the needle on new products, average ticket and dwell time. I think that Adam Brotman and his team are in learning phase in a highly measurable environment. Once they understand the uptake on SDN and specific elements of the content offering, they will eventually apply those learnings to efforts that sell more stuff. Public companies survive on same-store sales growth. Phase 1 of SDN probably won’t have an impact there. But you can bet that corporate imperatives will morph SDN into a driver of revenue growth in future phases. Something is brewing, and pull will turn to push when the timer goes off. That may be when the big screens begin to appear.
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