The Starbucks Coupon Conspiracy - Industry Trend or Event

Industry Standard, The, April 9, 2001 by Lydia Lee, Bevin Cumming, Laura Rich, Katie Motta

If you've read a news story in the past two years about our wireless future, you've probably come across the following scenario: Your cell phone beeps as you're walking down the street. It's Starbucks, which knows that you're 100 feet from its nearest franchise and zaps you a coupon for $1 off your next cup of coffee.

According to archive research, the "Starbucks coupon" first appeared Oct. 18, 1999, in a Business Week story called "Smart Phones." With surprisingly little variation it has made the rounds of just about every major business publication (including this one). "The outlet will give you a dollar off a cappuccino," the Wall Street Journal wrote as recently as March 13.

Problem is, not only has it become an annoying anecdote, it's also off the mark; Starbucks has no plans for wireless coupons. "It's definitely not something we're driving toward," says Darren Huston, senior VP of new ventures.

Even worse, the assumption of the inevitability of "location based" advertising, which will become possible when cell phones become miniature tracking devices as mandated by the federal government, is offensive to some people.

"I hate it," says Mark Flolid, co-founder of SignalSoft, which makes mobile software. "It's overused and smacks right up against privacy issues. If that's the only service [that makes use of someone's location], God help us."

We'll soon find out. By October, wireless carriers will have to pinpoint mobile users within a few hundred feet to help locate people who dial 911. Pilot programs for wireless location-based ads should soon follow, though mass-marketing campaigns probably won't take off until 2003. If people want them, that is.

To gauge public opinion, we asked Starbucks customers in three cities how they would react if a coupon was zapped to their mobile phone every time they came near one of the chain's zillions of franchises. (See answers below.)

Marketers, take note.

Man on the Street: The Coffee Drinkers

"I would find It invasive. The fact that so far no one can solicit on cell phones is the nice thing about them."

Jay, computer technician, Los Angeles

"I would like getting things like coupons. Advertisements would get annoying, though. It's one more thing I'd have to ignore."

Shamika, student, New York

"This is one of the reasons I don't have a cell phone and never will."

Chills, tattoo artist, New York

"I wouldn't mind as long as It didn't Interrupt a conversation, was easy to delete and I wasn't charged for the transmission, like I would be for receiving a text e-mail on my phone."

Roger, contractor, San Francisco

"It would entice me depending on what the freebie was. I'm all about freebies."

Chad, talent agent, San Francisco

"The fact that a business can track where I am is way too intrusive. Fifty cents off a cup of coffee Is not worth someone knowing that I take the F train every morning."

Brendan, advertising, New York