At the La Fleur's Lottery Conclave and Interactive Summit, over 150 lottery organizations, gaming vendors, agencies and research partners gathered for three days to discuss the most pressing issues facing the billion-dollar lottery business. The three-day conference was organized by the trade publication, TLF Publications and attracted some of the leading thinkers in the industry, including May Scheve Reardon, president of North American Association of State and Provincial Lotteries (NASPL) and director of Missouri Lottery, and Gary Grief, executive director of the Texas Lottery.
One pressing concern at the conference was the need to improve continuous engagement with players, who are increasingly becoming empowered by technology that gives them more options with how they spend their time and money. According to numerous speakers, empowered players are demanding products that reflect their feedback. Players are demanding increased sophistication—and when they don’t receive it, they become disinterested and choose progressive and innovative alternatives like online, mobile and sports gaming that can yield higher value and reflect current technology.
Lotteries are working harder than ever to stretch marketing dollars, make smarter product portfolio additions and stay relevant in the marketplace.
Here’s a deeper look at three key themes explored at the conference.
1. Product innovation
A Booz and Company report showed that almost 66 percent of new products will fail within two years. What’s more, according to a Doblin Group Report, almost 96 percent of all innovations fail to return their cost of capital.
Indeed, a lack of player understanding could hurt a lottery organization’s revenue as well as its brand and reputation. The cost of failure is high. Lotteries make large investments in introducing new products to market and can spend even more in promoting those products.
During an instant ticket panel discussion, Terri LaFleur asked panelists if they believed the industry is doing a good job of “speaking to our players enough and hearing what they think.” Panelists indicated that positive steps were being taken to “organically” listen to players (through email and social media, for instance), but traditional means and methods were still the norm. The industry can do a better job of soliciting feedback from players in an organized fashion.
As the need to release more innovative products increases, lotteries can enhance their chances of success by infusing the voice of the player at every level of product innovation. Ongoing player engagement in the innovation process helps ensure that the games and supporting campaigns that lottery organizations launch are in tune with the market.
"Lottery organizations must engage with players and identify ways of staying relevant in this evolving landscape."
2. Marketing effectiveness
Plummeting marketing budgets put extra pressure on lotteries to ensure maximum effectiveness of their marketing strategies. May Scheve Reardon talked about Missouri Lottery’s advertising struggles and her fight to increase the advertising budget. However, she also noted that a budget increase also means more accountability for dollars spent and increased scrutiny from local government. Reiterating the importance of testing campaigns, Reardon said timeliness is also an issue since traditional, slower methods of getting player feedback are still the norm.
Just like in product development, there’s also pressure to innovate in advertising. Charles McIntyre, executive director of New Hampshire Lottery, talked about the importance of relating to today’s players and finding new, fun ways of marketing to them. “If you’re not standing on the edge, you’re taking up too much space,” he said.
Advertising to lottery consumers is changing. Infusing humor and “wow” factors is now a necessity to grasp people’s attention. Lotteries are looking to their ad agencies for innovative, creative and compelling product and brand advertising that will create a strong emotional reaction with their audience.
Increasingly, lotteries are defending the way they do business to legislative groups, commission boards and committees—groups that want solid, metrics-driven evidence to explain their decisions. Lotteries need a fast, nimble way of testing the effectiveness of their campaigns so they can make quick improvements to their marketing strategy and tactics.
3. Growing the lottery niche player base.
The industry is beginning to appreciate that a one-size-fits-all approach to addressing the player base no longer works. Instead, lotteries are working to understand niche player groups. The industry’s new paradigm calls for programs that reach individual segments and targeted audiences.
Lori Harris, director of product marketing at IGT, noted that the industry is now adapting its product lifecycle to niche players through niche products. One example is Fast Play Game, a product that has varying game and creative components that change frequently to improve interest in the game. As the player base becomes more fragmented, lotteries need to release products more quickly that account for targeting specific niche players.
The good news is that more lotteries are attempting to go down this path by launching draw, instant and hybrid products that are tailored to specific segments. However, lottery organizations struggle gaining insight into a product’s appeal to a niche group prior to its release—a critical step to ensuring a successful launch..
Niche player groups are hungry for products that are tailored to their preferences and are eager to tell lotteries how they want to interact with these products. Lotteries need to work harder to listen to players, especially segments like the millennials—an elusive generation with an increasing purchasing power that aren’t playing the lottery as much as previous generations have. .
La Fleur’s annual summit is a reminder that large, established industries like the State lotteries are also feeling the pressure in the age of the empowered customer—with the ramifications witnessed in struggling sales numbers, failed product launches, and marketing campaigns that miss the mark.
Lottery organizations must engage with players and identify ways of staying relevant in this evolving landscape. As the industry evolves with the empowered player, using customer intelligence to make data-driven decisions will be key to their success in the future.