ANDREA JAMES
P-I REPORTER

Starbucks won’t slug it out in ad wars

Coffee chain says it’ll take high road

McDonald’s has erected a billboard in sight of Starbucks headquarters declaring, “four bucks is dumb.”

If Dunkin’ Donuts’ taste test commercials were the schoolyard equivalent of blowing spitballs at the coffee giant from afar, then the latest from McDonald’s is like pulling a wedgie. Starbucks employees driving northbound can see the billboard on their way into the city.

Another billboard slogan jabs, “large is the new grande.” The two phrases are displayed on 140 billboards in Western Washington, some of them near Starbucks cafes.

“The billboard placement was done because we picked high visibility locations,” said Alan Finkelstein, who owns four McDonald’s in King County. “We really wanted to point out that ordering an espresso at McDonald’s is quick and simple. Small, medium and large. It’s easy.”

Earlier this year, McDonald’s started unsnobbycoffee.com to promote the launch of espresso drinks in the Seattle market.

Will Starbucks respond in kind? Unlikely.

While the coffee wars received much media and Wall Street trumpeting this year, Starbucks has been mostly silent, maintaining that its customer base is different.

Starbucks could fire back that not all of its coffee costs four bucks, or that extra cents help pay for health care for baristas. (A 12-ounce cup of brew starts at $1.40 at Starbucks, a penny more than the average McDonald’s brew price. A small McDonald’s latte costs $1.99 compared with $2.45 to $3.15 at Starbucks.)

Instead, it is fighting back in a more subtle way. Executives have hinted that Starbucks is taking the high road.

“We get a lot of questions on the competition and that everyone seems to be picking on Starbucks through their advertising and try to reposition Starbucks as expensive or snobby, and, boy, when is Starbucks going to start advertising and join in that coffee conversation?” Starbucks Chief Marketing Officer Terry Davenport told investors last week in New York.

“We’re not going to get into that conversation. We’re not going to get sucked into the, ‘My coffee is better than your coffee,’ price point type of coffee conversation. We’re going to play at a much higher level.”

Starbucks is relatively new to the advertising game after two decades of building its brand on word of mouth. However, armed with newly hired advertising agency BBDO New York, Starbucks placed two commercials recently. One, which ran during the “Saturday Night Live” show before Election Day, advertised that Starbucks would give out free coffee Nov. 4.

The second ran on the heavily traveled Wednesday before Thanksgiving, on the Weather Channel and CNN, to let customers know that Starbucks would be donating portions of coffee sales to help African AIDS victims.

The coffee giant also is turning to cheaper modes of advertising via YouTube, Facebook and Twitter.

During an interview that aired this week with CBS anchor Katie Couric, Starbucks Chief Executive Howard Schultz made clear his feelings about one of the rivals.

“I think the way we deal with that is not to respond to something that’s that frivolous,” he said. “Are you going to say to your friend, ‘Let’s go meet at Dunkin’ Donuts?’ Are you going to say that?”

He pointed out the “Saturday Night Live” advertisement as a success. “We had an amazing response to that. Amazing.”

More insight into how Starbucks’ top brass really feels about McDonald’s and Dunkin’ can be found in ousted Chief Executive Jim Donald’s severance agreement, in which he was prohibited from working for either competitor, but was permitted to work for Burger King.

Even though Starbucks won’t play along publicly, it’s still fun to pick on the company, said consumer anthropologist Robbie Blinkoff, who studies consumer reaction to the financial crisis.

“It’s even more fun now with the economy,” Blinkoff said. “I’m back and forth about my love, hate with Starbucks. I love to hate them.”

A new type of consumer, more conscientious, less vain, is emerging. Fewer will be “slaves” to Starbucks, he said.

“We’re going to come out with a new identity. It doesn’t mean that people won’t go in and buy a Starbucks cup of coffee, but they’ll know why they’re buying it again. It’s more like a reboot.”

The advertising campaigns against Starbucks signal a shift in the rules, especially when a corporate behemoth such as Oak Brook, Ill.-based McDonald’s goes after a company half its size.

The commonly held wisdom that attack ads are an underdog’s game no longer applies, said Emily Bryson York, a Chicago-based food reporter for Advertising Age.

Attack ads are popular right now: Mac vs. PC. Campbell’s vs. Progresso. Dunkin’ vs. Starbucks.

