Casino Marketing: The Leap from Email to SMS

Jumping the Curve

Guy Kawasaki (managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Entrepreneur Magazine and previously, he was an Apple Fellow at Apple Computer, Inc.) speaks of a concept called “jumping the curve.”

I was fortunate enough to listen to Guy speak at Preview Las Vegas in 2008. The long and short of it is that companies often fall victim to success and don’t invest in the next evolution of their industry. One example Guy uses is the business of keeping food cold. Originally people had to go up to high altitudes to get ice for storing food. Then factories began to produce ice and delivered it to customers. Finally we had the home refrigerator which could freeze ice, eliminating the need for delivery. No one company survived all three stages of this evolution. Prior businesses died out and a host of new businesses emerged at each stage of the evolution. The moral is that your business is relevant one day and can lose relevance if you don’t pay attention.

The Gaming Curve

As a long-time veteran of casino partnerships, experience tells me that the trend of adoption and the use of SMS will follow the same rates of adoption, success and failure that I’ve seen in 7 years in the casino entertainment industry for other new channels, especially email.  Casino properties sell “entertainment,” nothing more. At least in Las Vegas, the value proposition is very broad with offerings from high-end spa to low-brow topless shows. This melting pot of time-eating fun is based on one thing.

I have had the privilege of working closely with some of the greatest minds in the gaming world. Jenny Holaday, a seasoned revenue management, marketing and branding whiz kid who is widely known for her role with Harrah’s Entertainment as Regional VP of Marketing in Atlantic City overseeing over $2B in revenue for 4 premiere properties, said the most interesting thing to really break down the fundamental problem in finding gamers. She said, “You can have two twins with identical habits, incomes, attitudes, etc. and one’s a gamer and one’s not and there’s nothing that will tell you who is who until they come into the casino and game.” With this in mind, we understand that gaming customers are identified over time through their gaming history and why the industry is so offer-based.

The Email Jump

Direct mail is the backbone of casino marketing and has been for over 30 years. Gamers are conditioned to receive offers in their mailbox. They crave the next exciting offer and will often complain when the offers they “earned” are not received. This conditioning of anticipating offers in the mailbox has not been an easy habit to break. The use of email marketing by casino marketers has only recently been widely used in this decade. The more progressive markets that have developed a “best practices” approach to email marketing like many Las Vegas resorts experience high rates of return, reduced expense over direct mail and shorter implementation periods for loyalty campaigns.

In working with the most progressive property on the Las Vegas Strip, I saw first hand the initial depression of open rates and click-thrus while increasing deliverability and database size. In 2006 this property began utilizing email for hotel and gaming offers dropping their direct mail expenses nearly 50% over 2 years allowing for the rapid development of a robust and effective email program. From 2006 to 2007 this property experienced a 6% drop in email open rates (from 50% to 44%), sending nearly 3MM emails in 2007, an increase of almost 16% over 2006.  The number of email campaigns increase by 18% from 2006 to 2007 with 202 campaigns sent in 2007. The trend is higher deliverability (through an obvious attention to “best practices”,) more campaigns, more recipients, lower open rates and lower click-thru rates. This property adhered to compliance with the guidelines set by all the major ISP’s and maintained a very clean database.

It is safe to say that these rates have continued to drop as email boxes become more and more saturated with marketing messaging, spam filters block more mail,   the target audience becomes desensitized to messaging and other environmental factors. Email response rates will normalize over time giving casino marketers a reliability to deliver messages and offers to customers, but the early days of abnormally high ROI will be a forgotten side-effect of ideal market conditions for those that started right and started early with their email marketing program. For those that began late, that high rate of return will never be realized. As bad as this sounds, email marketing should be utilized by each and every casino in every gaming market throughout the world as the most cost-effective direct marketing method available.

The SMS Jump

Experience tells us that the use of SMS will follow the same rates of adoption, success and failure that we’ve seen for other channels in the casino entertainment industry such as email. Think of the analogy by Guy above, but replace our need for “ice” (or really the ability to keep perishables cold) with our need for gamers. There are many different ways of delivering the message that will entice these key drivers for successful acquisition and retention of customers. Similar to the early days of email marketing for gaming properties, the ideal climate exists right now for those that have begun a responsible mobile marketing program.

Take the Las Vegas market with tourist population of about 40MM (That’s about 13% of the entire population of the US!) that are being trained to use their cell phones while on a casino property. Databases on the Las Vegas Strip range from 7,000 to 50,000 active cell phone numbers of those that have opted in to receive casino entertainment messages direct to their cell phone. The number for most of these properties are increasing exponentially as gamers become more comfortable with releasing their mobile phone number to marketers. Outside of Las Vegas, mobileStorm‘s casino partners throughout the country are experiencing similar success.

