With more than 70 million people playing online poker each day, the industry is flush with new sites trying to lure in new gamers. To keep its edge as the leading online poker site, PokerStars hired Alex Payne as CMO in 2011. Adding the marketing vet was akin to having an ace in the hole.
PokerStars operates PokerStars.com, which has signed on more than 61 million registered members. With more than 110 billion hands and 800 million tournaments played, more hands have been dealt on the site than any other.
In his position, Payne, who hails from the U.K., is responsible for the company’s brand and advertising, TV programming productions, media buying, online marketing, social media, regional customer relationship management and acquisition, plus conversion and retention campaigns for online and live poker players.
Prior to PokerStars, Payne worked at Microsoft for 11 years, creating a U.S. industry standard for online ads with Yahoo and AOL, launching Windows 7 in Europe, and holding market share on Internet Explorer following the European Commission’s ruling that all Windows users be offered a choice of competitive browsers. Payne, who has an MBA from France-based INSEAD, also worked as sales and marketing director for Bing in the U.K., helping it to double-digit revenue growth, and spent 10 years working for advertising agencies such as OgilvyOne and and EHS Brann.
In this exclusive interview with CMO.com, Payne tips his hand about a number of topics, including PokerStar's mobile-first mentality, the power of celebrity endorsements, and how his tenure at Microsoft prepared him for his current role.
CMO.com: You have an impressive background at some major companies. How did you become interested in marketing, in general, and what led you to become part of PokerStars?
Payne: My interest in marketing was sparked during an English lesson when [I was] 14. The teacher asked us to write the copy for a soft drink for a newspaper ad. I was hooked, and after university went straight into marketing as a graduate trainee with OgilvyOne. As for PokerStars, after 11 years at Microsoft marketing business and consumer software, I wanted to move on to market something around which I had some real passion in my personal life. Moving to PokerStars was actually a very easy choice.
CMO.com: How did your experience at Microsoft prepare you for PokerStars?
Payne: There were numerous practical marketing and general management skills, but Microsoft taught me to look strategically at the forces shaping technology industries. The network effects that exist in poker, for example, make it one of those rare categories—like search and social networking—where scale yields disproportionate benefits to the industry leader. Understanding this has informed how we evolve our product and marketing, and has helped PokerStars gain an additional 10 percent market share in the last two years.
CMO.com: What were some of the goals you set upon joining PokerStars, and looking back two years later, which have you been able to check off of the list?
Payne: My key goals and successes have been to make our marketing more cost-effective, strengthen our brand, embrace mobile, and deepen our marketing capability. Over the past two years we’ve seen a healthy improvement to our cost-per-acquisition directly increasing profitability. We’ve taken a much more holistic approach to strengthening our brand across all customer touch points, and in addition to strong awareness and perception, we now see our Net Promoter score 45 percentage points ahead of our nearest competitor. We now see over half our new customers join on mobile. Lastly, our marketing capability has become more robust, with clearer strategies, training, and organizational alignment.
CMO.com: Chris Moneymaker’s winning the 2003 World Series of Poker was a huge boon to the site. I know you weren’t with PokerStars at the time, but what marketing efforts over the past two years do you think has had the biggest impact—akin to Moneymaker’s win?
Payne: There are a number of areas that we’ve gotten great results from, particularly around shifting to mobile, diversifying TV, enlarging promotions, and improving our experiential marketing. On mobile, we’ve introduced a number of mobile apps and seen huge interest from players in them. In our developed markets, more than half of all our new customers come to us from mobile, which has prompted us to redouble our efforts to become truly mobile-centric.
Our TV strategy has changed dramatically, with an increase in local [custom-made] shows on prime-time Tier 1 channels, a bedrock of low-cost content for late-night TV, and local digital Web shows—both live global webcasts and local digital shows designed just for the Web. On our promotions, we’ve focused on building up flagship events, like the World Championship of Online Poker, Spring Championship of Online Poker, Micro Millions, the 100 Billionth Hand, and the December Festival. Our marketing of these has been much more integrated and cohesive, and resulted in these events becoming bigger and better, attracting many more players and with ever bigger prize pools. In the case of the 100 Billionth Hand celebration, [we hit] a commanding 72 percent global market share.
Our experiential marketing—the 60 live events we run around the world—has had renewed focus to bring a more distinct and enjoyable experience for our players. We’ve seen much higher satisfaction, recommendation, and attendance rates accordingly.
CMO.com: What are some key changes you have brought to PokerStars’ marketing efforts, and how has the brand grown as a result?
Payne: [There has been] many changes, but the principal ones are to refocus our branding efforts, change our media mix, and transition to mobile. We’ve taken a much more holistic approach to strengthening our brand across all customer touch points, and in addition to strong awareness and perception, see our Net Promoter score 45 percent points ahead of our nearest competitor. Our media mix has shifted away from late-night TV, toward a combination of prime-time TV product placement, with top shows in Russia and Germany; live webcasts, which will soon surpass our broadcast reach; and significantly greater use of digital and social media. Finally, there’s been a profound focus on mobile—product, marketing, and experience—which is now at the forefront of our marketing. Accordingly, we’re seeing the majority of new customers in our developed markets sign up on phones and tablets.
CMO.com: How important are the players who act as the faces of PokerStars? Talk a little about what these celebrities add to the brand.