“A big part of this is the economy and marketers feeling like the economy is in horrible shape, people have fewer discretionary dollars and you have to sharpen your elbows,” York said.

McDonald’s is trying to build up its coffee credibility.

“That at least seems to be why they’re going after the Seattle market so aggressively,” York said. “The thing about these comparative campaigns is you have to hammer away at them for a long time. You can’t just hit someone and then run away. You have to have a lot of marketing dollars to put behind it and that’s something that McDonald’s could theoretically do.”

It’s unclear whether McDonald’s will take its “four bucks is dumb” campaign national. Nationwide, 4,000 out of 13,000 McDonald’s restaurants sell espresso and the number is growing. Out of the 190 McDonald’s in Western Washington, 155 sell espresso.

“We see ourselves as trying to enter a new category and steal as much of the breakfast and coffee share as we can garner,” said Kelly Hoyman, Northwest region marketing director for McDonald’s.

The fact that “four bucks” sort of rhymes with “Starbucks” is not on purpose, said John Livengood, executive creative director at DDB Seattle, McDonald’s advertising agency.

“The idea is, in a billboard, you got three or four seconds to capture people’s attention,” he said. “You’re trying to be as short and sweet and as pithy as possible.”

No matter what McDonald’s does, Starbucks is likely to stay on its own message, and surgically pick advertising spots that promote social responsibility.

Says Starbucks chief marketer Davenport: “The answer to how we’re going to respond to the competition is we’re not going to respond. We’re going to keep doing what we do and we’re going to keep doing it our way.”

P-I reporter Andrea James can be reached at 206-448-8124 or andreajames@seattlepi.com.

© 1998-2008 Seattle Post-Intelligencer

STAFF REPORTS

The cinema advertising revenues of Cinema Advertising Council (CAC) members grew 18.5% in 2007, to $539,946,000 from $455,661,000 in 2006, according to a CAC report. CAC members account for some 82% of US movie screens, the organization said.

On-screen advertising revenues – approximately 92% of total cinema advertising revenues – increased 18.5%, to $494,622,000 in 2007 from $417,401,000 in 2006, and off-screen revenues grew to $45,324,000 in 2007, an 18.5% increase from $38,260,000 in 2006, according to the report.

On-screen cinema advertising includes commercials airing in advance of movie previews and the feature presentation; off-screen revenues include those derived from audio programming, sampling, special events, concession-based promotions and lobby-based promotions.

Approximately 74% of total revenue is from national or regional advertisers, with growth attributable to increasing activity across a broad spectrum of national advertising categories, including Automotive, Broadcast/Cable, Government/Educational Institutions, Consumer Packaged Goods, Media, Movie Studios, Wireless, Retail/Stores and Telecommunications, CAC said.

CAC attributed off-screen revenue growth to advertisers’ using a variety of media options, including concession-area marketing (up 48%), in-lobby and in-auditorium audio programming (up 207%), and in-lobby sampling programs (up 374%).

Stu Ballatt, president and chairman of the CAC, noted that cinema advertising’s growth in 2007 was also buoyed by revenue growth in local advertising. Leading local advertising categories include Auto Dealerships, Education, Government Services, Media, Medical Health Services, Restaurants, Telecommunications and Universities.

“More advertisers are using cinema more frequently, committing ad dollars ‘upfront’ for multiple flights as cinema has proven its value and efficiency as a sustaining media,” said Ballatt.

“Further, many advertisers are taking advantage of the extensive off-screen options cinema has to offer; used in tandem through integrated campaigns, on-screen advertising combined with off-screen marketing in the theatre can, literally, double or triple the impact a brand can make on the moviegoer.”

The CAC report was independently tabulated by Miller, Kaplan, Arase & Co. LLP, CAC said.

Jennifer Saba

NEW YORK Total advertising revenue for the newspaper industry is expected to decline 11.5% to $40.1 billion this year, according to the Newspaper Association of America.

The organization forecast that by 2009, ad revenue declines would not be as steep — total ad revenue is expected to drop 5.5% to $37.9 billion that year.

The loss of dollars in 2008, which if the NAA proves to be correct will be the largest decline the industry has seen since the association started tracking results 58 years ago, is due to plunges in print advertising. The forecast is in the September issue of Press Time.

