Does Coffee Advertising Work?

10 years ago, I hardly drank it.

Then I met my wife, who has a passion for a good tasting cup of coffee, although she usually drinks decaf.

She introduced me to a couple local coffee shops where we would try different drinks and deserts and check out the entertainment.

Starbucks had not yet invaded Fort Wayne, Indiana.

We would sometimes have days off in the middle of the week and travel to find new coffee shops.

After a couple of years, I was hooked on the coffee shop experience and I was also back in the advertising and marketing business. Advertising did not persuade me to drink coffee. My wife did. Classic Word of Mouth.

Earlier this month, we took a trip to the New England States and found very few Starbucks but lots of Dunkin' Donuts. I also could judge a small town's fortunes by whether or not they had a McDonalds.

All three are battling it out in the coffee biz these days along with the local Mom & Pops that I will visit when I am in Fort Wayne, even though we have the Big 3 available too.

AdAge released a report on the results of the advertising that the Big 3 have been brewing up the past few months. Be sure to read the last paragraph:

All That Advertising Brings Buzz for Coffee Marketers

Brand Index: Consumers Saying More Positive Things About Starbucks, McDonald's, Dunkin'

By Emily Bryson York

Published: June 11, 2009

CHICAGO (AdAge.com) -- The coffee wars generated a flurry of advertising in May. McDonald's launched its first McCafe blitz, Dunkin' Donuts made its first concerted doughnut push in more than a decade and Starbucks began its first pure branding campaign. While it's too soon to say what the impact on sales has been, all three marketers saw a major uptick in buzz, as measured by Brand Index.

Dunkin' led McDonald's and Starbucks in buzz and value perception.

Brand Index, which tracks more than 1,000 brands by conducting 5,000 daily interviews from a panel of 1.5 million consumers, monitors key brand attributes, including buzz, value perception, quality ratings and customer satisfaction to compile its index (which has a range of -100 to 100).

Dunkin' began May with a 24, peaked at 33 mid-month and settled at about 32 this week. McDonald's started with a 15, peaked around 24 and had dropped off to 16 by June 9. Starbucks' campaign, which has been confined to newspapers and select outdoor markets in its initial phases, has been more cyclical. The company began May with a score of 1, shot up to 11 within a week and plummeted again. In the past week, the chain's buzz has shot up to double digits again.

Those numbers may seem low, but ratings vary dramatically by category. Within the fast-food sector, a good buzz rating is considered to be anything above 10. Ratings closer to zero mean consumers have heard an even number of positive and negative things about a brand.

"Over the last few weeks, Starbucks has generated buzz through a variety of channels, including our national 'Coffee value and values' campaign hitting its stride, beginning our sponsorship with 'Morning Joe' on MSNBC and being named No. 1 best coffee by the Zagat survey," Starbucks' senior VP-marketing, Terry Davenport, said in a statement. He added that the retailer's online activity, including using Facebook and Twitter to tout its efforts, has also built excitement among baristas in its stores.

Dunkin' did not immediately respond to a request for comment.

McDonald's spokeswoman Danya Proud said the burger chain has been "extremely pleased" with the results of its coffee push. In particular, she said, the chain's "McCafé Your Day" online competition with Visa has gotten more than 10,000 entries. That response rate makes it "by far the most successful online sweepstakes in the company's history," Ms. Proud said.

Starbucks tries 'a different tack'
But all three companies got a pretty strong jump in buzz, said Ted Marzilli, global managing director at Brand Index. Starbucks' jump, he said, had the "highest magnitude," especially because it was coming from about zero. He said Starbucks should be heartened that it not only made a splash when its competitors were outspending it but got a second spike in interest as McDonald's and Dunkin' were leveling off.

"They're probably going to be outgunned by McDonald's and Dunkin'," he said, noting that those brands spend more on advertising. "Starbucks is trying a different tack in last couple of months, getting people to think about bigger concepts. How expensive is a $3 latte when you think about other things like providing health care, working with farmers in areas where coffee is imported? That slightly different tack seems to be making a mark."

Mr. Marzilli said an increase in buzz can trigger shifts in other metrics, but not always. And as it stands, Starbucks is still struggling with its "value" perception, or whether consumers view the brand as giving them the most bang for their bucks. The chain has been hovering around -26, with a small spike last week that seems to have already corrected. McDonald's is just behind Dunkin' in value perception, around 25 to Dunkin's 26.

But when consumers want to treat themselves, all these numbers may go out the window. According to Brand Index, 43% of adults asked where they were most likely to purchase a "premium coffee drink" said Starbucks, 15% picked McDonald's, 11% sided with Dunkin' and 31% had no preference.

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