Ticket to Success
StubHub continuously explores greater uses of business intelligence, Web analytics and interactive marketing. But the online ticket marketplace is just heating up.
September 2008 By Melissa Campanelli
In 2005, San Francisco-based StubHub, a wholly owned subsidiary of eBay that serves as an open online ticket marketplace for the buying and selling of event tickets, had a problem. The rapidly growing company had limited visibility into current data, customers and business drivers, all of which threatened the long-term survival of the business. The root of these problems was an inadequate technology infrastructure.
"We had virtually no information management infrastructure," says Rob Singer, director of customer intelligence and relationship marketing at StubHub. "We didn't have a data warehouse or a centralized reporting mechanism, and we had not identified the core metrics of the company and what the key performance indicators of the company were."
In short, day-to-day business decisions weren't being driven by data and analysis and an understanding of what the levers of the company at the time were, he recalls.
Faced with these challenges, that year StubHub embarked on a campaign to turn the company into more of a data-driven, scientifically oriented entity.
Launched in 2000, StubHub enables customers to buy and sell tickets at fair market value to sporting, concert, theater and other live entertainment events — even those that are sold out.
In 2007, eBay acquired StubHub for about $310 million. The acquisition was designed to enable eBay to expand its presence in the online tickets segment while allowing StubHub to leverage its business with the e-commerce expertise and resources of eBay.
While StubHub has a similar business model to eBay, a big difference is StubHub manages all transactions for both buyers and sellers.
"In effect, we are a managed marketplace, meaning a buyer never communicates with a seller, and vice versa," says Ray Elias, StubHub's co-director of marketing. "You're operating in an environment with the advantages of inventory from multiple sources but also with the peace of mind of dealing with a single, reputable source for the transactions."
Ticket aftermarket
StubHub's business model essentially is a stock exchange for the secondary — or aftermarket — ticket-selling business, where millions of tickets are bought and sold after initial sale at box offices or other means directly from the events' ticket sellers. The secondary ticket market is estimated to account for $10 billion annually in the U.S., according to StubHub. This keeps the door wide open insofar as demand for StubHub's service is concerned.
Anyone can sell tickets on StubHub's exchange, similar to how a stock exchange has both individual and institutional sellers. "A really good example is a baseball season ticket holder who has tickets for 81 games," Singer says. "Obviously, it's difficult to go to all 81 games. So the tickets you can't use you can post on StubHub."
Other tickets may come from artists' fan club members, corporate sponsors, ticket brokers, radio contest winners, venue or team employees, or fans who have changed plans and decided not to go to the event.
Sellers, not StubHub, set the asking prices for their tickets, making price a function of market supply and demand for the particular event. Buyers pay a 10 percent fee; sellers pay a 15 percent fee.
The solution
In mid-2005, StubHub assembled a steering committee and a business intelligence team to assess requirements, evaluate options and, ultimately, build a scalable business intelligence/data warehouse infrastructure that could support StubHub's growth and contribute to business value.
In 2006, after looking at several technology solutions, StubHub implemented a data warehousing program that combined open-source technology with best-of-breed software tools from Business Objects, Oracle, Omniture and SAS. The tools offered the company a stable, scalable and extensible data warehouse environment that enables dynamic reporting and provides access to current and historical performance data.
Now, as a result of the program, StubHub has a 360-degree view of its customers, company-wide dissemination of critical company data, and the quantification and monitoring of key company metrics.
Web analytics
StubHub also continually monitors Web site activity using Web analytics, enabling it to make ongoing changes to its Web site. These changes have increased StubHub's site conversion rate to 8.5 percent in 2006, resulting in $5.4 million in additional revenue, according to the company.
StubHub uses analytical tools from Omniture. The tools enable StubHub to benchmark what its overall conversion looks like and then break that down to see at what point during the buy/sell process customers drop off, Elias says. "Then, we could decide what to do with [those learnings], either from a product development standpoint or from a marketing standpoint, and optimize around that."
In addition, the company also uses Web analytics to track new feature functionality and see how well it's performing on the site. Two years ago, for example, the company launched a feature on its site called "Browse by Seat Map," which helps people decide the seats they want by allowing them to click on an interactive map of the theater, stadium or arena for the event they're interested in.
