What Stays in Vegas (14 page)

The founder of University Painters, Joshua Jablon, found Kanter's name through a data broker called American Student List. Now part of ASL Marketing, the firm rents lists of students and recent graduates, and allows buyers to specify age, grade point average, hobbies, sports interests, ethnicity, and other categories.
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Nowadays, ASL Marketing says it has mailing addresses of 4.3 million high school students and email addresses for three million.
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Jablon appreciated that he could target specific students in key New Jersey ZIP codes such as Princeton and Lawrenceville. “They are affluent neighborhoods, and if you have a college kid that lives there and he goes to school within a few hours away, that was ideal,” he says.

Sophisticated segmenting allows direct marketers to rent very specific lists. Among the countless variations on offer are Americans of Iranian, Albanian, or Vietnamese descent or other ethnic origins; contributors to AIDS research; male virility supplement buyers; depression medication users; and cancer victims. Also available: gays who own boats; recently divorced African Americans; tobacco chewers; rich baseball fans; birth control users; readers who buy books about drug and alcohol abuse; women who have bought porn or sex toys; concealed weapon permit holders; online gamblers; and subscribers to
The Dairy Goat Journal
(just 4,025 households at the beginning of 2014).

Las Vegas casinos have used direct mail for decades, typically targeting their own clients. When Caesars send out their 750 million pieces of direct marketing annually by mail and email, people get messages tailored to them.
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Some get two to three offers a month, others as many
as twenty. That's certainly a lot, but the company has found that the more offers it sends, the more responses it gets. Overall, offers to come on a specific date generate half of Caesars' revenue, CEO Gary Loveman says. MGM Resorts, Caesars' main rival in Las Vegas in terms of total properties, whose holdings include the MGM Grand, Bellagio, and ARIA, sends out forty million to forty-five million pieces of direct marketing a month.
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That's at least two hundred million fewer offers per year than Caesars, but it's still a lot. “We are all guilty of ‘Are you ready to buy, are you ready to buy?'” says Adam Bravo, MGM Resorts' director of campaign operations.
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Loveman believes customer data can also improve the client experience: “It drives me fucking crazy that in so many settings companies ought to know a lot more about me than they do.” He thinks firms such as cell phone providers, cable companies, and others that know a lot about what their customers buy should do more to cater to them—but they still fail to personalize the experience. Loveman scoffs at personal-data-rich firms that don't provide individualized services. He gives the example of his own American Express Black Card. He paid $7,500 just to get the premium card and shells out another $2,500 annually to keep it. “God knows why,” he says. “As far as I can tell, there is absolutely no service that has been provided to me based upon what they have learned about me.”
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Loveman would like to use the data he knows about his clients to target offers more intensively even within micro-neighborhoods. For example, someone in Philadelphia who lives closer to a rival casino may get a more generous offer than someone who lives closer to Harrah's in the same city. “We want to treat every single person differently, based on what we know they care about and what we can afford to give them,” he says. This desire guided Caesars as executives crafted their evolving strategy toward collecting customer data.

Origins of Database Mining

Although Loveman has introduced many innovations in marketing during his time at Harrah's and Caesars, he follows a long American
tradition of appealing directly to customers at their homes. Companies started gathering home addresses en masse for mail-order sales in the nineteenth century. Mail-order companies such as Montgomery Ward and Sears, Roebuck and Company bypassed the expense of operating stores wherever their clients might be. Other firms took a similar approach in Europe. A century before
Amazon.com
, mail-order companies dazzled customers with their wide array of goods. They made exotic products available to even the most remote rural areas. Sears, Roebuck's 770-page 1897 catalog offered nerve and brain pills for 60 cents, Dr. Rose's Obesity Powders, a “sure cure for the tobacco habit,” “Peruvian wine of coca,” “57-cent princess tonic hair restorer,” and “bust cream or food unrivalled for enlargement of the bust.” Whether you wanted a banjo, a pack of diapers, a feather boa, or an array of farming tools, it was all in there.
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Prices were quite high compared to what one could buy in Las Vegas in that era. A state land act made land available for $1.25 an acre, just a bit more than some Sears, Roebuck nerve pills and the tonic hair restorer. But people loved shopping through the mail. With such an exciting array of products, shipping goods directly to the home address became a big deal. By 1939, two years after Bill Harrah opened his first bingo parlor in Reno, Nevada, 434 mail-order businesses were operating in the United States—not including department stores, which also sold by mail.

Directly targeting potential new customers through lists dates back nearly as long. Entrepreneurs mined telephone books to accumulate names as early as 1903—two years before Las Vegas was even established as a city. Back then, just owning a telephone line suggested wealth. A company called Multi-mailing, located across from City Hall in Manhattan, was selling lists of six hundred thousand names and addresses it had copied from phone books in New England, New York, New Jersey, Ohio, Pennsylvania, Maryland, Delaware, and Washington, DC.
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After learning computing basics at NASA, working briefly for IBM, and getting his MBA from Harvard, Hal Brierley launched a company to automate his fraternity's national list of 150,000 members. It was 1969. Out in Vegas, Caesars Palace was enjoying its heyday.

Using exotic new things called computer printers, Brierley and others replaced conventional labels and tailored messages on an individual basis. Customization made it seem as though the person pitching you something really knew you. The computer stored information about when people had gone to school, where they graduated, and what they had contributed to the fraternity in the past. The technology helped boost fundraising tenfold within a few years. A letter might begin, “Dear Brother Brierley,” then mention the year he joined and his member number, thank him for his recent gift, and close with an appeal for a little more this year. “We discovered that using the computer as a fundraising tool for segmentation and personalization significantly raised more money,” Brierley says.

