Surely this has got to be the biggest cliche in mobile marketing. For years and years, Starbucks has been used as the example for geo-targeted SMS ads. The theory goes, wouldn’t it be great if you were walking down the street and, as you came up to Starbucks, you received a text message telling you about the great promotion that is on at Starbucks right now? Location as the ultimate targeting mechanic. The problem is that location isn’t the only thing that’s important, it’s also the context of what you’re doing at the time. I might be walking past a Starbucks, and I might like coffee, but I’m not going to be interested in a special coffee promotion if I’m on my way to meet someone and don’t have time to stop. Or if I’m on my way to the pub and the call of a pint is going to be much louder than the call of a coffee. So location is all well and good, but it isn’t everything, and now O2 are doing exactly this. Sending text messages to their customers that walk past a Starbucks telling them that they can get money off a VIA Ready Brew.
I don’t know how much they’re going to be charging Starbucks for this service, but O2 charge 25p per message sent to their O2 More database. If they charge anything like this for this geo-targeted service then I can’t see how the numbers would stack up for Starbucks. Let’s say a coffee costs £2.50 and they’re running a half price promotion, so they’re selling it for £1.25. Let’s say that there are 10,000 O2 customers that walk past a Starbucks and receive the promotional SMS, that’s a cost of £2,500. Now, if we’re really generous and say there’s a 20% take-up of the offer, that’s 2,000 people that are going to buy a coffee at £1.25. Or £2,500 in revenue, which is just enough to cover the cost of the messages. Which means that Starbucks are effectively giving away 2,000 coffees for free. And I think that that 20% take-up is being really generous, a more realistic rate might be 10%, or 1,000 people buying a coffee at £1.25. Now you’ve got a £2,500 cost of the promotion being rewarded with £1,250 of revenue. Neither of these scenarios are going to lead to Starbucks placing a repeat booking with O2.
Obviously I’m a great fan of mobile marketing and advertising, but I just can’t see how this stacks up in terms of customer experience or advertiser finacials. I’m happy to be persuaded otherwise if any of you can put a convincing argument forward.
NO, NO and, again, NO! O2 launch geo-targeted ads for Starbucks
Posted by themobilemarketeer on October 18, 2010
Surely this has got to be the biggest cliche in mobile marketing. For years and years, Starbucks has been used as the example for geo-targeted SMS ads. The theory goes, wouldn’t it be great if you were walking down the street and, as you came up to Starbucks, you received a text message telling you about the great promotion that is on at Starbucks right now? Location as the ultimate targeting mechanic. The problem is that location isn’t the only thing that’s important, it’s also the context of what you’re doing at the time. I might be walking past a Starbucks, and I might like coffee, but I’m not going to be interested in a special coffee promotion if I’m on my way to meet someone and don’t have time to stop. Or if I’m on my way to the pub and the call of a pint is going to be much louder than the call of a coffee. So location is all well and good, but it isn’t everything, and now O2 are doing exactly this. Sending text messages to their customers that walk past a Starbucks telling them that they can get money off a VIA Ready Brew.
I don’t know how much they’re going to be charging Starbucks for this service, but O2 charge 25p per message sent to their O2 More database. If they charge anything like this for this geo-targeted service then I can’t see how the numbers would stack up for Starbucks. Let’s say a coffee costs £2.50 and they’re running a half price promotion, so they’re selling it for £1.25. Let’s say that there are 10,000 O2 customers that walk past a Starbucks and receive the promotional SMS, that’s a cost of £2,500. Now, if we’re really generous and say there’s a 20% take-up of the offer, that’s 2,000 people that are going to buy a coffee at £1.25. Or £2,500 in revenue, which is just enough to cover the cost of the messages. Which means that Starbucks are effectively giving away 2,000 coffees for free. And I think that that 20% take-up is being really generous, a more realistic rate might be 10%, or 1,000 people buying a coffee at £1.25. Now you’ve got a £2,500 cost of the promotion being rewarded with £1,250 of revenue. Neither of these scenarios are going to lead to Starbucks placing a repeat booking with O2.
Obviously I’m a great fan of mobile marketing and advertising, but I just can’t see how this stacks up in terms of customer experience or advertiser finacials. I’m happy to be persuaded otherwise if any of you can put a convincing argument forward.
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