But what is very troublesome is the slowdown in online ad revenue growth. The NAA estimates that in 2008, it will still be in positive territory, up a scant 1.8%. In Q2 of this year online ad revenue fell for the very first time, down 2.4%. However, the organization expects that in 2009, online ad revenue will advance 9% — hardly close to the double-digit growth rate of 2007.

Jennifer Saba (jsaba@editorandpublisher.com) is E&P’s associate editor.

Michael Learmonth

NEW YORK (AdAge.com) — Google founders Sergey Brin and Larry Page have long said they won’t sully Google’s page with advertising. But the American landscape? That’s another matter.

The WSJ weighs in on the ongoing re-think taking place at Google over marketing. Mainly, the story is that Google is going to start doing some — and that includes some pretty non-digital approaches, such as roadside billboards to get people to try using the search giant for things other than search.

As Ad Age reported last month, those 800-GOOG-411 billboards were the work of Seattle-based Creature, which also did campaigns for Gmail and Google Maps. Google has been flirting with a number of agencies since it brought on former Ogilvy & Mather exec Andy Berndt to lead marketing efforts last year. At some point, it seems likely Google will want to do some marketing for it’s Web browser, Chrome.

In that same story, Ad Age also noted that Google seems to favor independent shops. The company is already working with Weiden & Kennedy on an outdoor and online campaign in Japan and has tapped it for some U.S. work around Google TV Ads. It tapped Toy, New York, to create a YouTube how-to-guide called a “Tubetorial” that launched earlier this year and Naked Communications is also said to have worked with Google. It has also reached out to the New York offices of Taxi.

The bottom line is that Google’s growth is slowing down. Word-of-mouth and free media was enough to grow the company into a search powerhouse but Google is going to have to spend more than its current $20 million a year on marketing if it wants to move in on big spenders like Microsoft and Apple with new products such as Google Apps and the G1 phone, respectively.

Stuart Elliott

MADISON AVENUE is having an out-of-home experience.

Out-of-home media was once commonly known as outdoor media, reflecting its roots in billboards, posters and signs. The term has been changed to reflect the expansion into places like airports, offices, malls, schools and health clubs, where the ads are inside but not inside the home.

That has also inspired another advertising term, place-based media.

The new places for ads — as well as the addition of digital and video capabilities to signs, bus shelters, phone kiosks and other sites — are among the reasons ad spending in the out-of-home category are second only to online advertising in growth.

The goal is to engage consumers “during the course of their daily lives in places they go on a frequent basis,” said Rick Sirvaitis, president at StoreBoard Media in New York, which puts ads on the security pedestals at the entrances and exits of retail outlets like drug stores.

“In 36 years in advertising, for the first time I can look people in the eye and guarantee every consumer will be exposed to the message,” Mr. Sirvaitis said, referring to a StoreBoard sign, “because you can’t miss it.”

StoreBoard has deals with chains like CVS, Duane Reade and Longs Drug Stores, where ads appear for brands that the stores sell, like Nexxus hair care products, as well as for nonstore advertisers like Broadway shows.

“We’re always looking for places where ads are not expected,” said Greg Corradetti, director for account services at Serino Coyne in New York, an agency owned by the Omnicom Group that is buying StoreBoard to promote shows like “A Chorus Line” and “Mamma Mia!”

“The feedback we get is mainly that it’s noticed, maybe more than other things we do,” Mr. Corradetti said of the ads. “You walk in the store, and before you even get inside it’s right in your face.”

That brings up a common concern about out-of-home media: crossing the fine line between pervasiveness and intrusiveness. The more that ads creep into new locations, the bigger the threat that consumers will be reminded of ad clutter on TV and in other mainstream media.

“The consumer will let us know when it’s too much,” said Wally Brewster, senior vice president for marketing and communications at General Growth Properties in Chicago, which owns more than 200 shopping malls in 45 states. The company displays ads on sites like the “You are here” kiosks in common areas.

“With our in-house research, we’re always engaging our consumers to make sure our environments are relevant and productive for them,” he added.

Beginning on Saturday, General Growth will introduce at 150 properties a promotion called UR Votes Count, aimed at the teenagers who shop at — and hang out in — malls. Exhibits, created by Grand Central Marketing in New York and Los Angeles, will include mock polling places where youngsters ages 13 to 17 can cast ballots in the coming presidential election.

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Sponsors of the promotion include Discover credit cards, SoBe beverages, Chip & Pepper apparel and CosmoGirl magazine. The exhibits are scheduled to remain through Sept. 21 and the vote tallies are to be released.