Payne: Our mainstream celebrities help poker become more socially acceptable with the wider audience—in particular, mainstream consumers and regulators. [Spanish professional tennis player] Rafa Nadal has an impeccable image and brings huge endorsement to the game and to our brand, while [former Brazilian football star] Ronaldo [Nazario] is also very popular. Both, of course, have very strong appeal in certain markets, and also directly help awareness and perception of our brand, as well as direct customer acquisition. Our professional poker players, Team PokerStars Pro, then bring enormous credibility to the PokerStars brand as the brand the best players in the world choose, both online and offline. Their endorsement cements our positioning, and as the pinnacle of the poker community, also supports our anthem that “We Are Poker.”
CMO.com: People seem to be a driving force for the brand. What are the roles of the “Friends of PokerStars” and “SportStars,” and how do they bring players to the brand?
Payne: “Friends of PokerStars” are typically well-known poker players who may not want the full-time commitment required from Team PokerStars Pro, but with whom we want to keep a relationship due to their extensive experience in poker. “SportStars” are those who’ve had success in another sport prior to poker, and who bring a variety of values to poker—awareness, trust, respectability—as well as very strong endorsement of the PokerStars brand.
CMO.com: Talk a little about PokerStars.tv and its role in bringing the brand to another level.
Payne: Our content serves multiple purposes. For existing players, it’s a great way to entertain and explore the different approaches that makes this such an interesting skill game. For dormant players, content is a great way to rekindle the interest of those players who’ve not made time to play. For prospects, content is a great way to illustrate the excitement of the game and educate on the basics.
CMO.com: How did the Unlawful Internet Gambling Enforcement Act of 2006 change the way you approached your marketing?
Payne: UIGEA had no impact on our business because it did not address online poker. It restricted the ability for banks and payment processors to transmit funds related to illegal gambling. We do not believe that online poker violated any federal laws, and recent rulings have supported this position.
CMO.com: How has the advent of digital media changed your job and the brand itself?
Payne: Profoundly. I started my career in direct marketing, so I appreciate the power of 1-to-1 marketing, which digital marketing increasingly offers. For PokerStars, we’re doubling our investment in digital media next year—a reflection of the already well-understood benefits of digital media.
CMO.com: In today’s digital age, how do you use social media and digital media to help market PokerStars? Is this an area that you look to grow?
Payne: Digital and social are two of the biggest growth areas of our marketing investment.
CMO.com: How has mobile played a role in your marketing efforts?
Payne: It’s essential. In developed markets, [more than] 50 percent of our new customers are acquired on mobile, so we are undergoing a period of genuine transformation. We have a “mobile-first” mentality, and so much of our acquisition marketing, on-boarding, life cycle communications, and player communications are increasingly optimized for mobile.
CMO.com: What would people be most surprised to learn about what you do in your role as CMO?
Payne: We produce over 70 hours of TV programming a year.
CMO.com: Describe the relationship you have with your CEO, Michael Scheinberg. What are his expectations of you and your team, and how are those expectations measured?
Payne: In addition to the obvious interest in our commercial and financial performance, our CEO takes a strong interest in marketing and understands the importance of the brand across the entire business. With no sales force, marketing is the vehicle that drives revenue, acquiring new customers and then engaging them to play frequently and maximize their lifetime value. So having a close understanding of the performance and priorities in marketing is essential for the CEO.
CMO.com: How about your relationship with the CFO—how do you work together?
Payne: I work with the CFO on a daily basis, on all commercial aspects of the business.
CMO.com: With all of the channels you have to deal with, how do they measure what works for marketing, and how do you prove this to C-level?
Payne: As an online business, most of marketing is readily measurable and easy to track. Mobile has introduced some cross-platform complexity, for sure, and social media remains the least well-understood medium, though all the C-level executives understand the technological shifts under way in the marketplace. Thankfully, we’ve attained some exceptional results in both our reach and engagement, so there is a strong appetite to continue to drive forward hard in these new areas.
CMO.com: How important are studying analytics to your position—is this a big part of the job?
Payne: Analyzing the performance of the business and—critically—the poker economy that underpins it is essential. Poker is essentially a zero sum game, where what one player loses, another one wins. So understanding how different promotions stimulate both game play and deposits is key since money will circulate between different players and different velocities; some funds are simply replayed again and again, while others are withdrawn by the more skilled players, and a very small amount of each transaction is paid to PokerStars from facilitating the games. All of this introduces enormous complexity, and so careful analysis is key to understanding if marketing is having the optimal impact.
CMO.com: Can you give me an example of how analytics plays a role in helping you shape decisions?
Payne: As mentioned before, our live events are an important part of our strategy to bring our brand to life. In addition to allowing people to directly buy-in to these events, we also encourage less wealthy players to try and qualify for a seat at a main event through online satellites, as these have a lower entry price. So, for example, a player may enter a $50 tournament online against other players and win a ticket to a $5,000 seat live event. However, these online qualifiers are perceived by regular live event players who buy into the events directly to be less skilled, and so events with a high number of qualifiers attract more direct buy-ins. Sometimes we supplement the online qualifier games with marketing funds to encourage more players to participate—for example, by guaranteeing a minimum number of seats that can be won for a particular tournament, even if not enough qualifiers participate to cover the seat cost. In this example, analysis is essential to understand a number of factors that will determine overall success: how many players can be encouraged to qualify; how much will that cannibalize other online poker games; how much should we supplement the online qualifier prizes in order to increase the total qualifiers at an event, in order to attract more direct buy-ins? Thankfully, as an online business, all this information is available for analysis and modeling, and has, in turn, helped us break some new records recently in event participation.