Cream and Sugar with Your Wifi? A Look at the New Starbucks Digital Network

Posted: April 19, 2011 in Advertising, Branding, Industry Research, Marketing, Media, Mobile Technology, Music, Tools/Gadgets
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(This post can also be found on here: It was originally posted October 20, 2010)

Although the coffee giant has been offering free Wi-Fi in the majority of its U.S. retail locations since July 1st, a new exclusive content network called the Starbucks Digital Network (“SDN”) launches October 20th in more than 6,800 of its U.S. operated stores.  The new content network will be specifically curated by the company and is being launched to enhance the customer’s in-store experience on what some might call a fourth dimension- the Web.

“The vision,” Starbucks’s Vice President of Digital Ventures Adam Brotman told Mashable, “is for Starbucks Digital Network to be a digital version of the community cork board that’s in all of our stores.” The move is a strategic one, despite the financial free-wheeling philosophy it seems to represent.

Starbucks has struggled publicly in the last few years with its big-brand, corporate generic image and how to compete with much-loved “mom and pop” coffee stores in big cities. The initial backlash was palpable, but with CEO Howard Schultz back at the helm, Starbucks is now trying to improve its public dedication to the local communities it moves into, and to incorporate many of the elements that make the neighborhood coffee joint a favorite for locals.

Because Starbucks relies so heavily on the in-store experience, the company is attempting to enhance the “third space” look and feel of the retail locations while also providing a stellar “fourth dimension” experience online.

As part of its extensive content network, SDN will offer access to news sites such as The Wall Street Journal, The New York Times and USA Today, but will also offer additional content channels such as “entertainment, wellness, business and careers, my neighborhood and the customer-personalized Starbucks.” The incorporation of the “my neighborhood” content channel is a pillar in the giant’s strategy to compete with the local feel of smaller community-based coffee shops.

As Brotman told Mashable, SDN “delivers on this objective by serving up content to users based on the exact whereabouts of the store where the user is accessing the free Wi-Fi. Community fare includes local news from Patch and a look at nearby classroom projects that could benefit from small contributions. Foursquare users can check in via the web from Starbucks stores, and Zagat makes available full ratings for restaurants in the surrounding area for free.”

But when is too much, just, too much content? Reportedly, Starbucks will be tracking user activity via web analytics to get a sense of what users respond to. From there they plan to taper the content network and its offerings based on usage research what is most popular.

From the research the company has already gathered based on its free Wi-Fi offerings since July 1st they now know, according to Brotman, that “more than 50% of users logging on to the free Wi-Fi are doing so from mobile devices, so the company was motivated by usage behaviors to build a mobile web experience just as good, if not better than, the standard web experience.”

As a boon for what many regard lately as a foundering hi-tech company, Yahoo is the coffee retailer’s technology partner for the SDN, having developed the site, hosting the SDN, powering search and also providing content. Yet Starbucks is not exactly following a hi-tech profitability model. The coffee behemoth is not charging its content partners for placement on the network, and no financial transactions are taking place unless SDN users make purchases.

Yet as traditional tells us, location is everything. As emerging technologies and social media allow consumers to make more educated, location-based purchasing decisions, perhaps this is Starbucks’ and Yahoo’s way of embedding themselves in communities via an increasingly location-based technology market. As Brotman said, “We’re really excited about the fact that we can leverage the location-based nature of the site to connect our customers with the communities around the stores,” he says.


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