Starbucks Digital Network: It’s All About the Wi-Fi

The first clue was the conference call announcement: “Wi-Fi has joined the call.” Wi-Fi? This was a Starbucks briefing. Odd.

I’ll explain.

Starbucks, in partnership with Yahoo!, is in the process of launching the Starbucks Digital Network, which will offer news, entertainment and lifestyle content to Starbucks customers when they visit a U.S. company-operated Starbucks Store.

Here’s how it works: when you enter a Starbucks and launch your browser (or Starbucks iPhone app), the network will recognize you and invite you to connect to the network. Once there, you can access a variety of free content on six channels: News, Entertainment, Wellness, Business & Careers, My Neighborhood and Starbucks.

Initial partners (among many others) include Apple (for a free song download), The Wall Street Journal (free access while you are at Starbucks), The New York Times, USA Today, and — perhaps most appealing for many harried parents hoping for a moment of Zen while they sip their grande half-caf nonfat caramel macchiatos — Nick Jr Boost, an educational program for early learners.

Here’s where it gets interesting.

1. Wi-Fi is now an asset. Once you’ve connected to the digital network, you’ve told Starbucks that you’re in the store. They can market to you in multiple ways. (Think loyalty programs, premium content, upsell, etc.) If you’re connected to Wi-Fi and have not joined the network, Starbucks knows that too, and can suggest that you try it out.

2. Starbucks can now learn a lot about your likes and dislikes, with the potential to customize offers to you down the road.  If you walk into a store today, only your favorite barista will remember who you are and what you like. So the network creates a valuable new data source that enables Starbucks to personalize content based on your expressed preferences.

3. Location (and proximity) matter too. Admit it: haven’t you parked in front of a Starbucks or a McDonalds just for the free Wi-Fi?  Now, if you do, the company can market to you from the comfort of your car, so you can now surf guilt-free. Beyond proximity, this also opens up endless possibilities for location-based offers like those provided by Groupon and LivingSocial.

It remains to be seen whether Starbucks will choose to further monetize the network  or whether other retailers will take a page from this approach and offer their own in-store digital networks, but it’s an idea with many possibilities. Think about all the places you have 5-10 minutes to kill; in line at the grocery store, in the doctor’s waiting room, at the movie theater, at bookstores. There are a lot of possibilities, but it will all depend on the execution.

And the killer app? Wi-Fi. Who knew?

About susanetlinger

Industry Analyst at Altimeter Group
This entry was posted in social commerce and tagged , , , , . Bookmark the permalink.

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