A guide to growth in 2016

Frank Ravanelli looks at the opportunities and challenges for egaming performance marketing in 2016

There are quantitative strategies you can implement to grow your business which may be done through internal growth and acquisitions, among other methods. The key advantage of such approaches is that your overhead costs can be accurately estimated in advance. Our industry is experiencing a consolidation frenzy, which is likely to stay for a while.

These are examples of a quantitative action: finding a company likely to offer economies of scale, and merge. Setting clear game-win or sales goals, and keep hiring until there is a marginal, positive ROI and risk-management allows to do so. The main disadvantage of these approaches is that they are linear. Aſter an acquisition, cost-savings are pretty fast to materialise (how they affect its competitiveness is another story), however a newly formed group is unlikely to grow its combined business substantially in a short amount of time.

There are also qualitative strategies available for 2016, which I think are ‘game changers’ for egaming performance marketing. They are about introducing new products, promoting existing verticals in innovative ways, finding new distribution channels or fostering financial innovation. While the overall costs and time-to-market are harder to estimate accurately, their positive income on your business can be exponential. Plus, they have the power to revolutionise our industry.

Your business needs both. Corporate strategies for long-term profitability and marketing strategies to bring the game to the next level in terms of innovation and reputation. Here, we focus mainly on qualitative strategies and actions, highlighting some key opportunities. I am always happy to speak with start-ups and other innovators who think they are developing the ‘next poker’.

Daily fantasy sports
Daily fantasy sports (DFS) went mainstream in the US with the start of the current NFL season. Unfortunately, as a side-effect, that brought a lot of unwanted attention from companies which see DFS as a potential competitor/threat to their earnings. Nevada decided that, on a state level, DFS has to go under the supervision of the gaming board, despite what’s written in the federal UIGEA, clearly stating that DFS is not gambling.

If you want to use free DFS tournaments to drive sales in other verticals, that should not affect your position. If you want to enter the US DFS market as an affiliate, that means you are better off with CPA deals instead of long-term revenue sharing. If you are an operator, it is time to move away from the traditional fantasy sport model of drafting a full team, and looking into additional options, like picking individual players and putting them head to head for a given statistical parameter and points scored.

In Europe, there is a massive interest, but the market still needs a lot of education. Even egaming operators are not fully aware of the differences between DFS and the old school ‘office football pool’. From a regulatory point of view, monetary DFS does require licences in most of the markets which have a framework for egaming. European football teams are among the most popular in the world, including fans in South-East Asia and South America. DFS geared towards European teams will be a major trend, especially aſter the 2018 Football World Cup. Operators who are going through the marketing and monetisation learning curve now will be ready to benefit from this opportunity.

Binary options
The days of opening a skin, which looks like the existing hundreds of binary options operators, setting up a call centre and laughing all the way to the bank are over. As usual, the US market has its own dynamics, with Nadex leading with its brand and Cantor Fitzgerald’s leveraging its access together with the SpotOption’s technology and licensees.

The rest of the world will have to offer new, smart tools to traders: copytrade, social signals and programmable trading-bots, etc. The success of affiliate programmes is going to be a balance between the financial incentives offered to affiliates and the sales funnel. Sending potential traders straight to the brokers’ homepage still work but its conversion rate is declining fast for other channels.

3D casino
The appeal and economics of casino games are hard to replicate through other egaming verticals. Companies innovating the casino industry may strike gold. Performance marketing allows them to test different approaches, and then scale-up the advertising of the winning formats. 3D Casino is coming soon. It has already been available as a desktop experience for a number of years, sometimes with good results, others with little traction. Now, thanks to virtual reality devices becoming more and more affordable, the 3D experience is taken to a brand new level, with total immersion in the gaming floor. An example of this trend is SlotsMillion.com, which is offering a 3D casino powered by Barcelona-based Alea Gaming.

I see an opportunity for operators to give away, as gifts or at subsidised prices, these 3D dedicated devices to their VIP players. For the market at large, the real appeal is in apps which can run on Android. With the Google Cardboard and any Android mobile, full 3D immersion is just a few seconds away, with virtually no investment required.

3D takes performance marketing to a brand new level but where are the players looking most of the time? Which UI is more appealing, and which ones are interfering with a smooth and entertaining gaming experience? How does the order of the slot and other games presented influence the overall profitability of the casino? These are questions that arise on the floors of land-based casinos as well, but the trackability of 3D apps will come to the rescue of the savvy operators, who know how to mine big data.

Lotto and betting
What can improve the performances of these historic gaming verticals? The key innovations come from risk-management, which open new opportunities for performance marketing and product development. Gibraltar-based Lottoland has designed a solid financial approach, which allows smaller lotto sites to pay jackpots to their winners. It has been tested over and over again, and we all know that big jackpots are major motivators. But, usually, independent lotto operators cannot afford to take the financial risk of paying a multi-million jackpot.

Lottoland, by pooling its own liquidity together with that of another operators and using a clever insurance model, makes jackpots available to operators of all sizes. This is a substantial improvement in terms of players’ protection as well, a jackpot insured by a third-party is a guaranteed one, compared to having to hope to get paid from an individual operator.

BetConstruct, along with its transparent and affordable B2B approach, is offering something similar for sports betting. Every sportsbook loves to take big bets, but it is scared by the risk they carry. By pooling resources and spreading risks through its BetCloud platform, sportsbooks of any size can take on big bets, keeping their customers happy.

eSports
Gaming is filling stadiums of admirers in the US and around the world, especially in Asia. There are several opinions in the industry about this opportunity. Some people see it as a massive money-maker. Based on my experience in the egaming industry and analysing the demographics of eSports, I see it as a substantial opportunity for performance marketing. There is an audience eager to play, and this vertical is a goldmine for companies which want to target millennials.

It is a great opportunity to cross-sell other egaming verticals, however I do see most of the action occurring around major eSports tournaments. The idea to bet on unknown players is not likely to get much traction. In eSports, the Pareto’s rule is going to be respected, with most of the profits coming from a handful of events. Operators like Unikrn invested a lot to make the market transparent and user-friendly, this will help to make growth sustainable.

In conclusion, no matter how or what you decide to invest in to grow your business, make sure to be very innovative – even disruptive – with the first ‘P’ of marketing, namely product. Performance marketing gives you an unprecedented opportunity to A/B test and benchmark, not only your ads and landing pages, but also your core offering. If you want to grow just a little, you can just keep doing what everyone is doing. If you want to achieve exponential growth, you need to innovate, test, scale-up what works and discontinue what does not work.

It is getting harder and harder to get the attention of potential customers, if your site and products are just made with a cookie-cutter. Here, I presented some of the emerging trends. How to mix, match, scale and leverage them is up to your specific goals, resources and characteristics of your performance marketing capabilities.