EXTRA, EXTRA, Social’s All About It!

 

An old time News Stand

Copyright All rights reserved by mwr83 from Flickr Creative Commons

 

I started my career as a photojournalist at the age of 18. The local newspaper had hired me after I investigated a minor scandal at my high school, which got a lot of people in some hot water. This landed me on their radar and eventually on assignment for a Pulitzer-Prize winning editor.

Oh wait.

For all of you that don’t know, a newspaper was a printed version of say…Facebook. The only difference was instead of paying with likes, loves and shares you paid with real cash to see a daily tally of what everyone in your hometown was up to.

The economics of a newspaper are quite simple.  Present enough relevant knowledge to attract advertisers to buy up space surrounding that information. A consistent run of good stories drove-up a key metric in the news business – subscriber rates.

Subscriber rates are important because, in a nutshell, they guarantee to your advertisers how many people will have access to their marketing messages. If the newspaper has more subscribers, they can charge those advertisers more money. To increase those subscriber rates, newspapers offer readers a deal to switch from just picking up the paper at the store, to having it thrown on their front porch by a crazy haired mother whose kid didn’t get up in time to pedal his route before school.

I like to equate social media to the economics of the newspaper industry. However, the model is slightly different.  First, we still have businesses looking to tell consumers about their products and regardless of what you have heard about The Long Tail, Niche Marketing, and On-Demand Production. Deep down inside, marketing is a numbers game and admen (and adwomen) know that the more opportunities to see – the better their chances are of making a sale. Things change slightly in the “subscriber” section of our social model, because our customers no longer must pay to subscribe to relevant information. Instead, they are now in control of which channels they will accept through a Like or Follow.

The major change in the social model is the blurring of the line between advertiser and news. Many traditional journalism brands such as CNN, The New York Times, and USA Today still follow the basics of the elder model. They provide the information people want to see and advertisers pay to show up beside those stories. I will assume that this is because they too see the similarities between their past “ink” audiences and today’s “click” consumers. The problem arises with the many organizations who do not understand this similarity between print and digital. They either un-wittingly leave out the information component of their online publications or purposely remove them to utilize the entire space as nothing more than a billboard where they bombard their audiences with sales pitches and marketing messages. Interestingly, these same publication tactics exist in the print medium as well. They come in the forms of penny savers, car flyers, and grocery store circulars that probably spend more time at the bottom of a bird’s cage than in a consumer’s hands.

So, why am I explaining the similarities between the news medium of yesteryear and today’s social advertising strategies?  Aren’t newspapers dying off?

Yes, print news is dying. However, our appetite for information is not. We have become an interconnected species hungry for more information. YouTube has made millions on videos that teach you how to fix your own car, grow your own vegetables, or learn calculus among a host of other subjects. Facebook connects thousands of people everyday to share their life stories, anecdotes, and views on everything under the sun and, according to some sources, over two million blog posts are published each day on a range of topics. We have become a society in demand of more information than those before us. However, unlike our predecessors who wound up with ink on their fingers from thumbing that information we cleanly click and swipe.

With that being said, I would like you to return to the newspaper model I described earlier. Think about its simplicity. Provide enough relevant information to attract a sizeable audience and charge advertisers to surround that information. Now apply that theory to your social pages. Provide your consumers with enough interesting information so they return to your pages over and over again. In the marketing world, these are called opportunities to see. The more you have the statistically greater your chances will be for a positive result such as an interaction, or better yet – a sale. It doesn’t matter if you do not want outside advertising on your site. Instead, you can simply display your own messages. Just remember to empower your social team to focus on the “news” element first and your long-term ROI will be greater.

Sure, newspapers are dying, but their economic model can be a powerful tool in today’s social-focused ad world. All of the basic elements are there. You have a medium for news distribution and you have an audience hungry for that information. Put those elements together and you have an opportunity to create a sales channel for any internal or external brand.

But only if you can put the news first.

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

Millennials Versus baby Boomers in Gaming

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

Solve the Issue Not the Problem

Solve the Issue not the Problem

 

When I signed up for my HMO health care provider, I chose a D.O. over a M.D. In my research, I found that while both save lives and treat illness everyday the D.O. focuses on the “whole” person while the M.D. seeks to address the disease itself.

