Why Harrah's Opted to Roll Dice on $5 Billion Merger With Caesars

Q&A: VP Kris Hart Says Research Showed Move Would Be Brand Booster

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Kris Hart, VP-brand management for Harrah's Entertainment, recently oversaw the merger of two major players in the gaming world -- Harrah's and Caesars, which it bought for $5 billion -- creating the world's largest casino company. Ms. Hart's topic at this year's Association of National Advertisers' conference is brand and organization integration, and the quantitative customer research conducted before the historic merger. Here, she relates to Advertising Age reporter Megan McIlroy how it takes a lot more than luck to meld such industry giants.
Kris Hart, VP-brand management for Harrah's Entertainment
Kris Hart, VP-brand management for Harrah's Entertainment

Advertising Age: How did you know it was the right time to integrate Harrah's and Caesars?

Kris Hart: We just realized we had a very large portfolio and needed to rationalize that portfolio in a way that made sense. We also decided we wanted to move from more of an operations-oriented company to try to be a more a brand-focused organization and that sort of happened when we acquired Caesars Entertainment and started talking to some folks out of the country about international development. We realized that when we said we were Harrah's Entertainment, there wasn't a lot of recognition outside the United States, but as soon as you mentioned Caesars, light bulbs went off -- so it was a very powerful brand both domestically and internationally.

Ad Age: Can you describe the research and analytics you used to support the decision?

Ms. Hart: We did a fairly significant national study across about 14,000 gaming customers, so there were people who had engaged in the gaming space. We did a lot of psychographic segmenting -- looking at what were the drivers of people's behavior. Where they coming because of the location? Where they coming because there were incented to do so with a piece of direct mail? Where they coming because they have an affinity for a loyalty program? And that allowed us to look at segments that clumped around certain drivers because it allowed us to look at why people had an affinity toward a particular brand and it enabled us to construct our brands and messaging and the asset in a way that would capitalize on those drivers.

Ad Age: What have been some of the challenges of integrating the companies?

Ms. Hart: We had two somewhat different cultures and that's always a challenge. Caesar's Palace has been funded -- not to the detriment of the other properties -- but it has certainly gotten its fair share, and I think there were some underutilized properties in Las Vegas that we were able to go in and invest in and really sort of bring them into a new space and attract a broader customer segment with them.

Ad Age: What have been the benefits of the integration?

Ms. Hart: The main benefits for us are we now have some really premier properties. We have Caesar's Palace as an asset. We have a brand that gives us a platform to leverage internationally. We have now 365 acres of contiguous place on the Las Vegas strip ... so it gave us not only the nice portfolio of the brand, but it also allowed us to be a significant player in Atlantic City and Las Vegas.

Ad Age: What advice do you have for companies or brands thinking about integrating?

Ms. Hart: One of the things that we did that was really smart was we took almost a year before the deal even closed and we formulated an integration group (which had to sign all kinds of nondisclosures). So both companies decided this was the best thing to do. We both had access to one another's information and we basically formulated what the integration strategy was going to be as soon as the deal legally closed. So it was a really nice way to understand their business. It enabled us to really sort of seamlessly be able to integrate these two companies.
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