Solving The Casino Millennial-Baby Boomer Marketing Funnel Conundrum with Entertainment

 

What do Millennials, DJs, and funnels have in common?

The answer may surprise you. As fun as the three combined may sound, it isn’t the set-up for a new drinking game. Instead, the three components come together to help us understand the future of the gaming industry and how we can capitalize on an impending change now efficiently and cost effectively through entertainment.

The Millennial demographic was the topic of discussion at the 2015 Global Gaming Expo in Vegas, as this collection of consumers brings with them a huge opportunity and perhaps an even larger challenge. According to the PewResearch Center, Millennials are projected to surpass Baby Boomers as the nation’s largest living generation 75.3 million to 74.9 million by the end of 2015. Normally an increase of this magnitude would be a welcome sign in any market – a fresh crop of new consumers to replace the old. However, this new charge doesn’t appear to be responding on the gaming floor in the same way as their ancestors. Research is revealing that Millennials typically find current slot products uninteresting, seek skill-based games, want a social atmosphere, and prefer night clubs over gambling – pretty much the opposite experience that has been cultivated collectively by the industry up until now. This has left many in unchartered waters as they seek out what drivers will lead this next generation to the gaming floor. According to the CEO of the American Gaming Association, Geoff Freeman, there is “going to be a lot [of] throwing things up on the wall and seeing what sticks.”

Freeman’s statement provides us with a key element regarding Millennial based marketing in the casino business. It suggests that they may not be opposed to gaming, but rather they are sitting at the top of the marketing funnel, a place where consumer behavior teaches us that prospects are still learning how the intended products and services can enhance their lives. This, in turn, tells us two things. One, it will take time before this group will take the place of the profitable consumers currently on the gaming floor. Second, because the head of the funnel is larger than the spout we will need to fill it with more prospective Millennial gamers so a reasonable amount can filter down the funnel and eventually replace their predecessors. Taken together, this creates a unique challenge as we are left with two disparate groups within the funnel. Sitting at the bottom are previous generations who are converted, loyal, and most likely advocates for a particular brand. As such, they provide the property with the majority of its revenue at this moment in time. However, the longevity of a casino’s success will eventually rely on getting enough Millennials to replace them at the bottom of the funnel.

So how does a casino’s marketing team attack this situation? With the current mix of generational consumers nearly split down the middle, you cannot simply cut the budget of one and give it to the other. Especially when you are taking away from the profitable sector in the Pre-Millennials and allocating it to the generation that is still contemplating if your services are the right offerings for them. For these same reasons, it would be unwise to dramatically re-align your entire marketing message and risk alienating those gamers that currently help you keep the lights on. What you can do now is to re-align through your entertainment offerings– especially if you are a larger entity with various programming opportunities such as lounges, clubs, showrooms, pools, and restaurants. Take Las Vegas where many prominent casino brands have adopted a tent pole design that “props up” the organization by attracting non-gaming individuals to the property through key entertainment offerings. Many big names on the strip include four elements in their portfolio: (1) a branded show such as Cirque, The Blue Man Group, or Absinthe; (2) a headliner such as Céline Dion, Carrot Top, or Britney; (3) a celebrity chef/kitchen such as Gordon Ramsay, Wolfgang Puck or Emeril Lagasse; and (4) a big-name DJ such as Steve Aoki, Dash Berlin, or Tiësto.

These poles achieve a lot of good for the casino. For one, they create additional income centers for the property. In 2013, an article in The New Yorker reported that half of Steve Wynn’s profits were coming from his dance clubs with the gaming floor beginning to take a back seat to bottle service and confetti cannons. The pole’s also provide powerful branded ammunition to compete in Vegas’ noisy market. Today, nearly every major casino on the strip features a high-end night club and outlandish pool parties stacked with brand-name DJs. MGM has Hakkasan with Steve Aoki and Tiësto on regular rotation; Encore has XS with the likes of Diplo, Zedd, and Manufactured Superstars; The Cosmopolitan has Marquee with Cash Cash and Dash Berlin. You can grab a Gordon Ramsay Burger at Planet Hollywood or one of his steaks at Paris before you head out to a Cirque de Soleil show at AriaNew York New York, the Bellagio, the MirageMandalay Bay or Treasure Island. Any of these offerings could be destinations in and of themselves in other markets, but in Vegas they are revenue centers, marketing machines, and perhaps most importantly investments in a Millennial generation that hasn’t even been realized yet. Why? Because they continue to bring potential new prospects onto property, which places them in the mouth of the funnel where they begin their journey of learning how gaming can enhance their lives and (hopefully) move down into the spout to become brand ambassadors.

