The US online betting and gaming market is still focused on customer acquisition according to Andrew Foster, Chief Business Officer at Enteractive. But already it is apparent that those that place a greater emphasis on retention will be more likely to succeed in the long run.
It has been said many times before but it is no less true, US online sports betting operators are currently focused on customer acquisition and increasing market share. This focus is characterized by huge and costly advertising campaigns, strategic sports sponsorships, and player promotions and bonuses that are leading to, in some cases, eye-watering losses for many operators, including the most well known ones such as DraftKings.
For smaller or medium-sized brands, the pressure is also telling as they see marketing budgets rise but little in the way of corresponding increases in market share or revenues. In fairness this is not surprising, as all newly-regulated markets go through similar phases when they first open as operators focus on building up the customer base and generating volume.
The US of course is different to most regulated markets. Its size, scale and potential are on a different level to any other market, but this is also balanced out by operators having to be regulated in individual states, which means high regulatory costs and barriers to entry for many of them.
Changing customer habits
And while the business environment in which sportsbooks operate is one issue that impacts how they work, customer habits are also changing.
A recent analysis of mobile betting apps by the gaming research firm Eilers & Kreicjek shows that operator improvements to their user interface has a direct impact in how bettors respond to their products and, therefore, will be more inclined to bet with them.
The E&K data revealed that DraftKings took top spot for user ratings, overtaking FanDuel in the process, after “significant improvements” were made to the DraftKings app.
In addition, US-focused apps are not only gaining on the more European-based products, they are now overtaking them. According to E&K, this is “a departure from previous testing cycles in which European operators were more dominant”.
The E&K analysts added: “We are increasingly finding testers turned off by Eurocentric design considerations and language. Moreover, we’re beginning to see specific expectations emerge in our testers’ comments regarding market structures and layouts; of note, easy availability of prop bets and same-game parlay is now hugely important.”
The increased focus on US-centric interfaces, prop bets and same-game parlays should be expected as the market matures. It will also play an increasingly important role in the adoption rates of US betting apps and, of course, the follow-on from adoption rates of mobile apps is retention.
Even if the battle for market share continues to take priority in the short term, it is clear that retention will become a key differentiator in the future. How long that will take is open to debate, but at some point operators will move away from acquisition to maximize lifetime values through independent features like quality content, such as podcasts. And those with land-based outlets will seek to drive online players to their resorts with special promotions and experiences.
Some executives are already thinking about this. Speaking at the recent iGaming NEXT Bright Future conference online in June, Laila Mintas, CEO of the US challenger brand PlayUp, said retention was largely being overlooked in the US at the moment.
“Everyone is focused on acquisition, and not many are focused on retention, so part of our strategy is to retain the customer,” she said. “Instead of going out and keep giving bonuses away to acquire new customers, it’s much better to reward customers that you have already, and I think that’s something we will see improving in the US over time.”
Adam Fiske, CEO of Australian affiliate iRival Media, concurred: “Sometimes we falsely think about affiliates as just about acquisition, where there’s probably a bigger role for them, or for us and for many companies, to play in retention and re-engagement.”
Again this is not to say that bonuses, incentives or money-back promotions don’t have their place, indeed they are very effective as part of a broad marketing mix, but they can also be blunt instruments and are often viewed negatively by regulators.
Fiske added that there were as many different approaches as there were operators, but some, such as PointsBet, have major media deals with networks such as NBC but are also mixing this with niche betting products and rewards programs to differentiate themselves from their competitors.
How are the trends outlined in this article relevant to an activation specialist like Enteractive? For us, they simply confirm our belief that our specialisms – one-to-one communication and dialogue with players – can play a key role in the customer retention mix. Being able to generate player activity, and increase the volume of your active players, with agents who speak in the same accent, with the same cultural references as the players, is how we do it.
We’re always happy to talk about our expertise in this area, so any operators who are looking for advice in the US market should get in touch with us to find out how we can add to their bottom line revenues. Check out our website, www.enteractive.com, or drop me an email at [email protected].
Andrew Foster is the Chief Business Officer for Enteractive. He has been with the company for five years, and lives in Malta with his family. Hailing from Johannesburg, SA, Andrew spent almost seven years in the South African gambling industry before making the move to Europe in 2016.