Over time, his company, Epsilon Data Management, attracted hundreds of nonprofit clients. Eventually it moved into for-profit work and became a direct-marketing giant. In the decades since Brierley cofounded the company, the explosion of digital records has allowed direct marketers such as Epsilon to gather an unprecedented amount of data on almost every American. Today the Irving, Texas–based company, part of publicly traded Alliance Data, brings in more than a billion dollars a year in revenue.
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Epsilon caters to catalog and retail companies that share information about their clients in a data cooperative so they, in turn, can receive information about prospective new clients. From this information Epsilon filters a person's purchases into more than twenty categories, such as home electronics, pet supplies, food and beverage, apparel, cigars and tobacco, and religious merchandise.
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It has information on 250 million consumers and sends out more than 40 billion emails annually, which it says makes it “one of the world's largest permission-based email marketers.”
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That's a fancy way of saying that it is not spamming people but sending out messages to people who have agreed to receive the emails.

Controversial Practices

The same year Brierley started building what became Epsilon in 1969, an Arkansas businessman founded a direct-mailing company that eventually became one of Brierley's main rivals, Acxiom. Using phone books and a computer, the Arkansas company sent out direct-mail pieces for Democratic Party candidates. The business continued to grow, and today Acxiom enjoys annual revenue of more than $1 billion. Clients include nearly half the Fortune 100 list of America's largest companies, eight of the ten top credit card issuers, seven of the ten top automakers, four of the five top banks, and five of the thirteen largest federal government agencies. The company has widened its political focus too: Republicans buy its data as well.
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The largest part of Acxiom's business comes from supplementing information companies have collected on individuals. Getting more data from Acxiom helps boost marketing across sectors including the Internet, mobile, direct mail, call centers, and interactive TV. For example, if a company knows a person's name and address, Acxiom may be able to add a phone number, email address, and demographic information about average wealth in the neighborhood. A smaller chunk of the business comes from selling lists of potential customers.

Acxiom knows a staggering amount about people. It starts with public records, then amalgamates information volunteered on warranty cards and online surveys about hobbies and lifestyle information as well as commercial data from magazine publishers, retailers, and catalog companies. Acxiom also aggregates other identifying data, such as credit header data, the nonfinancial information at the top of your credit report that includes addresses and phone numbers. It may also include sensitive data such as Social Security numbers, which, the company says, are used only for fraud prevention. Acxiom's file does not detail that you once bought a $269 TaylorMade Men's Burner Super-Fast 2.0 TP Driver golf club, but it may indicate that your household has an interest in the sport.

The end product combines thousands of sources on a given person into two main dossiers. One is for marketing purposes and the other is
for “risk mitigation,” with only the data needed for that purpose. The company provides data from these products to companies, nonprofits, and government agencies that have passed a credentialing process.

Acxiom has data on almost all US consumers. Just reading the list of information it has can prove a little overwhelming. As consumers learn how much a company like Acxiom knows, some grow uneasy and concerned. “It is new and people don't understand what is happening. That feels a little bit creepy, that feels a little bit uncomfortable,” said Tim Suther, Acxiom's former chief strategy and marketing officer, who insisted that consumers should not be afraid of the company.
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He stressed that it does not make this data available to just anyone or for just any purpose. Thus Acxiom data do not determine whether you get credit, or health insurance, or a job. “We use it generally for one thing, and that's to help advertisers be more efficient with their messaging and who they want to talk to,” he said. “If that information were used in a way that disadvantages you—‘Hey, wait a minute! I've noticed you've gained a little bit of weight here. Do you mind if I share this with your insurance company?'—well, that would be a little freaky.”

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A few years after the initial incarnations of Epsilon and Acxiom, an Indian immigrant started his first direct-marketing efforts, which would eventually make him a millionaire invited to spend the night at the White House. Vinod Gupta grew up in a poor village north of the Indian capital, New Delhi, without water or electricity. He studied engineering and came to the United States in 1967 to get a master's degree and then an MBA in Lincoln, Nebraska. After finishing university in 1971, he got a job at the Commodore Corporation, a mobile home manufacturer, as a market research analyst earning $850 a month. (That same year, Harrah's sold shares to the public for the first time.) The following year, seeking to boost sales, Gupta asked the national telephone monopoly AT&T to deliver a copy of every local phone book to him. Because Commodore had a costly toll-free 800 number that made it an important business client, AT&T sent a massive order of about four thousand books, free of charge.
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When his boss protested the massive size of the shipment, Gupta had the phone books delivered to his garage. The piles of directories sat there for a few months. Then, over the course of a few days, he compiled a sample list of mobile home vendors in Nebraska, writing them out by hand. Others programmed the data into an IBM System/3 computer, inserting punch cards to store up to ninety-six characters of data, about as much information as a line of text in this book.

He offered to sell a master list of US mobile home vendors to his company for $9,000 to compensate for his extra labor or give it to Commodore for free—provided he could market the list to rival firms as well. Commodore chose the latter option. Within a month Gupta had received $22,000 in new orders and started compiling data from other states, charging 10 cents per listing. It took three months before the list was ready. He started his own list-building business on the side and left Commodore the next year, 1973. Over time he expanded the lists to car dealers, boat dealers, and others. By 1981 he had made close to $1 million in sales.

In the mid-1980s Gupta added lists of people across the United States, layering public and commercial data onto basic phone book listings. Computer storage was becoming far cheaper, and his firm could do a lot more. “Once you know the name and the address, you had the home value, you had the phone number, then you can estimate the income of the household and then you can also overlay other information anytime a person fills out some stupid warranty card,” he recalls. “Suppose it's a warranty card and some coupon for an arthritis drug, then you know this guy has got arthritis. So we had a lot of these clearinghouses who basically are selling that information.”
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