This pole design is not exclusive to Las Vegas or even properties with big brand names and even bigger budgets. Many casinos outside of Sin City have multiple bars, more than one restaurant, and spaces that can create revenue and achieve long-term branding goals if properly utilized. This makes it very plausible to craft a diversified entertainment program that appeals to your current profitable customers while luring future prospects onto the property. You can continue to appease your Pre-Millennials with showroom entertainment while hosting afternoon pool parties with regional DJs that drive those Millennials across your floors where they can hop in the funnel and begin the process of learning about your brand and how it fits in their lives. Clubs, lounges, and bars can easily be rebranded by adjusting the entertainment offerings towards one side or the other and then allowing the demographic shift to happen naturally (or with a little marketing push if needed), just as adjustments in menu selections and price points can sway the clientele in a chosen restaurant. These are all efficient and cost-effective modifications that can be done without sacrificing your budget or the overall brand of the property and they can help protect your very valuable current assets in the Pre-Millennials while positioning your property for long-term success with this next generation of prospective consumers by allowing them to investigate your offerings while your management team can learn what drives their behaviors, so your property is ready to capitalize when the time is right.

Lego Photo by Stefan Schindler from Flickr Creative Commons

Marketing Funnel from http://adamhcohen.com

Herd Mentality in Entertainment

 

Regardless if we want to believe it or not, at our very core humans are animals. As such, there are primitive psychological behaviors that influence many of the things we do – even if we don’t notice that we are doing them. One of these rituals is the need to follow the herd.

At its core, herd mentality is a survival instinct ingrained in our DNA. According to Pat Thomas, general curator at the Bronx Zoo. Over the course of our evolution, we have been taught that individual members of a herd should relate and act in a similar fashion so they do not stand out and appear different from other members of the group. Why? Because, in the wild if a member of the herd acts too much out of the norm, they are often singled out by a predator and do not survive.

Over the course of human evolution, this survival instinct has become lodged in our brains. Dr. Gregory Berns, Professor of Neuroeconomics and Director of the Center for Neuropolicy at Emory University, informs us that those fear receptors are located in a very specific spot called the amygdala, which is comprised of the brain stem and cerebellum. Some still call this the old mammalian brain and not only is this place responsible for that fear of being eaten by a predator, it is also accountable for our emotions, long-term memory, connects events with feelings and controls hormones and body temperature.

So, why is this entertainment manager spending his time explaining biology and evolution? What does this all have to do with booking entertainment?

Let’s put the pieces together.

First, the ingrained concept of pack protection that is inherent in all of our mammalian brains causes us to seek out crowds of people whenever we are in a public environment. It is something we do naturally and often without even noticing it. It works like this. A potential consumer walks by the room and sees it is jammed with people. Subconsciously the receptors in their mammalian brain begin to fire, kicking in long-term memories and coded DNA from the evolution of our species, which tells them they would be safer within the pack, so they enter.

Many will argue that sold out shows are the result of numerous causations such as marketing spend, notoriety of the performer or club, day of the week, etc. These are correct assumptions. However, marketing teams and management often cease their efforts once the show has begun. This is ill-advised, because it is likely that they will achieve greater success if they continue to strategically manage the room once doors are open in an attempt to first achieve, what I call, the adoption tipping point and then work to avoid (another one of my terms) the exodus tipping point.

The adoption tipping point is when the room begins to build at an exponential number. If you have ever worked in a live environment you will notice that a 200 plus person venue will not grow with only ten fans in attendance. However, once twenty, thirty, forty or more arrive the adoption cycle approaches a steeper upward slope. Studies by Rick Nauert PhD and his team at the University of Leeds, discovered that it takes a minority of just five percent to influence a crowd’s direction and the remaining 95% follow, without realizing it. In my years as both an entertainer and manager, I have witnessed this phenomenon. For instance, I have watched the attendance of a 253-person club jump nearly 370% in less than 15 minutes due to the adoption-tipping point being initiated.