There is a Web site for the promotion (urvotescount.com), also created by Grand Central Marketing, and a tie-in with Declare Yourself, an organization that encourages civic participation among younger Americans of voting age.

In trying to avoid alienating consumers with too many ads outside the home, “it’s all about balance,” said Ron Greenberg, senior vice president for digital media and chief marketing officer at the TouchTunes Corporation in New York. “You have to be careful.”

Consumers will “give you permission to present your ad” he said, “as long as you’re not disturbing what they’re there to do.”

TouchTunes operates more than 35,000 digital jukeboxes in bars, restaurants and stores, carrying ads from marketers like Sony BMG Music Entertainment, the Universal Music Group, Verizon Wireless and the Warner Music Group.

In another indication of the interest in out-of-home media, deals are reminiscent of those among traditional media companies. For instance, TouchTunes is planning to acquire Barfly Interactive Networks in Austin, Tex., which operates an entertainment network that adds sponsored messages to the TV screens on the walls of about 150 bars and taverns in cities like Chicago, Dallas and Philadelphia.

“We’re digital, we’re interactive, we’re speaking the language of that 21-to-34-year-old” who is prized by marketers of beer, liquor and other beverages, said Bob Weinschenk, president and chief executive at Barfly, which will become an autonomous unit of TouchTunes under its current management.

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Barfly has sponsorship agreements with marketers like Anheuser-Busch, Diageo and Skyy Spirits, which are attracted by the ability of the ads on the Barfly screens “to tell a story over time,” Mr. Weinschenk said, referring to the length of a visit to a bar by a typical customer.

Barfly is also alert to suggestions its ads are clutter, and provides the bars with buttons that can turn off the advertising.

“When you step into one of our bars, we don’t text you, ‘Hello, welcome,’ ” Mr. Weinschenk said. Rather, “it’s about engagement” with consumers, he added, which could be disrupted if they perceive the ads as intrusive.

Press Contact

Anywhere — ORANGE, CA–(Marketwire – January 17, 2008) – Billboard Connection, a media agency specializing in outdoor advertising, has a new franchise at 438 E. Katella Ave., Suite 213, in the City of Orange under the ownership of local attorney and businessman, Rod Bidgoli.

Before becoming a franchise owner, Bidgoli was a corporate attorney for 10 years.

“Discovering Billboard Connection came at a perfect time in my life because I was looking for a new business venture,” says Bidgoli.

Billboard Connection is an advertising agency specializing exclusively in the sale of outdoor advertising such as billboards, bus shelters, cinema media, mall kiosks, mobile billboards, airport displays, sports stadiums, trains and subways. Billboard Connection works with all of the outdoor media companies to obtain the best value and exposure for its clients and provides them with everything necessary to run a successful outdoor advertising campaign, including the graphic design, layout and production of their advertisement. Every aspect of the client’s outdoor advertising campaign will be handled by an outdoor advertising specialist.

Anywhere — /24-7PressRelease/ – BOSTON, MA, June 29, 2008 – Outdoor advertising specialist Billboard Connection today expanded its offerings with the addition of AdsOnFeet to its media portfolio. AdsOnFeet is the innovative provider of walking TV ad campaigns, which feature a team of trained presenters wearing TvVests that grab attention with high-impact video ads.

Building on Billboard Connection’s core business of helping clients more effectively leverage outdoor advertising, AdsOnFeet provides a new and very different advertising option for the media giant to offer its clients, and reinforces the company’s commitment to innovation in advertising.

“AdsOnFeet’s innovative advertising strategies will help our customers increase brand exposure and better engage with their target audience” said Tom Flood, Managing Director of Billboard Connection. “With AdsOnFeet ad walkers, we’re bringing customers a whole new way to look at outdoor advertising. The entire experience is highly interactive and engaging; the presenters walk through the crowd, answering questions and handing out marketing materials and samples. The TvVests get a lot of attention, it’s an exciting example of high-impact, targeted advertising that really attracts eyeballs.”

“Many advertisers are seeking ways to stand out from the pack and better engage their target audience,” said Denise Chew, Senior Partner. “AdsOnFeet will help Billboard Connection’s clients take their message directly to customers where they are – on the street, at sporting events, night clubs, and in busy commuter and tourist areas. We look forward to a long relationship with Billboard Connection.”

