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Marketing Challenges for the Global casino Industry in the Year of the Dragon and Beyond
by Sudhir Kale

2011 could be generally considered as a tough year for the casino industry, unless you were operating in Singapore or Macau. Overall, the industry saw lacklustre revenues, a reduction in margins, and a surge in player reinvestment percentages. It was one of those few periods in gaming industry’s history where marketing professionals had to work extra hard to keep the casino floor busy and to keep their job secure.
2012 could prove equally challenging for casino marketing folks. The overall economic performance still remains a mystery, and competition within the industry could intensify from here on as many state and provincial governments look to casinos as a means of generating badly needed tax revenues. Besides, with the marketing function being subjected to increasing scrutiny in the C-suite, casino marketing professionals have their work cut out for them. But this could also be the year where marketing earns the respect it is owed from other C-level executives. To establish its legitimacy within the organization, marketing professionals need to address five important issues.
1. ROI Accountability
John Wanamaker, considered by many as a pioneer in marketing and the father of modern advertising is reported to have said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” In no other context does this observation ring truer than in the casino industry. It is not just the return on advertising and other mass marketing expenditures that we’re unsure about, but the whole gamut of marketing related expenses, from the salary and bonuses paid to the marketing staff to the ubiquitous car draws and door prizes. Sure, we do try to measure the performance of our various promotional campaigns, but I have yet to meet a casino executive who has been able to quantify the net marketing contribution for the company.
With access to resources getting scarce, marketing budgets are going to come under increasing pressure. This is already taking place in other industries where marketers are asked to assess the return on marketing dollars allocated to a product or service. The metric of effectiveness has shifted from the volume of sales generated to the marketing productivity. Executives who can tie their performance to solid financial measures will be the ones who are looked up to.
2. Data Explosion
Analytics experts are of the consensus that the total data at our disposal are growing at a rate of forty percent every year. What this means is that every 1.75 years, we have twice the amount of data to contend with. With such a massive upsurge in data, many executives feel powerless in trying to make sense of the data deluge. Many concede that we are getting data rich but information poor with every passing day.
Few executives have the training or experience to harness the opportunities presented by unprecedented data munificence. Yet, advances such as big data and in-memory computing provide depths of consumer insights that data aficionados could only fantasize about just a few years ago. Few marketing professionals in the casino industry have taken advantage of not just the sheer volume of data but the increasingly sophisticated analytical techniques with which to make sense of the data. Marketers will be increasingly required to upgrade their skills when it comes to conceptually understanding the Marketing-IT interface as well as being able to use high-level statistical techniques for solid customer insights.
3. Social Media
For sure, every casino has its Facebook page, and most properties provide opportunities for customers to engage with them via Twitter. Unfortunately, most companies in the gaming space are mismanaging their social media communication. They practice aggressive selling when they should be listening, many use social channels the way they used mass communication -- for broadcasting as opposed to dialog -- and few have in place relevant metrics for assessing their effectiveness with regard to the new media.
The risks associated with inept running of social channels are high. With social media, anyone can become a publisher, broadcaster and critic. A disgruntled customer can get on to Facebook and LinkedIn and seriously tarnish not just the casino brand but the reputation of the casino marketing executive. Remember someone posting porn on the Facebook page of one Singapore casino? Casino executives need better understanding and appreciation of social media so that they are able to integrate the new media such as Facebook, Twitter, LinkedIn, Four Square and YouTube with the traditional media such as mass advertising and direct-mail.
4. Decreasing Brand Loyalty
Let’s face it. We are among the most commoditized industry in the world. The gaming products we sell are pretty much the same and the prices we charge across the industry are uniform. Under this scenario, little can be done by way of product differentiation. Sure, you can always refurbish your restaurants and renovate the property, but the actual gaming products sold will always remain fairly standardized. Consequently, it is hard to have a cadre of loyal players unless you have a regional monopoly.
Despite the best intentions behind player retention initiatives, maintaining player loyalty will continue to be an uphill struggle. Loyalty can of course be bought in the short-term with generous comps and extravagant promotions but these retention tools are expensive and easy for the competition to copy. True customer loyalty, attitudinal and behavioral, is mostly the outcome of how your frontline employees treat the players. A customer-centric culture backed by employees who are rewarded on the basis of metrics that ensure the best possible customer experience is the only proven antidote to customer churn.
5. Shifting Demographics
The casino industry has to try hard to woo the Millennials, particularly the Echo Boomers, if its future is to remain secure. This involves massive retargeting and a rethinking of promotion and even products. With opening up of the markets in Singapore and Macau, the ethnic composition of casino patrons at the global level has undergone a sea change. In this decade, we could expect Japanese and Indians to further alter the makeup of global casino clientele.
Executives will need to be open minded and adaptable to cope with shifting customer demographics. Not every market will respond to the “build it and they will come” operating philosophy. Changing demographics will demand a constant and vigilant assessment of customer needs, desires, and aspirations. Casino marketers will have to stretch their powers of imagination and analysis to ensure that groups such as the Echo Boomers are provided with a compelling gaming experience so that they do not increasingly look online to satisfy their gaming desires.
ROI accountability, data explosion, new social media, fickle-minded players and a different clientele to contend with will all make the casino marketer’s life more interesting and challenging. Let’s not forget that this is the year of the Dragon. Rearing its head once every 12 years, the dragon is the only mythical creature among the dozen animals in Chinese astrology. Maybe this time period could prove to be the beginning of an uncertain, surreal, and bizarre era for the casino industry.


Date Posted: 30-Apr-2012

Sudhir H. Kalé, Ph.D., is the Founder of GamePlan Consultants, a company that offers marketing-related consultancy and high-end training to the casino industry. He is also Professor of Marketing at Bond University. You can write to Sudhir at skale@gameplanconsultants.com, or visit his website, www.gameplanconsultants.com.

 
 
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