Huh.

Now, I use the app and it works for me – it’s convenient, already in my hand, and paperless.  No more rewards card swiping – it’s all in one digital package!  However, I hadn’t thought too much about what widespread adoption might mean for Starbucks’ bottom line.  The answer?  A lot.

I  called up my brother, owner of leading online merchant account provider MerchantPlus, for some hard numbers.  He estimated that Starbucks was saving ten to fifteen cents per transaction – multiply that by 25 million transactions and you’ve sent about $3.75 million to your bottom line instead of to Visa, Mastercard, Amex and the various middlemen in between.

It works like this:

1. As a loyal/addicted Starbucks customer, I load $50 onto my Starbucks account via credit card.  One transaction.
2. As part of that credit card transaction, Starbucks will pay a percentage fee and a gateway fee (a nickel or more each time).
3. Then each time I visit my corner for a grande bold drip, I scan my payment with the app, and the $2.12 is deducted from my account.
4. Note that I can buy 23 cups of coffee without Starbucks incurring another gateway fee, saving them about $1.15 on my $50 worth of purchases.
5. Throughout this process, much like a gift card, I’ve given Starbucks a $50 interest free loan – imagine how many millions of dollars in liquidity they’ve acquired through this process?

Jacob Smith is a Senior Project Manager and Web Strategist with Dinkum Interactive and has led over 150 high-level consulting and website development projects over the last 10 years. He is active in both the internet and cultural communities, and served on the board of Philly Car Share, a nonprofit and one of the largest car sharing organization in the United States until helping engineer its sale to Enterprise Holdings in the summer of 2011. Originally from Southern California, Jacob and his wife, Meghan, now live in Center City Philadelphia with their young sons Rory and Duncan.

Types of Mobile Advertising

“We see mobile as a huge growth opportunity for us,” Susan Wojcicki, vice president of product management at Google, said in an interview. “We see an opportunity working with AdMob to really accelerate our efforts in an important industry for Google.” Founded in January 2006, AdMob has some high-profile customers such as Ford, Procter & Gamble, and Coca-Cola.  AdMob claims to have served more than 125 billion ad impressions.

The deal seems to provide benefits to users and advertisers alike. Users should see more free mobile applications , since developers will be able to subsidize their products through effective mobile advertising. Advertisers, on the other hand, should benefit too; Google will be able to serve more highly targeted, relevant ads to mobile users through the combination of AdMob’s mobile publisher network with the search giant’s network of advertisers. Furthermore, combining the advertising technologies of AdMob and Google is likely to yield better ad performance on mobile apps and websites.

Admob's Worldwide Ad Requests

AdMob sells ads on many kinds of phones, including iPhone and Google’s own Android phones. Google is now primed to become a one-stop shop for companies interested in search and display on regular websites and cellphones.
Google hopes to finalize this deal in the next few months. In the meantime, the company continues to make smart purchases that make advertising more flexible and more efficient than ever before.

It should be interesting to see the future developments in mobile advertising.

Paul Mosenson