Much like my medical provider preferences, I have found that the holistic approach to management may be best in the live entertainment field as well. This is due to two primary issues inherent in our industry. The first is there are numerous stakeholders with varying agendas working on a single project (the show). Many times these needs clash with one another. For instance, the artist may feel like the bass is overpowering her vocals, making it difficult for her to reach specific notes. However, the sound guy argues that the current bass mix is paramount to the best F.O.H. sound. Off stage, the waitstaff feels the overall volume is too loud, making it difficult for them to take drink orders while customers in one section feel as though they are struggling to hear the boom stick. Each one of these stakeholders has different needs regarding this one element of the show – the bass EQ. Making matters worse, this is just the tip of the iceberg. There are additional sound frequencies that must be addressed along with lighting, seating, ticket pricing, bar service, security, and parking among others, resulting in a litany of stakeholders’ needs that must be balanced.

Contributing further to the need for a holistic approach is the subjective (and at times emotional attachment) these stakeholders place on the final product. This is especially true when there is a lack of communication between senior leadership and line-level employees. For example, a bartender may enjoy the light jazz he has always had in his room because he is a fan of Coltrane and it allows him to chat with his guests more freely. However, management has decided to attract a different demographic and in doing so has shifted entertainment to hip-hop, a style of music the jazz-loving bartender feels is nothing more than noise.

These two underlying issues in the venue space make reactionary approaches to problem solving oftentimes inefficient and short lived. This is because the quick-reflex tactic will likely address the problem, but only appease one stakeholder group, leaving the other factions feeling alienated. This alienation is only exasperated by their emotional attachment to the product, which can increase the probability that (given the chance) they will work outside the box to return to the environment they once deemed as satisfactory. This could lead to them challenging the new initiative a number of ways such as poor performance, internal gossip, and negative appeals to customers – all of which can ruin the guest experience and put the organization’s mission, strategy, and profitability in jeopardy.

While management will never have 100% buy-in from such a diverse and emotionally charged group of stakeholders, they can mitigate this risk by simply stepping back and analyzing the issue from a holistic approach much like a D.O. would do. For example, a few months ago there was a huge problem with volume at a venue I manage. Waitstaff in a particular location couldn’t hear their customers, so they demanded that the volume be turned down. The sound technicians obliged immediately and brought down the overhead speakers that made up the house. However, the volume was never low enough for the waitstaff who continued to complain and thus the cycle continued until there was nearly no sound in the house. The reactionary approach to the problem was not working and a result was needed. The technicians and myself decided to step back and walk the room. We stood by the bartenders who were having trouble hearing their customers and traced the problem to the position of the artist’s monitors. We then spoke with the artists, who informed us that they relied on the house system to hear their vocals and when it got lowered they needed to make-up the difference via their monitors, so they would turn them up. Stepping back, speaking with all stakeholders involved, and walking the room revealed that the reactionary problem solving approach of arbitrarily lowering the volume was actually contributing to a louder environment and making the problem worse. Instead, we followed a holistic approach, which led to true results that helped appease all involved and moved the program forward.

The take-a-way from this should be that it never hurts to slow down, step-back, and seek out the root of a problem. Most of the time it will only take a minute and a simple fix is all that is needed. However, the few minutes it takes to analyze the problem offers a host of benefits. As mentioned, it will provide keen insight into a potentially larger issue that will only re-occur or get worse if not properly addressed. In addition, there are numerous indirect benefits to the holistic problem solving approach. For example, it will force you to speak with and (more importantly) listen to your line-level employees. The benefits of listening to your troops on the ground are tremendous. They know your customers (probably better than you), have a unique view of the day-to-day operations, and can offer suggestions to better the guest experience, work environment, and profitability. After you are done listening, you can explain your plans to address the issue with them. They will see this as a sign of respect, which may help them buy into your ideas and act more patient as your plans unfold.

While this post is focused on my experience in the entertainment industry, the concept of tackling problems holistically can be carried over to many organizations. Give it a shot and let me know the outcome in your business model.

Photo Credit: Gavin Schaefer from Flickr.  