Unfortunately, the same biological influencers can also work against club attendance. If enough of the crowd is removed, evolution causes the brain to re-investigate the environment and if it is deemed unsafe (too few in the pack) it will initiate the fight or flight reflex. As you guessed it, just like adoption a tipping point will be reached and exponential losses will occur.

These biological influencers suggest that, with the assistance of proper marketing and promotion, management should seek to ensure that (1) the adoption tipping point is achieved as soon as possible; and (2) the room should constantly be monitored and adjusted to avoid the exodus tipping point. Here are a few suggestions to get you started.

  1. Start with a stacked deck. Entertainers should have a following of at least 10% of room capacity or the venue should provide ways to increase the initial attendance to at least 10% out of the gate. Offering free entry, free drinks, etc. can achieve this. Females are of particular importance, because they initiate the mating behaviors of males, which are also controlled by the mammalian brain. However, many venues think that just letting ladies in for free the whole night will work. This isn’t necessarily true. It is best to find ways to stack the deck early and reach the adoption tipping point as soon as possible. However, it serves a club little purpose to let in females for free if they are approaching capacity. Instead, they should hold off on free entry until the exodus tipping point is being approached and then open up the floodgates to prevent the negative tipping point from being hit. Letting ladies in for free is important – but it should be done strategically throughout the night.
  1. The venue should never be dead. This is extremely true in live entertainment situations where bands take breaks. Keep the lights on, keep the instruments lit, keep the music pumping and keep people on the dance floor. If there are televisions in the club, do not turn them on, especially to sports or the news. Do everything you can to remind people that the show will continue.  Breaks should never be used to calm the room down as that would inevitably cause you to reach the exodus tipping point.
  1. Breaks should never be longer than fifteen minutes. To be honest, in today’s market breaks shouldn’t exist. I know a lot of entertainers will send me hate mail on this one, but it is the truth. There should be a DJ or other entertainment happening if the group must take a rest. Consumer behavior has radically changed to the point that even thirty-second television commercials are becoming obsolete. The modern consumer’s attention span has diminished by unprecedented amounts. What makes you think they will hang out for fifteen minutes while the band is on break? My on-site research estimates that for every two to five minutes after a fifteen-minute lull in entertainment attendance drops by nearly 10% and follows a strong negative compounding effect from that point onward. Keep the energy up. Do a raffle, have the bartenders do tricks, give out free drinks, monitor band breaks religiously, or find entertainment that doesn’t need to rest for so long.
  1. Be fluid. Someone needs to take control of the room and monitor behavior for an approaching exodus tipping point. They must have the authority to make changes “on the fly” including promotions, getting the entertainment back on stage, or letting in females for free without resistance that will cause the exodus point to be hit.

In closing, there are no hard numbers for an adoption or exodus tipping point. Entertainment is largely qualitative in nature and numerous outside forces impact the speed at which a room reaches capacity and when the process reverses. It is up to the club owners and management to gauge their venues. I would encourage many to start off by logging hourly headcounts. Don’t worry about bar sales or other metrics at this point. Create a baseline over the course of at least a month or longer. If you utilize numerous styles of entertainment, you should have multiple metrics for each act. Numbers are an amazing tool and they will reveal very valuable information including when the room generally approaches capacity, when the trend reverses, and which styles of entertainment help you approach a full house quicker and which hold crowds longer. From there, make adjustments and then re-analyze your results. Continue this process as you adjust for demographic parings relative to bar sales and marketing.

For all of you “marketing whizzes” out there, remember true marketing is not just about pretty posters and television commercials. It is part quantitative science that involves understanding numbers and how to adjust your business environment to move those metrics into a positive relationship. In entertainment management, a large portion of this analysis is done during the show.

Strategic Analysis of Live Nation Entertainment

 

 

The following paper was the final deliverable for my MBA strategic management course at Southern New Hampshire University. The purpose was to analyze the macro-level strategy of an organization of our choice.  For ten weeks, we explored how that strategy impacted virtually every aspect of the firm from their financials to their competitive position and H&R practices. I chose to put my experience as a booking agent and undergraduate degree in music business to good use and analyzed the top promoter in the world – Live Nation Entertainment.

