“There will come a time where operators need to ratchet down the spend to break even, and in those moments we feel we will be at our strongest.”
The thoughts of Jon Kaplowitz, Head of Penn Interactive, made as part of a ‘Leaders in Gaming’ track session sponsored by GAN at this week’s SBC Digital North America on ‘how decisions igaming operators make now will impact growth in the future’.
He was responding to a question from session moderator Cathryn Lai (SVP and General Manager, US, SG Digital) about the challenge of balancing new user acquisition in active states with preparing for expansion in soon-to-be regulated states.
“We’re in a unique position because we have two distinctive brands and audiences,” said Kaplowitz. “We have our mychoice brand with 20 million card carrying loyalty members, and we have a young 100 million strong social media audience through Barstool. They’re very complementary – they don’t cannibalise each other.
“We have a different strategy to some of our competitors. We’ve said publicly that not only do we want to be one of the biggest operators in the US, we want to be one of the most profitable. By leaning into our two audiences, we can acquire customers at industry leading cost for acquisition, which gives us a lot of firepower.
“Our approach to marketing is a bit different. Our big thing is ‘how do you cut through the noise?’. You see commercial after commercial. At some point for a 30-year old who doesn’t quite consume their content on TV, we think it becomes noise.
“So we’re going to focus on what we think we do better, which is digital marketing, use of influencers, and talent-driven marketing because of our Barstool connection.
“There will come a time where operators need to ratchet down the spend to break even, and in those moments we feel we will be at our strongest with the power of our balance sheet.”
Adam Greenblatt, BetMGM CEO, agreed that there is a critical balance to strike between acquiring new users now and reacting quickest to US market expansion.
“If you’re not in a market, you’re not participating and not in the discussion,” he added. “So being there, ideally from day one, is absolutely a priority without compromise. But then it becomes about the relationship between what you pay to acquire players and how much they leave behind during their lifetime.
“For BetMGM, having MGM in the name is an unbelievable strength as people associate it with a leading gaming experience in the world bar none.”
Expanding on the importance of understanding a customer’s value, he said: “Through integration of our technology from the top of the marketing funnel down to product, within 10 days we can tell you with a 95 degree of confidence how much that player is worth.
“And so that relationship between how much we spend on marketing through external channels and the value of players coming through those channels allows us to spend more effectively and over time become a winning recipe.”
Another operator chasing this ‘winning recipe’ is Rush Street Gaming, whose President Richard Schwartz described the explosion of igaming in the US as a “once in a generation opportunity”, explaining that you have one of the largest entertainment mediums digitizing 20 years after most others because of previous legal and compliance restrictions.
He said: “We’ve spent the last eight years building a unique and differentiated online casino product. Unlike sports betting where the entertainment primarily takes place outside the app – on the court or sports field – with casino you are manufacturing fun in the app itself.”
On increasing the efficiency of player acquisition spend, Schwartz shared: “We announced in our most recent earnings call that in the past we got return on our payback in six months for new players through the door with us. And that was for New Jersey.
“We’ve now expanded that to say – across all markets in the country including sportsbook only markets – we’re getting payback in six months or less. That’s extremely exciting for the business as it means we can invest more in marketing and deliver profits long-term.”
The industry experts were speaking on the GAN-sponsored Leaders in igaming track at SBC Digital North America, which ran from June 9 to 10, 2021. You can still watch it on demand by registering at https://sbcevents.com/sbc-digital-north-america