Strategic Analysis of Live Nation Entertainment

Rock Concert and Rock Horns

 

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

Lessons from a Mexican Restaurant

Lessons from a Mexican Restaurant

 

The other day I went to my favorite Mexican restaurant for lunch.  It is a quaint little “mom and pop” shop that makes some great food, has an awesome atmosphere, and plays great Latin music.

I noticed they had a sign by the cash register that said:

Join Our Email List

Get 20% Off Your Meal

Get Great Coupons and Chances to Win Prizes

That sign made me realize that so many artists offer me nothing to join their email lists, and you know what?…It greatly reduces the chance I will.

Seems my homegrown Mexican entrepreneurs know more about marketing than most entertainers.

Musicians undervalue the power of the email list.  It is a direct connection to your consumers. It is a way to tell them about your new album, so they buy it. Inform them about upcoming shows, so they go. Showcase your newest merchandise, so they wear it. And to like, follow and join your social media networks so you can keep them informed and connected.

Most of you looking for a record deal have no idea that labels place a lot of weight on your mailing and social lists. Why? Because they know if you can get 2,000 people to follow you on your nothing budget than their $500,000 check would get exponentially more fans interested, which leads to more money.

Even those of you who want to make it on your own have no idea the power of an email list. That list is a great way to keep your fans coming to shows and buying into your brand. It is also a great selling tool to help you get money from sponsors who want to put a link on your site, a banner at your show, or a tattoo on your drummer’s forehead. And the more names you have, chances are the larger the paycheck.

Basically put, in today’s marketing world the email list is gold, so you have to work hard to get people to join it.

Remember it is a business transaction and every exchange with a consumer (even when there is no money involved) requires you to give them something for their currency, even if that currency is their email. Offer them a few free tracks, a free concert ticket, a chance to win something cool and there is a greater chance they will join your cause.

Never underestimate the power of consumer information and the email list is a great way to get it.

With the Launch of Beats Music, Streaming will Ramp Up Encroachment of Digital Music Sales

Editors Note: The following is an academic paper I presented in a managerial economics course while working towards my MBA. I have included it in its entirety with citations, only edited to reflect the launch of Beats Music.  

Beats Music has tossed their hat into the streaming market. The popular company, known for their high-priced headphones, follows Apple, who jumped into the streaming ring in the fall of 2013. These two companies are attempting to capitalize on a market estimated to rise from $5 billion this year to $46 billion by 2018, and is currently dominated only by a handful of companies including SpotifyPandora, and Google Play (Snider, 2014).

Streaming is encroaching heavily on the market for digital downloads, which has many in the music industry concerned. Billboard reported on January 3rd of this year that digital track sales fell 5.7% while digital albums fell 0.1%, which is a historic first since iTunes opened their doors. Industry managers and pundits alike have concluded that the consumers growing appetite for streaming is most likely the culprit (Christman, 2014).

From an economics perspective what the music industry, particularly the digital sales sector, is witnessing is a leftward shift in the demand curve brought about by a combination of the price of related goods (streaming) and changing consumer tastes. This demand shift will continue as more and more solid brands such as Beats, Apple, Spotify, Pandora, and Google ramp up their advertising to sway consumers into paid subscriptions, which, in turn, will lead to a decrease in demand for digital downloads (a substitute good).

In conventional economics, such a shift would lead to unsold inventories held by retailers, which would inherently lead to a decrease in the price by retailers as they attempt to achieve the new equilibrium. While this is certainly possible, it is also equally likely that this will not happen as companies such as iTunes and Amazon do not carry a physical inventory of digital downloads and have less of an incentive to reduce costs to unload excess product and achieve their new equilibrium point. Instead we may find that they attempt to shift the demand curve towards the right and back in their favor through more advertising and entering more untapped global markets.

References

Christman, E. (2014, January 3). Digital Music Sales Decrease For First Time in 2013. Billboard. Retrieved January 13, 2014, from http://www.billboard.com/biz/articles/news/digital-and-mobile/5855162/digital-music-sales-decrease-for-first-time-in-2013

Snider, M. (2014, January 11). First Take: New Beats Music may spur streaming growth. USA Today. Retrieved January 13, 2014, from http://www.usatoday.com/story/tech/personal/2014/01/11/first-take-look-at-beats-music/4430383/