My analysis of Live Nation Entertainment revealed an organization executing a well-crafted strategy to vertically integrate the unique value chain elements of their main concert business. As a result, the company has catapulted past their competition in the U.S. concert and event promotion market as well as the global online ticketing industry where they hold commanding market shares in each. Despite this success, there is much more opportunity for the company to grow…almost an entire planet.  I touch upon management’s future plans throughout the paper and offer my own insight as well.

Jeremy Larochelle’s Strategic Analysis of Live Nation Entertainment

When Hooks Become Brands Part II

 

In my last blog I explored how rock/metal group Metallica crafted excellent hooks into their songs. Each member of the band has seemed to contribute to catchy phrases on their respective instruments that, over time, have evolved into brands that have helped elevate Metallica’s success.

The term brand came to us from cattle ranchers who would burn their mark into their livestock to help differentiate their products from hordes of others.  Over the years branding has become big business, helping merchants distinguish their products from those of their competitors. Today, proper brand execution can give the firm value beyond its wildest dreams.  According to Forbe’s 2013 Apple’s brand is worth $104.3 billion; Microsoft’s $56.7 billion; and Coke’s $54.9 billion.

Branding isn’t just the name, the logo, the colors the firm chooses, or even the slogan. It is a combination of all of these elements along with the development of a feeling the consumer gets, or is intended to get, from the product or service. Coke makes you feel refreshed, Hershey brings us sweet joy, and Apple offers unique yet simple products that are easy to use. If executed properly over time these brand feelings become imbedded in the consumers psyche, so when they are sad they look for Hershey chocolate, when they are parched they grab a Coke, and when they want to “Think Different” the fire up an Apple product.

In today’s market musicians and entertainers MUST think the same way.

They must turn their passion into a brand.

There is far too much noise in the market right now. Anyone can record an album, anyone can follow you on Twitter, anyone can start a Kickstarter campaign, and by anyone, I mean anyone around the world.  That is a lot of people all vying for listeners to give their songs a chance, to stream their tunes, to come out to a show.

Call me old fashioned, but I still feel the longest lasting, and thus more profitable musicians, are those who can craft better songs, tunes with great lyrics, a story to tell, and of course excellent “hooks”. Think about it for a bit. Metallica has remained relevant and profitable for the past 25 plus years, Jay-Z has launched an empire off of his ability to combine his tales with the perfect musical compliments, and the Beatles continue to influence generations over fifty years later.

Below is a small sample of some of the things you should think about when crafting your next tune if you want them to emerge as their own living breathing entities like Metallica has done. I remind you this is not a complete list, just a few random thoughts and suggestions.

1. The best hooks are simple:

As musicians, we tend to over think how music should be. We feel that complexity makes things better. Most of the time it does not. The people who buy your music need to be able to hum along and that is easier when you keep it simple from the get go.

 2. It takes more than one:

Part of the Beatles’ success came in the melody and counter melody parts written by John and Paul. The same can be found in the music of Led Zeppelin. The best songs meld rhythmic structures and melodies perfectly. I once read one rock critic describe it as creating a balanced sense of tension for the listener. Too far in either direction and it would sound awful, but when placed in the perfect pocket it becomes magic.

3. Producers are worth their weight in gold:

No I don’t mean your buddy who has ideas about your next song, I mean real producers such as Rick Rubin, Jerry Wexler, Glen Ballard, Jimmy Iovine, and Pharrell. A lot of artists think they can produce their own songs, but they get stuck, especially in problems arriving from point one above. The best producers know how to take away extras from the song, which allows the hook to shine through. They know how to connect your ideas with the music listener, who is usually enjoying music in a different way than you are.

4. Don’t throw in a hook just because it sounds cool:

I will return you to my analysis of Metallica and the haunting opening to Welcome Home/Sanitarium. This isn’t a complex hook, but it fits in with the overall theme and dark feel of the song. The hook needs to be thought of as an overall component to the brand you are trying to develop for that song. The Beatles’ producer George Martin was a master of this. Songs such as Yesterday are stripped down, forcing the consumer to become directly attached to the haunting lyrics, while Sgt. Pepper’s Lonely Hearts Club Band brings in a lot of noise and ruckus to make you feel as though you are surrounded by a, you guessed it, marching band.

