Marketing Response and Optimization

Model for Alpha Casinos

What we will talk about today

• The model architecture

• Decomposition of marketing effects

• Total Alpha

• By Property

• By Week

• Marketing Variance Analysis and Drivers of Performance

• Total Alpha

• By Property

• Marketing Spending Optimization

• By Media

• By Property

What we will talk about today

• Special Issues and Topics

• Impact of Fuel Prices on Alpha Casino

• Promotion Effectiveness by Event

• Television Effectiveness

• Cable v. Broadcast

• Media message effectiveness

• TV & Radio media message optimization

• In-State v. Out-of-Area media optimization

• Marketing Synergies

• Marketing Investment Matrix

• Appendix: Model fit and validations

Model Architecture: Covers all marketing drivers plus

hotel rates and region fuel prices

Revenue

Gas.Prices

Print Media

OOH Media

Hotel Rates

Loyalty Cards

Promotion

Direct Mktg

TV MediaCable and Broadcast GRPs

Newspaper & Magazine Spend

Direct mail circulation &

Optimization

New issues

Nine Events

Outdoor spend

Region avg. fuel prices

Average weekly cash room rate

price

By Week

&

Property

Paid Search, Display Ads &

Optimization

Online Media

Total Alpha Casinos: Decomposition of Annual

Revenues. Direct is Dominant and Accounts for

about 38% of Total Marketing Impact

52.1%

18.4%

3.2%2.3%4.6%1.4%

7.4%

6.1%

4.4%

47.9%

Base

Direct

Promo

Loyalty

ONLINE

OOH Media

Print Media

TV

Radio

Revenue Decomposition by Property: Significant Differences in Drivers

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Property 1 Property 2 Property 3 Property 4 Property 5

Radio

TV

Print Media

OOH Media

ONLINE

Loyalty

Promo

Direct

Base

Properties 2 and 3 more driven by media, while Property 1 and 4 & 5 more affected

by Direct Marketing.

Decomposition of Alpha’s Revenues by Week:

TV and Radio went Dark in Q1-08.

-20,000,000

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

Hotel.Rates

Gas.Prices

Radio

TV

Print Media

OOH Media

ONLINE

Loyalty

Promo

Direct

Base

In Q1-08, TV, Radio and Print

went dark or nearly dark

There was a significant reduction in TV, radio and print in Q1 and this impacted overall

performance.

Weekly Revenue

Q1-08 v. YA Marketing Variance Drivers: Lack of TV, Radio and Print

media in Q1 were major negatives driving -3.9% YOY Trend

-10.5%

-6.7%

-5.3%

-3.5%

-2.1%

-1.1%

1.3%

1.3%

4.6%

5.8%

12.3%

-100,000,000 -80,000,000 -60,000,000 -40,000,000 -20,000,000 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000

Marketing Variance

Direct

Promo

ONLINE

Loyalty

OOH Media

Gas.Prices

Hotel.Rates

Base

Radio

TV

Print Media

Direct and promotions were strong positive drivers, but the cumulative -23.5% impact from

TV, radio and print, drove the negative YOY performance

Weekly Revenue

Marketing Variance by Property: Property 2 holding its own, but

Property 4 a major weakness, accounting for 75% of the -3.9% YOY

decline.

1.1%

-3.0%

-1.1%

+1.4%

-0.21%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

Property 1

Property 2

Property 3

Property 4

Property 5

Base

Direct

Promo

Loyalty

ONLINE

OOH Media

Print Media

TV

Radio

Gas Prices

Hotel.Rates

% Impact on HAC Total YOY Trend

Q1-08

Incremental Revenue per $1K Spending: Print Magazines and

Gaming, Entertainment media messages are the most productive

media tactics

$34

$41

$56

$111

$197

$256

$256

$257

$350

$968

$1,223

$1,588

$2,258

$0 $500 $1,000 $1,500 $2,000 $2,500

Incr.Rev.

Per $1K

Print Mag

Radio Promotion/Gaming Message

Radio Entertainment Message

Radio

Online Paid Search

Cable TV

Radio/TV Brand Message

Promotion

Print News

Broadcast TV

Online Display Ads

Direct

OOH Media

Marketing Optimization by Media Channel: Shifting spending away

from Direct Marketing and more towards Mass Media & Promotion is

expected to lift total revenues +11%.

