CMO Q&A: David Norton, Caesars Entertainment (Extended)

Caesars Entertainment CMO David Norton talks to Alexandra Bruell about how the economy is impacting the casino market.

Alexandra Bruell talks to Caesars Entertainment CMO David Norton about the economy's impact on the casino market and targeting a cash-paying customer.

It's been a tough few years for major casino and entertainment towns such as Vegas. What impact did the economic challenges you faced have on your current marketing approach?
We always thought that the industry was immune to little blips in the economy, but it's no doubt that this industry has been hit pretty hard over the last couple of years. Part of the problem has been that our best customers who had enough wealth in the past were pretty immune, but what happened to their stock portfolios and businesses potentially changed their risk portfolio. The best consumers are still coming and we haven't lost share to our competitors, but their appetite for gaming is less so it takes a lot of retail nongaming customers to make up for these VIPs.

Over the last few years we focused a lot on expense. The biggest expense, which is advertising, we cut a little bit over the last couple of years. We continue to invest in online, but it's about how can we be as efficient as possible, especially with direct marketing, direct mail, and understand which activities are truly driving incremental profitability.

What have you learned about your customer?
What we learned is that for a long period of time - and I think the tide is starting to turn this year because our revenues were down 20% over the last couple of years, but we've certainly flattened the revenue and we're starting to see creep-ups – generally customers were more inelastic. In the past, we'd just throw another event or concert or sweepstakes promotion on the calendar and they would choose to come one more time. [In the economic downturn] they had a fixed budget and if we threw something else on the calendar perhaps it was less incrementally profitable, or just not profitable, to do that.

What does that mean for the types of messages or programs you're communicating to them now and in the recent past to entice them once again?
For the core customer that's come for a long time, it's understanding how programming we do against them is optimal, so which customers are going to shift from Saturday to Wednesday if we're going to put something on the calendar for Wednesday. It's being very surgical in our CRM, and then how do we attract more of a cash-paying customer who may not have thought of our properties previously. One of the bigger things we did against that is we created a group called Togo Experiences, which is focused on customers coming in small groups for occasions. So it's coming in for a guy's bachelor party or girl getaway weekend or golf trip and family reunion.

Are there any particular regions you're focusing on in terms of development and marketing?
For Vegas, Southern California has been big because they can drive or fly pretty quickly – that's been pretty successful, but we definitely have thought about different markets and which ones have more potential and which ones are more of a challenge from an economy standpoint. Memphis is a big market for us – unfortunately it's just challenged from an economy perspective. But the thing we did this year for the first time since I've been here is national TV for Caesars. We had tested in a couple of markets such as Los Angeles and Chicago and got incremental hits to the website. We've seen that [the national campaign] has driven share to our own website which is great.

What differentiates Caesars from other properties in terms of positioning and brand equity?
I'd say two things. One thing is the distribution. Caesars Entertainment is a variety of brands - it's Harrah's, Horseshoe, Flamingo, Paris, and Planet Hollywood in Vegas. We have a big presence in Las Vegas, but we have broad national distribution that MGM or Sands don't have. We can move people across the system because the other differentiator for us is our loyalty program, Total Rewards. As a result we're also pretty famous for our CRM capabilities.

Do you find it challenging to maintain consistency across so many brands?
That's why we centralized more and more of the execution. We've internalized studio and central assets to make sure the message is consistent, as well as consolidated media budgets so we can optimize as well as execute these brands as effectively as we can. They had presided in individual property P&Ls and we optimized that across the enterprise through my group this year.

How are you spending in social media or digital? Are you increasing agency or internal departmental budgets?
Online, we continue to grow in terms of the budget, and social is an emerging channel for us. At CES, for example, we endeavored to respond to 95% of the posts about us and [help] people who were looking for things to do - restaurants or show tickets. It was a high-tech audience so we thought it was a good way to invest time and good learning in this channel. We found it to be pretty successful.

Can you give me a sense of the breakdown in the marketing mix?
One of the things we're definitely trying to do is more with PR. That had been pretty decentralized, as we hadn't had a corporate resource on my team focused on PR even though we would do it for one-off events. That's why we hired [PMK BNC]. We think we can get a lot of buzz out there and create awareness that can be more efficient than traditional advertising given our budget has been cut there.

One of the big things we have planned for the end of the year is a promotion called Total Escape because it leverages our distribution, the various brands, and our [celebrity] assets. We're definitely invested more in PR, and related to that will be social media so we get that buzz around it.

Has online gambling changed the competitive landscape or challenged you in any way?
Not really. It's obviously a huge business and we would like for online poker to become legal. Our philosophy is all this money is going offshore so why not regulate it, legalize it, and have a huge revenue stream to help us with our problem. We've got the greatest brand there is in poker with World Series poker.

Even though there are great [online] businesses and their world has been rocked here in the past couple of weeks, we don't think that it necessarily impacts the business because it's a whole different experience that's quite non-nonsocial to my thinking.

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