On the face of it, the secondary ticket market seems like a relatively straightforward business. Previously purchased event admissions are resold at whatever prices the market will bear. But, in fact, it’s a dynamic and heavily data-driven industry, where dramatic prices swings happen in seconds, products perish within hours, and customer loyalty is elusive.
That’s the operating environment for Ray Elias, chief marketing officer of StubHub, one of the largest marketplaces for live event tickets with 15 million unique visitors per month. Elias, who joined the 12-year-old company in 2004, and his team of digital-savvy marketers are focused on building a more complete customer view and churning out industry-leading innovations like transparent inventory, social purchasing, and a new loyalty program.
CMO.com talked to Elias about his biggest marketing headaches, the value of an analytics-focused hiring strategy, why brand affinity doesn’t guarantee brand loyalty, and why some tickets go for pennies while others are worth their weight in gold.
CMO.com: What are the biggest marketing challenges in your industry?
Elias: We manage a catalog with tens of thousands of live events and growing—millions of sports, concert, and theater tickets and millions of buyers and sellers. Tickets are perishable, and StubHub doesn't buy or sell any inventory.
Like all businesses, we have a seasonal curve that peaks in the third quarter as the event landscape swells, but it's the often unpredictability of the market at our scale that can be challenging. Prices can swing wildly based on a player trade, a pitching match-up, a change in event dates, and even weather.
As soon as Peyton Manning officially signed with the Denver Broncos during the off-season, for example, the demand for Broncos tickets spiked threefold. Conversely, if a team is playing poorly, we see demand fall to prices well below face value. Before the New Jersey Nets moved to Brooklyn last season, you could find $5 tickets available for most games. In some instances, tickets were priced as low as a penny.
A common misperception is that all tickets on StubHub are expensive. The reality is that nearly half of tickets purchased on StubHub are either at or below face value, which illustrates the benefit for consumers in having an open marketplace dictated by fans.
The mix of perishable and less predictable product means we have to manage our business with domain expertise at a very granular level. Over the years, automating processes like traffic data has enabled our marketing team to spend more time doing analysis, making strategic decisions, and optimizing our marketing results.
CMO.com: According to your research, a consumer attends an average of 1.5 live events per year. How do you make sure they use StubHub when they do? Your brand is well-known, but does that necessarily translate to brand loyalty?
Elias: Customer loyalty can be fickle in our space. Shopping behavior is part of that. But beyond passionate live-event enthusiasts, people are busy and they have lots of entertainment options. Often, they miss out on live events simply because of lack of awareness.
Fan motivation also varies. Some fans are naturally highly engaged on their own. But, more often, people are driven to act by those in their social circles. Most people want to go to events with their friends or family, but only a few act as the planners organizing those outings.
To address the social nature of live events, we just launched Go Together, which will help those de facto “event planners” round up the gang to buy tickets to a show or a game. The tool enables them to invite friends to events, see who has committed to attend, vote on seats, and split tickets costs.
We have high brand awareness and high brand affinity, but we also want to have a long-term relationship with our customers. So recently we also introduced Fan Rewards, a comprehensive loyalty program that will reward fans with unique experiences like suite nights, seat upgrades, parties, and meet-and-greets, which we think is a first of its kind in the ticketing industry.
CMO.com: What lessons have you learned about lifetime customer value that might be applicable to other companies and industries?
Elias: Smart segmentation is critical. In our space, some people go to one or two live events a year. Others may go to many, but only buy one or two on StubHub. And there are many variations in between. If you don't understand the differences, you can swing and miss [with your marketing efforts]. For those that may only go to one concert a year, we have the opportunity to provide more event discovery. For those that go to more, we are looking at ways to increase our share of wallet.
How StubHub uses, and shares, Big Data.
CMO.com: What does Big Data mean to you and your company?
Elias: We define Big Data as any large, complex data set. Inventory and paid search are two examples of Big Data at work at StubHub. Volume, velocity, verity—all aspects of Big Data can be challenging. With paid search, we’re dealing with massive amounts of data that have to move at a certain scale and speed as things change so quickly. We’re currently focused on consolidating our data sources and introducing more automated processes to deal with those challenges.