5. Hooks can be anywhere:

A great hook doesn’t need to be played on the guitar or piano.  It can come from the bass. Dave Matthews Band bassist Stefan Lessard proved that in the tune Crush. It can come from the drums. Steve Gadd proved that with his catchy rhythm on Paul Simon’s 50 Ways to Leave Your Lover. It can even come from secondary lyrics. Who doesn’t say the phrase “turn it up” when listening to Sweet Home Alabama by Lynyrd Skynyrd?  The point is that catchy hooks can come from any member of the group, so keep that and point number two above in mind.

The thing to remember is that your musical brand revolves around the tunes you create. When you take the time to craft songs that utilize all of their aspects (lyrics, tempo, genre, instrumentation, and production) to help articulate your intended feeling onto the music listener you stand a better chance of connecting with those listeners on a psychological level that will keep them returning to your brand over and over again.

When Hooks Become Brands

The other evening I kicked back, cracked a few beers and watched Metallica’s “Through the Never”. I have always been a fan of the group, caught them live on several occasions and own all of their albums. However, this time I watched their concert through the lens of a marketer, and what did I learn?

Metallica’s hooks have evolved into their own mini-brands that fuel the group’s ongoing success.

To help explain what I mean let’s look at a few great Metallica hooks and how they exploited them into a multi-million dollar franchise.

First take a listen to the opening of  their 1988 hit One. The simple haunting guitar hook sits on top of a background of gunfire helping set-up the overall feel of the song. It is a well crafted piece of music that would eventually catapult into it’s own brand image starting with a music video that left every kid in the late 80’s/early 90’s in complete awe.

Now watch how they carried that hook (now a brand) through to their live show 24 years later.

In 1984 the group unleashed Ride the Lightning offering up one of the most iconic Metallica tunes to date, For Whom the Bell Tolls. The song started with the sounds of, you guessed it, church bells followed by the pounding full band hits that have become a rally cry of fans everywhere.

Metallica has proven they know how to write a hook, and those hooks come from every member of the group. There are the dual guitar riffs that open Seek and Destroy. The haunting opening of Welcome Home (Sanitarium). Lars’ precision double bass in One.They even managed to turn lyrics into hooks. Remember Hetfield’s prayer in Enter Sandman followed by that “BOOM”? This group knows how to make music that sticks in our collective minds. Hooks that are so memorable they have evolved into very valuable brands for the franchise.

And it isn’t just hooks that Metallica has branded through the years. They also branded entire albums, carrying iconic themes through decades of live shows. Remember the cover for their 1986 release Master of Puppets?

metallica_-_master_of_puppets_cover

They carried that imagery over into their live shows.  Here they are performing in Seattle in 1986. Notice the iconic crosses in the background?

Now here they are performing 24 years later. They stay up-to-date with the latest in stage performance technology, but stick to the branded imagery of the album. Those haunting white crosses.

How about the cover of And Justice For All?

And Justice for All Cover Art

Lady Justice came to life, and then crashed down, in their most recent tour which was featured in the live concert video Through The Never.

Metallica’s ability to write hooks has placed the group on a successful trajectory. There is no doubt that when Elektra Records A&R director Michael Alago, and co-founder of Q-Prime Management Cliff Burnstein, attended that September 1984 Metallica concert they realized the potential of those hooks and the opportunities that Metallica’s sound provided, which encouraged them to sign the group to a deal that has since launched one of the most successful acts on the planet.

According to an article in Guitar World “they are on the exclusive list of music artists who have sold more than 100 million records, and each of their albums has enjoyed multi-Platinum status, an achievement that even AC/DC, the Rolling Stones and U2 haven’t matched. And according to an article in Loudwire, in 2012 the group only played thirty shows, but took in $86.1 million in ticket sales. That’s about $3 million per show.

Sure, there are numerous factors that have played into Metallica’s success. They were first movers in the thrash metal scene of the 80’s, helping establish them as a namesake in the genre. A genre whose success lies in touring and not #1 Billboard hits, which ultimately builds a loyal fan base. But there is no doubt that the memorable hooks they developed have emerged as their own icons of music, which, in turn, have provided the group with huge notoriety and success.