Site merchandising
Web analytics also enables StubHub to evaluate the relative value of all the components of its Web site. The company then uses that information and those tools to offer the right promotion, creative and branding components of the Web site for the specific users that show up to it, Singer points out.
"In a simple, high-level A/B test we did a while back," he recalls, "we tested the opt-in language on the site to see if we could maximize our opt-in rates. We had four different language tests that we placed against the existing control. From there, we've been able to increase our opt-in rates by a fairly significant percentage."
In a more complex, multivariate test, StubHub conducts an "offers" test, where a customer comes to the site, purchases a certain product, and "we test offers or incentives that would make them turn around and purchase something else," Singer says. "For these tests, we look at a whole spectrum of things, such as the posting of the language we use, where we place the offer on our site, when we place it and when that offer happens."
In general, the company has multiple tests in flight at any given period of time. "Our general philosophy here is that we should be making constant, iterative changes to our Web site, versus massive site redesign over a certain period of time," Singer says.
E-mail plays major role
StubHub also relies heavily on e-mail. For instance, the company e-mails biweekly newsletters and preference-based personalized e-mail alerts with specific event schedules. "Instead of sending out a generalized e-mail," Singer says, "we send out highly targeted e-mails based on direct preferences for customers we have. Or we minimally geo-target based on where they live." More than 4 million of the 7 million registered users on StubHub receive these e-mails.
StubHub also relies on online banners and a paid search program with Google. In the Google program, StubHub can bid for contextual ads. "If someone is on a particular page of a newspaper, for example, we can serve up a StubHub ad that is relevant to the page the person is looking at," Singer explains.
Recently, StubHub also started using online ad exchanges and networks to reach sports and music fans on the Web. Both avenues have become part of the company's marketing mix. In fact, the company has gone from spending nothing at the beginning of the year to a sizable portion of its marketing budget for display ads over networks and exchanges. The exchanges have allowed StubHub to place ads on large and small sites that it had never used before, such as the gossip blog Gawker and Internet radio station AccuRadio. Both of these channels have helped fuel ticket sales.
StubHub also has entered the social Web scene, having launched a Facebook application earlier this year to see what kind of traction it could get there, Singer says. The big social media pushes, however, are around mobile marketing and desktop and toolbox applications that offer customer alert boxes.
"We don't want to limit ourselves to people being on our Web site or checking their e-mail," Singer says. "We want to be available when our customers want us to be available. Being able to communicate alerts, or giving customers the ability to use their WAP-enabled cell phones, is a very, very powerful way to go."
StubHub certainly is on the cutting edge when it comes to interactive marketing. But its true success comes from more traditional business practices, such as those around data warehousing, analytics and business intelligence. These practices should be top-of-mind for all interactive marketers before launching into any interactive media program.
StubHub Fast Facts
● StubHub sold its 15 millionth ticket this summer. The ticket purchase was part of a pair transacted for the July 4 Boston Red Sox-New York Yankees game at Yankee Stadium.
● 5 million tickets were purchased between StubHub’s inception in 2000 and 2006.
● StubHub’s 10 millionth ticket was transacted in December 2007.
● StubHub sells a ticket every 5.5 seconds.
● A consumer visits StubHub.com every 2.1 seconds.
● This year, the average ticket on StubHub sells for $97, which is down from $112 last year.
● The most expensive ticket ever sold on StubHub to date — excluding suites — was for Game 4 of the 2008 NBA Finals, Boston Celtics-Los Angeles Lakers, June 17 at the Staples Center in L.A. The cost: $37,839 each for two tickets courtside next to the Lakers’ bench.
● The least expensive ticket ever sold on StubHub cost 1 cent. The event was a San Francisco 49ers-San Diego Chargers preseason football game; the seat was in the upper level.
● The most tickets ever sold via StubHub to a single event was 12,095 for a Cincinnati Reds-New York Yankees game at Yankee Stadium this past June.
●The highest grossing event in the history of StubHub was Super Bowl XLII (2008 — New England Patriots vs. New York Giants).
Source: StubHub