About AdsOnFeet
AdsOnFeet provides innovative marketing tools that allow advertisers to engage with customers in areas untapped by traditional marketing media. AdsOnFeet coordinates and executes complete walking video advertising campaigns on an international basis, including TvVest and presenter preparation and deployment, and video consultation and creation. For more information visit www.adsonfeet.com or contact getinfo@adsonfeet.com.

About Billboard Connection
Since 1997, Billboard Connection has helped businesses nationwide locate premium outdoor locations and negotiate affordable prices. The company brings new products and innovative advertising solutions to clients to propel their business and increase their brand awareness to a targeted audience.

Media Post By Erik Sass

In a major victory for outdoor advertisers, the Federal Highway Administration issued a
memorandum last week giving the go-ahead for the installation of digital signage along
the nation’s Interstate highways and other federally subsidized roadways.

Coming amid vociferous objections from some municipal governments, which claim
electronic billboards are a safety hazard, the FHWA decision buoys the hopes of outdoor
advertisers that are betting big on digital signage to drive revenue growth.

The key part of the memorandum from the FHWA, a division of the U.S. Department of
Transportation, says that states are entitled to allow installation of signs that “do not
violate a prohibition against ‘intermittent’ or ‘flashing’ or ‘moving’ lights.” Federal law
distinguishes between these prohibited types of signage, and changeable signage where
messages are displayed for a certain fixed period of time–lessening the likelihood that
drivers will be distracted.

Based on a survey of existing state and federal laws, the
FHWA suggests that: “Duration of each display is generally between 4 and 10 seconds–
8 seconds is recommended.”

LISA CORNWELL, Associated Press Writer

Cincinnati — Wanted posters offering rewards for Jesse James and other outlaws were a common sight in America/country-region />’s Old West. Now a modern twist on that idea is showing up increasingly across the country: wanted billboards.

Many of the billboards, which typically include a suspect’s photo or a sketch drawn from witness descriptions, have resulted in tips leading to an arrest.

Eight of the 10 suspects shown on billboards in the Kansas City Mo./place />, area have been arrested, seven of them because of the billboards, authorities say.

And police in Passaic N.J./place />, say a billboard was instrumental in catching a man charged in the stabbing death of a police officer’s son.

“This is an idea that is working fabulously,” said Lt. James Wood, leader of the Major Crimes Unit of the PassaicCounty/place /> prosecutor’s office.

A high-profile supporter of the billboards is John Walsh, host of Fox’s “America/country-region />’s Most Wanted.”

“We reach a lot of people through television, but billboards are seen daily and serve as a constant reminder,” said Walsh, whose 6-year-old son was kidnapped and murdered in Florida/state /> 24 years ago.

But the billboards raise concerns for Marc Mezibov, a defense attorney in Cincinnati/city />, where the city’s first went up recently.

“If a client’s face and name were posted on billboards ascribing some horrendous crime to him, I would certainly raise issues with the court about whether he could receive a fair trial,” he said, adding that he might request the trial be moved.

Tips from one of the billboards in Kansas City/city /> led to the arrest of a man in the 2002 slaying of 19-year-old Ali Kemp. Roger Kemp, who found his daughter’s body at the swimming pool where she worked, said the idea came to him while driving.

“I was looking at billboards one day and thought, ‘Why not try that since so many people drive by them every day?'” Kemp said.

He asked Lamar Advertising Co. about renting a billboard, but the company offered to donate one to post a suspect sketch and hot line number for anonymous tips. Some billboards also include reward information.

Police were somewhat hesitant at first.

“We thought a generic sketch could create false leads,” said Sgt. Craig Sarver, coordinator of the Crime Stoppers program of the Kansas City Metropolitan Crime Commission.

The billboard was so successful, however, that other area law enforcement agencies have been calling to get photos of their fugitives put on billboards, Sarver said.

So far, advertising companies have donated at least 14 billboards, whose values run from about $1,500 to more than $5,000 each.

The Cincinnati/city /> billboard, donated by Norton Outdoor Advertising, has led to some tips on the whereabouts of Michael Anthony Mitchell, 35, who is charged with shooting a man to death over a parking spot.

“Even if not every subject is caught, this creates a better awareness of crime and the need to do everything possible to stop it,” said Chuck Kreimer, director of Greater Cincinnati-Northern Kentucky Crime Stoppers.