Marketing Contribution Current Spend Optimal Spend

Print $197,919,585 $3,137,056 $4,730,312

Radio $119,205,549 $622,139 $3,430,736

TV $163,044,982 $5,990,834 $12,351,200

OOH $38,833,486 $5,084,962 $2,140,374

Online $124,430,739 $3,179,562 $6,637,395

PROMO $86,299,932 $1,941,516 $7,392,062

Direct $495,243,704 $83,630,050 $66,904,040

0%10%20%30%40%50%60%70%80%90%

100%

Print

Radio

TV

OOH

Online

PROMO

Direct

$103,586,119 $103,586,119

Marketing Contribution Current Spend Optimal Spend

Property 5 $574,305,007 $33,533,049 $13,533,016

Property 4 $494,747,607 $23,193,519 $33,243,438

Property 3 $356,899,222 $19,877,122 $22,877,122

Property 2 $479,397,249 $22,641,594 $35,169,912

Property 1 $323,852,448 $24,217,958 $18,639,753

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Property 5

Property 4

Property 3

Property 2

Property 1

Total Marketing Spending Optimization by Property: Calls for shifting

funds from properties 1 and 5 towards properties 2,3 and 4

Special IssuesFuel Prices

Promotions

Media message effectiveness

In versus out-of-market spending

Marketing synergies

Tactical Investment Guide

-1.8%

-1.9% -1.9% -1.7%

-1.8%

-$350,000

-$300,000

-$250,000

-$200,000

-$150,000

-$100,000

-$50,000

$0

Property 1 Property 2 Property 3 Property 4 Property 5

Revenue Impact

Impact of Fuel Prices on Alpha’s Revenues: Every $1 increase in gas

price, costs Alpha’s -1.8% in Revenue.

Impact of $1 Increase in retail fuel prices

Fuel prices had a -1.1% YOY impact for Q1-08

Alpha’s AC Promotions: $4M Sweepstakes was

most successful

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Diamond Acquisition

$4M Sweeps

Other

MillionDollar Weekend

Set Sall

Gift Grab

Vacation Cash

3X Cashback

Hidden Jackpot

Weekly Revenue Impact

Print, TV & Radio Optimal Spending by Messages: Calls for Increases

in Entertainment, Gaming and Food/Beverasge, and relative

reduction in Branded and Misc. messages

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Marketing Contribution Current Spend Optimal Spend

Misc

Food/Bev

Entertainment

Gaming

Brand

Optimal Spending by Market: Calls for Increases in Markets 1, 3, 5

and National media, shifting funds out of Market 2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Marketing

Contribution

Current Spend Optimal Spend

NATIONAL/REGIONAL

Market 6

Market 5

Market 4

Market 3

Market 2

Market 1

Marketing Synergies: 45% of the total marketing impact is due to synergies

or interactions between two or more marketing drivers. Direct marketing

drives the highest overall synergy, while Online has the highest portion of

total marketing effects due to marketing synergies.

Online

DirectDirect

Direct

Direct

TVPrint

Direct

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Other Synergies

Primary Synergy

Primary Effect

The Marketing Investment Matrix

• The next chart is a visual display of each marketing and media tactic and program along a spend v. returns matrix.

• Programs in the upper right are high investment and high returns efforts. These are high stakes and critical ongoing investments in the future.

• Programs in the upper left are low investment and high returns efforts. These represent significant upside opportunities for improving overall marketing productivity and should be expanded aggressively

• Programs in the lower left are low priority initiatives. They are neither high investment nor high returns. These efforts are of marginal importance and can be reduced or even eliminated.

• Programs in the lower right are high investment but low returns efforts. These are probably in the diminishing returns portion of their response curves and, although important, can probably be scaled back to some degree.

Marketing Investment Matrix

Radio.Misc.Mkt3

Radio.Brand.Mkt4

Brdcast.Brand.TV.Mkt1

Misc. Print,News.Mkt3

CableTV.Brand.Mkt2

Radio.Brand.Market7

CableTV.Brand.Mkt1

Enter. Print.News.Mkt1

Radio.Gaming.Mkt3

Misc. Natonal.News

Gaming National.Mag

Radio.Brand.Mkt2

Enter. Print.News.Mkt4

Onlline Search

Promotion

CableTV.Brand.Mkt4

Brdcast.Brand.TV.Mkt2

ONLINE.DISPLAY Brdcast.Brand.TV.Mkt4

Enter. Print.News.Mkt2

OOH.Adv Direct.Mktg

Enter & Gaming

Regional.Mag

Radio.Gaming.Mkt2

Radio.Entertainment.Market7

Misc. Mag.Mkt3

Radio.Entertainment.Market6

-

20

40

60

80

100

120

140

160

180

80 85 90 95 100 105 110 115 120 125 130

Index of Spending

Ind

ex o

f R

ev

en

ue R

etu

rns

High Stakes Maintain/IncreaseHigh Opportunity Expand Aggressively

Dimishing Returns HarvestUnproductive Reduce Significantly

-10,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Error

Model

Actual

Model v. Actual Revenues: Overall Fit of Model

OutstandingR2=98.6%

Holdout R2=98.9%

MAPE=+/- 0.7%Weekly Revenue

• Marketing Optimization Modeling (MMO) is not just a technical exercise!

• Business Knowledge & Direct Industry Experience

• You can not succeed by “plug & play” via a CPG approach

• Bottomline Analytics (BLA) takes a “Consultative/Collaborative” Approach

• BLA’s philosophy is “strategic, custom and issues focused”.

• BLA believes and espouses that MMO is and should be an exercise yielding tangible benefits

• You will know marketing productivity, ROMI and how to optimize your marketing budget, yielding a tangible dividend

• BLA has some unique tools and methods

• Social media measurement and sponsorship engagement

• Focus on both Media Channels and Media Message

• Marketing synergies

• Marketing spending optimization

• MMO is a Competitive Advantage and One of the Most Powerful Tools in Analytics.

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The Way Forward

Michael Wolfe

Bottom-Line Analytics LLC

www.bottomlineanalytics.com

mjw@bottomlineanalytics.com

770.485.0270 (o)

678.314.8446 (m)

Thank You!

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