Latte liberals might be expected to stop by Starbucks on election day, but more people than usual visited. Starbucks offered free coffee on election day, and probably made a profit on the deal. Advertisng Age reports:
John Moore, a former Starbucks marketer, estimated that between 12% and 15% of customers are drip-coffee drinkers, and that each of the company’s 7,100 locations serves about 800 people a day. Those figures would set a conservative giveaway estimate at 568,000. Starbucks’ cost per cup is about 30¢, according to several executives familiar with the matter, which would put the cost of the giveaway at about $170,000.
Muffin with that?
However, about one in every five or six Starbucks customers buys food, executives said. If that held true during the giveaway, and each of those people spent even $2, the company could have made money on the promotion. Starbucks has said 75% of its sales are beverages sold in-store, and most of the remaining 25% are food sold in-store.
An executive familiar with the matter estimated the “Saturday Night Live” spot could have cost as much as $350,000. But the value of coverage relating to the giveaway — from The Wall Street Journal, CNBC and Newsweek, to name a few — as well as rampant blog chatter likely superseded the chain’s investment. Many of those organizations, including the Journal, posted the Starbucks commercial along with their stories.
The giveaway tactic also boosted the company’s buzz rating, according to Brand Index. Starbucks’ positive buzz rating jumped from 25% on Oct. 31 to 51% on Nov. 5. “This was a strong and well-timed promotion,” said Ted Marzilli, senior VP-brand group at Brand Index parent YouGovPolimetrix, in an e-mail. “There has been huge interest in this election (as measured by the voter turnout) and likely a lot of positive word-of-mouth, particularly given that the promotion ran on Election Day (a workday), when many people could spread the word to their colleagues.”