CMO.com: You share data with more than 65 third parties. How do you balance security and privacy risks with that kind of openness?
Elias: We integrate electronically with ticketing partners to enable us to cancel and reissue a ticket bar code between buyer and seller and deliver electronic tickets to the buyer instantly. That requires some basic data sharing to facilitate, but it is the best experience we can offer fans. Some of those partners—like Major League Baseball or NCAA teams—may choose to use that data for their own marketing efforts or pricing strategy.
We do not broadly share customer data on any level with our media partners. We are very protective of our customer data and secure it as any best-in-class e-commerce company would. We have the advantage of being owned by one of the largest and most experienced e-commerce companies in the world—eBay.
CMO.com: Many CMOs are struggling to build an effective marketing organization for the 21st century. What's your hiring strategy?
Elias: We are a very data-driven marketing team. Even many aspects of our creative process are data-driven. We tend to hire professionals who can be self–sufficient, capable of doing the analysis required to make day-to-day decisions, asking the right questions, and working as close partners with our analytics team when we dive deep into our data. The majority of my marketing team does not have a traditional marketing background. You’re more likely to find someone who studied economics and mathematics. We also have to have business people who know how to interact with that team and know what questions to ask. So I’m looking for someone with that kind of DNA—both analytical and business-minded.
We’ve had some great creative successes—our Ticket Oak ads were well-received. But very few of us sit around the table drinking bourbon and coming up with pithy taglines.
CMO.com: Do you work with a lot of third parties, or do you prefer to maintain much of marketing in-house?
Elias: We have worked with some consultancies and third parties on deep dives, as we did engaging the Wharton Customer Analytics Initiative to propose some new ways to look at lifetime customer value in our industry. We also do some work with our key systems vendors, like Oracle and Omniture. (Editor's Note: Omniture is a business unit of Adobe Systems, CMO.com's parent company.)
Cultural fit is key. You have to find a third party that can integrate with your team and can add value to what you’re already in pursuit of. In our case, having a sizable team internally that manages and owns the outcomes is important. We would never outsource analytics. It’s too unique. You can’t really package that up and send it out. For us, everything we do is based on what our customers ask for. I don’t know how you do that if you rely too heavily on third-party input.
CMO.com: What specific skills are you looking for, and how do you know a candidate has them?
Elias: Everyone on our team has to understand digital. Based on the way people consume media today, with companion screens, for example, there is no such thing as a single marketing channel anymore.
CMO.com: Where do data scientists and engineers fit into your marketing strategy, and what are the keys to working most effectively with them?
Elias: Data scientists are very important to us. Beyond partnering with them on the tools and analytics we require to do what we do in marketing, we need them on a day-to-day basis as much of our user experience and advertising is data-driven in real time. Timeliness and relevance is as important as awareness.
Our best products and results happen when we collaborate with StubHub’s internal data analyst group, from strategy and planning right through execution. If we make requests of our engineers and analysts without giving them the strategic and business context, that causes churn and inefficiency. We’re close cousins with the analysts, and some even sit in marketing.
Most of our technical people are also huge fans themselves, and have a lot of great insight and ideas about how to serve our customers and evolve our business.
CMO.com: What’s the biggest mistake you’ve made as CMO?
Elias: I should have focused on building out the customer view sooner. We had operated in our day-to-day mode with more of a transactional perspective for far too long.
CMO.com: What do you think the corporate marketing function will look like in 10 years, and how must marketers evolve to succeed in the future?
Elias: I think many marketing organizations are still too fragmented—literally fragmented, with an old approach based on marketing channels, products, reporting structure, and even categories like “online” versus "offline," which are rapidly blurring now.
The best marketing organizations will be more integrated and focused on the customer experience from end-to-end. Specialization will remain important, but even specialists need to think like complete marketers with a customer point-of-view.