According to the Nevada Commission on Tourism, a study conducted by Nielsen indicates that the mobile Web is growing at a rapid pace; as of May 2008 there were 40MM active mobile Internet users in the U.S. alone. A more recent study by PhoCusWright indicates that the smart phone adoption is reaching critical mass and by 2010 half of travelers will be utilizing the mobile Web while on vacation. As more and more Americans access the mobile Web the demand for relevant offers sent to mobile phones is expected to increase.

More food for thought…In a recent article on 4Hoteliers.com, the Sabre Travel Network recently surveyed 800 corporate and leisure travelers from Asia-Pacific, Europe, Latin America and North America covering topics ranging from preferred features to fees travelers might pay for travel applications. They found that 69% of these travelers owned as smart phone (78% if we drill down on just North American travelers) and 47% are over the age of 40! The article goes on to explain what types of messaging travelers are getting to their phones:

  • Flight notification (72%)
  • Weather forecasts (68%)
  • Viewing of hotel locations via map (67%)
  • Flight performance (65%)
  • Destination information/city guides (64%)


The Next Leap

All this information gives us a pretty clear picture of what mobile marketing means to the travel industry. 2010 will be a very “formative” year for travelers as marketers either adhere to best practices and begin at the beginning of their mobile marketing program or abuse the right to have a true one-to-one relationship with their customers.

Several common mistakes of those entering into mobile marketing that we’ve seen have prompted us to create a list of “Don’ts”:

  1. Don’t overshoot the audience in terms of their technical capabilities to create downloadable mobile apps. This will work for a select few that have mastered their mobile device but will likely not be appropriate for the majority of your customers. We were at a recent trade show and had to show most of the executives how to execute a text message on their iPhones. I seriously doubt most of them were downloading applications for offers from their favorite hotel.
  2. Don’t send too many text message. If you are sending too much through SMS without each message being of relatively high value compared to offers sent through other channels, you are ruining it for everyone. Mobile is sensitive and very personal. We as marketers have a duty to protect this channel and not ruin opportunities to acclimate people to responding to text message offers.
  3. Don’t rush the process. Give your customers and potential customers time to get used to the idea of receiving messages from you on their phone. Send your mom a text tomorrow and see what happens. I know if I send one to mine, it would be just as effective to throw my cell phone as far as I can in her direction. She is the quintessential gamer…55-year-old women who will spend hours trying to earn her next set of snowman salt and pepper shakers.  I am happy she just really started using her email account in 2009. I think we may hit our breakthrough with text in 2010.
  4. Don’t repeat offers that you are giving through other media. This is where customers create value for giving up their mobile privacy. If your offer is weak in comparison to other general offers, your customer will feel betrayed and your efforts will likely backfire. Offers sent via SMS should be unique to that channel and be highly relevant. Save your best offers for SMS and just like Pavlov’s dogs, they will begin to salivate every time their phone buzzes.

The days of MMS (multimedia message service), location-based technology, integration of POS/Hotel/Player Tracking systems and all the bells and whistles of mobile marketing are available today, but the consumer is king. Much like where email is today after a few decades of mainstream use, mobile will take time for people to get used to and we as marketers control the outcome of what that looks like by how we treat the medium.

The vast majority of us are not “innovators” or “early adopters”. We can segment our mobile efforts to include those that are more proficient with mobile devices, but the majority of those that have mobile phones will not be able to accept complex messaging or messaging that requires a complex set of steps to access it. For now, KISS (Keep It Simple Stupid) is a good rule of thumb and the key is working with a mobile partner that gets where the population is in this bell curve and moves along it seamlessly with technology, best practices, knowledge of ever-changing compliance issues and carrier requirements and just a dash of common sense. I believe we are going to move at least half of mobile phone owners over into the “Early Majority” in regard to utilizing text to receive offers by the end of 2010.

Please go to our whitepaper on Casino Mobile Marketing:

There is a ton of recent and relevant information on what happened on the casino landscape in 2009 in mobile.

Darren Withers, Director of Business Development @ mobileStorm



 

Posted in Casino Marketing


3 Responses

  1. Too good dude! I liked it!!

  2. Victor says:

    Hey Darren this article is great, i particularly like the 4 common mistakes mobile marketers make since i have made them myself lol.

  3. cazare says:

    cazare

    Hello it’s me, I am also visiting this site regularly, this web site is in fact pleasant

    and the visitors are truly sharing good thoughts.

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