Bands and artists seeking long term success in music should break out their note pads and take a course in Metallica, which, by the way, would be the best college class ever!

In my next post we will dive deeper into how hooks have evolved over the years and why musicians should look at them to help fuel their success.

Ticketing as a Marketing Tactic

Up until the early 80’s venues, promoters, and their distribution partners handled ticketing directly. Then in 1982 an analyst named Fred Rosen came up with the idea of offering cash strapped performance organizations bonuses and advances if they signed over their ticketing exclusively though his company. Rosen’s model paid off and Ticketmaster went on to dominate the ticketing industry.  In 2010 the firm merged with concert promoter Live Nation to become the largest concert promotion company on the planet, selling an estimated 119 million tickets worldwide that year.

To this day, Ticketmaster continues to dwarf the market, but that doesn’t mean promoters and venues aren’t without options. Thanks to the proliferation of the Internet, new services have emerged that allow promoters the opportunity to control the sale, but perhaps more importantly, the marketing of their event.

Companies such as TicketforceVendini, and Flavorus fill the voids of Ticketmaster in a few key ways.  First, they allow the promoter to control every aspect of performance sales dates from any computer with online access. For those utilizing Ticketmaster, pre-sales, on sales, and ticket cut-offs must be coordinated through the ticketing giant and their system built on non-user friendly software. Managers do not have direct access to their own events. This makes it difficult for the promoter or venue to get tickets listed quickly, enact unique pre-sale campaigns, adjust ticket sales cut-offs, and release holds on their schedule. Second, these services do not place their own fees on top of the ticket price. Instead they bill the promoter or venue directly. This can create huge good will for consumers who are used to seeing their $45 ticket change to $55 plus after fees are tacked on.

Perhaps the most crucial thing these boutique-ticketing services offer is the venue’s ability to control every aspect of their marketing campaign for the performance. Managers can choose which supply channels they want to offer such as mobile, mail, phone, and in-person ticketing. Valuable customer data such as email addresses and demographic statistics can be integrated directly into the venue’s customer relationship management software.  This allows managers to pro-actively manage and market future events, thus increasing ROI and consumer engagement and loyalty.

All of these services run on a whiteboard template. Working with the venue’s marketing and design teams, the ticketing processing companies integrate the ticketing service right into the venue’s website. This ensures that the consumer stays within the organization’s space and prevents them from having to click into a third party site, a process, which increases cart abandonment rates dramatically. Once established, the venue’s graphic designers can create custom click through banners for the ticketing portion of their site that can be used as ad space, or more effectively as a way to cross-promote events, sell parking, merchandise, restaurant reservations, or anything else to increase revenue for the property.  Even the ticket stock can be pre-printed with the venue’s brand aesthetics, special promotions, or used as third-party space for ad sales revenue.

Despite these positives, not enough can be said about the power of having Ticketmaster in your corner. Due to the brand legacy it has become a first visit for most consumers seeking events to attend. Combine that brand recognition with the organization’s powerful search friendly infrastructure and any query with the word “ticket” attached results in a first place ranking on many of the top search engines. Sure many independent artists have seen success moving against the Ticketmaster grain. Comedian Louis C.K. sold a whopping $4.5 million in tickets in just 45 hours through his own website in 2012, but he still must issue tickets through Ticketmaster for venues with exclusive deals with the concert promoter, and when you are piecing together a large tour the Ticketmaster name offers you much better exposure than these boutique agencies can offer.

That doesn’t mean boutiques aren’t trying. The modern day ticket suppliers place a lot of clout in their power to enable your social community. All of these services make it extremely easy to sell tickets through spaces such as Twitter, Facebook, and Google Plus with instant fan page and link creation. For venues such as casinos who see their client base come from a small local area or small theaters who see patrons from a small sect of the local population, this type of social campaign strength can actually enhance overall ticket sales for the venue.

All in all choosing a ticketing service can be a tough decision.  It all depends on the venue, the acts you bring in and the type of client base. I would say that leaving Ticketmaster out of the loop is ill advised, their brand recognition is just too strong, but there is a lot to say about the personal attention and configurability of the new solutions popping up in the market.