The Business Lessons to be Learnt from the iGaming Market
Posted by Harry Kane on Wednesday, July 14, 2021
There are plenty of growth industries in the current global climate, with the blockchain market offering a relevant case in point. This entity is expected to grow at an impressive CAGR of 56.1% between now and 2027, before peaking at a value of $69.04 billion.
The online gambling space also sits within this space, particularly in developed economies such as the UK. Here, the iGaming market grew by 8.1% in the year ending March 2020, with slots and casino gambling central to this trend.
This growth also came despite immense regulatory challenges, which betrays the advantageous model that underpins the online gambling industry on these shores. But what lessons can other businesses draw from this model, and why should entrepreneurs follow this marketplace so closely?
The Importance of Giveaways
For most businesses (and particularly startup), the notion of giving away a product or service for fee can be incredibly daunting.
After all, this carries a production and distribution cost that must be borne by the business, while this must be scaled when handing out freebies to a broad group of customers.
However, studies suggest that the financial benefits of distributing freebies can far outweigh such costs, with one in particular suggesting that this practice can actually boost sales by as much as 2,000%.
Interestingly, there’s some considerable science behind this observation, much of it based on the fundamental ‘buyer decision process’ that customers go through prior to them completing a purchase. This starts when shoppers realise that they have an inherent need or desire, at which point they start to seek out information about a potential solution.
Around this time, consumers are forced to process huge amounts of data and information whilst comparing the market, including price, availability and the overreaching identity of each competing brand.
However, the well-timed offer of a free product can help to cut through this noise and emerge as an influential factor in the minds of consumers, who are suddenly presented with a shortcut to a solution and one that won’t initially cost them a single penny.
The concept of social proof is also a powerful factor in this regard, not least because this describes a psychological phenomenon where people copy the actions of others out of a sense of conformity and a desire to be accepted by others. So, if you can demonstrate significant uptake of your free product or service, others will be compelled to participate and follow the example of their peers.
There’s another psychological concept in play here too, which is the fundamental rule of reciprocity. This explains the basic human urge to do something nice for those who have previously helped you it, and in this instance, it means that customers may be compelled to buy from brands that have extended the offer of a free product.
In practical terms, there can be no doubt that online casino brands provide veritable proof that free samples and offers can translate into optimised customer values.
After all, the entire iGaming casino model is built on the innovative notion of welcome bonuses, which afford new customers lucrative offers and ‘free’ gameplay that equates to a fixed financial value.
While such offers can be unconditional, most take the form of deposit matches, which means that the operator will match the value of your first deposit (usually up to the value of 100%). This will double the amount of money in your new account, while an operator may also augment this an offer of a finite number of free spins on a particular slot game (or several titles).
Operators are increasingly reliant on such offers in the current, competitive market landscape, in a bid to tender aggressively for new customers and claim their share of the overall iGaming GGY.
While businesses can definitely take concrete lessons from this model, however, it’s important to understand the structure of welcome bonuses. More specifically, you should note that each welcome offer has a fixed and carefully calculated value, while operators also use subtle mechanisms to potentially recoup their losses over the period of each customer’s lifetime.
For example, operators apply so-called “wagering requirements” to their welcome offers. These dictate an amount of cash that each qualifying player must ‘play through’ before they can withdraw any winnings derived from the bonus, with this typically equating to 30x the value of the bonus in question.
So, if you deposit £10 into a new casino account and receive £10 with which to play (and the bonus stipulates wagering requirements of 30x the bonus funds), you’ll have to play through £300 before you can complete a withdrawal.
Usually, the wagering requirements will increase in line with the value of the offer in question, with this creating a scenario where operators often recoup more than the total value of the bonus awarded to each qualifying player.
Of course, this doesn’t mean that you have to create complex giveaway or bind your freebies in various terms and conditions, but it highlights the importance of at least calculating the cost of your total offering to ensure that it ultimately proves to be profitable for your venture.
2. The Importance of Creative and Technical Marketing
There’s no doubt that iGaming brands are creative and savvy marketers, both in terms of their content creation and the type of channels that they use to engage customers.
For example, online operators have always blazed a trail for others to follow in terms of digital marketing, with nearly half of the £1.56 billion spent on advertising by iGaming brands invested online as recently as 2018.
Prior to this and between 2014 and 2017, marketing expenditure increased by 56% amongst iGaming brands, with this trend largely driven by rising investment in digital channels and the proliferation of ads online.
This was reflected further by the fact that direct online marketing in 2018 (including banner ads and paid search channels) amounted to £747 million, with this figure nearly double the £400 spent just four years previously.
