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The Name Game

The Importance of Brands During an Economic Downturn

We’ve all heard or read about it by now, and most of us are experiencing it:  significant cutbacks to the marketing budgets that promote the gaming industry’s greatest assets, its brands.

Sure, it’s tempting. Cutting advertising expenditures allows an operator to show immediate improved results through reduced expenses. Arguably, these cuts may not have an adverse effect in the short term. Their long-term impact, however, can be forever detrimental to a brand’s performance and equity.

Some may say this line of thinking is self-serving, coming from a marketing agency whose livelihood is somewhat based on clients’ marketing expenditures. We are certainly not alone, however, in the belief that limiting brand-focused communication during a downturn can be a mistake and something that deserves serious consideration and attention before dropping the ax.

According to a recent nationwide gaming survey, “Brand is the primary driver of casino preferences topping gaming options, comp program, service and amenities.” This notion is supported by a recent national leisure and lifestyle study conducted by the SK+G marketing agency which found a casino’s brand was viewed as one of the primary factors in driving visitation, along with location, types of games offered, ambience/environment, and quality and variety of amenities (one could make an argument that all of these elements comprise the casino’s respective brand).

A number of other studies over the years have confirmed the benefits of brand marketing during a down economy:

In an article from US Banker that compared leading brands in 1925 with leading brands in 1985, in 19 of 22 categories the brand leader in 1925 was still the market leader in 1985, a testament to the staying power of strong brands.

In an analysis performed by McGraw-Hill Research that reviewed the performance of 600 companies from 1980 through 1985, results indicated that brands that maintained or increased ad spending during the 1981-1982 recession realized higher sales growth, both during the recession and over the subsequent three years, versus those companies that eliminated or reduced advertising expenditures.

 A 1993 report from Coopers & Lybrand and Business Science International titled “Companies That Maintain Aggressive Marketing Programs Are Less Affected by a Recession” stated, “Businesses that maintain aggressive marketing programs during a recession outperform companies that rely more on cost-cutting measures. A strong marketing program enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery.”

In its annual branding report titled “Best Global Brands 2008,” brand consultancy Interbrand published an article from Nancy F. Koehn, a brand strategist, consultant and professor at the Harvard Business School. Koehn eloquently summarizes why brands are important, especially in a down economy. Her words ring true to all in the gaming and hospitality industry:

“It may seem counterintuitive, but brands actually matter more-not less-in uncertain economic times. This is because in a downturn or in a moment, such as ours right now, when there is so much confusion on the economy, most people are running scared. In all this turbulence and seeking, brands offer direction and clarity. Given this, it makes good strategic sense for CEOs to pay careful attention to brand in the midst of turmoil and doubt. After all, most of one’s rivals are likely to be running away from brand. So there is competitive advantage to be had.”

During tough economic times, it makes more sense than ever to “fish where the fish are” and focus on driving business from existing customers. Your bread-and-butter clientele is the audience that is more loyal than anyone to your brand. It goes without saying that keeping a good customer is less expensive than finding a new one (some estimates say five to seven times less costly). Remind your best customers of what your brand stands for, and emphasize your value proposition.

Too many marketers (gaming companies included) resort to price and rate reductions as a first and ongoing reaction to adversity. This is a slippery slope, difficult to recover from when the economy eventually turns around. Instead, combine a brand message with a strong call to action that is based around value and experience, not just price.

A look at some of the gaming industry’s most successful brands provides strong evidence that stellar brands are able to survive tough times better than the competition:

Bellagio-In the midst of one of the gaming industry’s most severe recessions, Bellagio recently experienced its best revenue-generating quarter in history.

Borgata/The Water Club-As Atlantic City deals with its second consecutive year of declining gaming revenues, Borgata and its sister property Water Club continue to buck the trend as the market leader in both gaming and non-gaming revenue.

Seminole Hard Rock Hotels and Casinos, Hollywood and Tampa, Florida-All one needs to do is set foot in a Seminole Hard Rock property in Florida to realize the importance of a brand. In Seminole’s case, they’ve taken one of the world’s most recognized brands in Hard Rock and activated it in a meaningful and relevant way to their target audience.

Many skeptics doubted the ability of a youthful brand such as Hard Rock to succeed in the semi-retirement and “snow bird”-dominated populations of Hollywood and Tampa. Seminole Hard Rock has proven them wrong by creating a Hard Rock experience that is welcoming and comfortable to all.

It’s no coincidence (or surprise, considering the strength of their respective brands) that each of the examples cited above represents a company that continues to invest in its brand through marketing and communications efforts targeting core customers.

Beyond the gaming, restaurants, room accommodations and other amenities they offer, Bellagio, Borgata and Seminole Hard Rock provide guests with a level of comfort and assuredness. Consumers know each of these brands will provide them with a quality experience and overall good value, because they trust them. All of these property brands consistently deliver on their respective promises and meet, if not exceed, guests’ expectations.

While we may not want to admit it, gaming is a commodity today. The brands that guide and create the experiences millions enjoy in casinos around the world are what make the difference and lead to long-term success.

Think twice before taking the easy way out next time. Invest in your brand and promote it. Strong brands can be your best friend when the economy is your enemy.

John Schadler is managing partner and Jim Gentleman is senior vice president of strategy and account management at SK+G, a full-service marketing agency based in Las Vegas that specializes in leisure and lifestyle brands. Clients include MGM Mirage, Borgata Hotel Casino and Spa/Water Club, Trump Hotel Las Vegas, Montage Laguna Beach, Montage Beverly Hills, The Grand Del Mar, L’Auberge du Lac Casino Hotel (Lake Charles, Louisiana), Lumiere Place (St. Louis), and Belterra Casino Resort (Vevay, Indiana). The company may be reached at 702-478-4000 or [email protected]

John Schadler is managing partner and Jim Gentleman is senior vice president of strategy and account management at SK+G, a full-service marketing agency based in Las Vegas that specializes in leisure and lifestyle brands. Clients include MGM Mirage, Borgata Hotel Casino and Spa/Water Club, Trump Hotel Las Vegas, Montage Laguna Beach, Montage Beverly Hills, The Grand Del Mar, L'Auberge du Lac Casino Hotel (Lake Charles, Louisiana), Lumiere Place (St. Louis), and Belterra Casino Resort (Vevay, Indiana). The company may be reached at 702-478-4000 or [email protected].  

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