At the same time, operators have gradually diminished their offline marketing spend, with TV advertising (which once dominated the iGaming space) accounting for just 15% of the total investment in 2018.
This highlights the speed and efficiency with which iGaming brands understand the behaviours of their customers, as they continue to adapt their marketing methods and optimise the quality of leads generated across the board.
This is definitely a lesson that all businesses (and especially smaller ventures) can learn from, while the same can be said for the way in which iGaming operators approach the challenge of technical SEO.
Make no mistake; a huge amount of time and money is spent by operators in the quest to identify the most valuable keywords, from the most competitive phrases to long-tail alternatives which can quickly afford brands a genuine competitive edge.
Of course, this represents another key point for brands and online businesses in the digital age, as customers become increasingly reliant on search engines for information and Google alone having received 360 billion searches during the first four months of 2021.
Online casino brands are also synonymous with affiliate marketing, which can create mutually beneficial partnerships within the industry and create low-cost leads for operators who are looking to target new consumer demographics.
In simple terms, affiliates serve as middlemen between casinos and potential players, while they usually offer a similar and relate service. They subsequently promote a specific casino platform and bonuses to their existing audience, typically claiming a commission based on the subsequent action taken by each individual player.
While the concept of affiliate market originated in ecommerce, it has been elevated and finessed in the iGaming realm, lowering the cost of marketing for new and independent operators while creating a more level playing field between start-ups and the most established brands.
Certainly, start-ups in other industries would do well to leverage affiliate marketing to their advantage, regardless of which market or sector they currently operate in.
3. The Importance of Accessibility
For businesses to be successful, they must be as accessible as possible to their target audiences. While this may sound like an obvious assertion, it’s also easy to overlook during the hustle and bustle of everyday operation, but it’s something that online casino operators happen to excel in.
This doesn’t only apply to physical stores and outlets that need to be made accessible to disabled citizens either; as online ventures also need to ensure that their products and services are widely available across a range of different platforms.
For example, smartphone penetration rates are rising incrementally across the globe, even in developing nations. This is helping to drive a worldwide m-commerce market that’s expected to generate revenue of around $3.56 trillion by the end of the year, as a growing number of consumers continue to shop and purchase goods through their smartphone.
The same trend is prevalent in the UK iGaming market, where approximately 51% of gamblers regularly wagered through their smartphone as recently as 2018.
This number will continue to grow incrementally in the near-term, which is why operators have been quick to ensure that their products are available through both mobile Internet browsers (such as Safari and Chrome on iOS and Android respectively) and standalone apps. To this end, their websites all benefit from the principles of responsive design, while their native apps are freely available and capable of being used seamlessly on various devices.
What’s more, contemporary casino products have been increasingly formatted for cross-platform play, with games and verticals designed to be accessible seamlessly across mobile, tablet and desktop devices.
This is largely thanks to the use of the HTML5 programming language, which is used to create contemporary casino games that can respond intuitively to different device types in real-time.
Online operators also commit to ensuring that their customers have access to a broad range of payment methods, which means that they optimise every opportunity to accrue revenue and maximise the value of individual players.
This includes traditional payment methods such as bank transfer and debit cards, along with convenient e-wallets like Skrill, Neteller and PayPal. However, operators within the iGaming market are also continuing to innovate in terms of the payment options that they make available, with some embracing cryptocurrencies such as Bitcoin and Ethereum.
A growing number of operators are even allowing players to complete small deposits through their phone bill, enabling them to wager with far greater flexibility and creating far greater accessibility to casual players.
As a result of this approach, no customer is left behind when wagering at a virtual casino in the digital age, which is just one of the reasons why there are so many active account holders and individual gamblers online in 2021.
On a final note, it’s important to note that online casino brands invest huge amounts of time and money in guaranteeing the safety and security of their websites. This also lends itself to far greater levels of activity and accessibility, as it enables players to wager freely and with genuine peace of mind no matter how much they spend.
More specifically, all online casino sites are protected by 128-bit SSL (Secure Sockets Level) encryption, with this representing a minimum requirement for security in all financial service niches. This safeguards individual player data and their transaction information, making it incredibly difficult for hackers or cyberthieves to steal your funds.
Each individual casino is also independently tested to guarantee the safety of its website and payment methods, with this a key licensing requirement in the modern age. So, you can verify the security and safety of any online casino that you choose to visit, creating a far greater sense of transparency that enables you to make a truly informed decision as a consumer.
Businesses across a broad range of markets can certainly take lessons from this, as they look to create a safe and welcoming environment in which customers are able and inclined to part with their hard-earned cash!