Sportsbooks from a marketing perspective

[GM]

Received this article in my email, found it very informative. I figure anyone with an interest in marketing, or hearing about some of the behind-the-scenes thinking of a couple of the bigger books in the industry would find this interesting. The volume these books are doing now is just phenomenal. Wow!

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Guerilla Marketing Tactics of 3 Top Gambling Web Sites (Industry Revenues Top $9 Billion per Year)

SUMMARY:
What do you do when your marketplace is booming, booming, booming, but practically no US Web sites will accept your ads?
Marketing online gambling and poker sites is not illegal -- it's just discouraged by the US federal government. Despite this millions of Americans are flooding online to play.

Top execs at three of the biggest sites in the industry granted MarketingSherpa's reporters exclusive behind-the-scenes interviews about their guerilla marketing for this Special Report. Discover what we learned?

Yes, includes ideas for more mainstream marketers:

"I've been doing this for about 15 years, and it seems like every time you have all the answers to the questions, they change the rules," says Mickey Richardson CEO BetCRIS.com, one of the world's larger online gambling sites.

Marketplace demand was always there ("Years ago, you could put a small ad in big newspaper and get a sizeable amount of leads"), but US lawmakers have danced around the subject of legality.

No one knew "whether it would be a long-lived, thriving industry or whether they'd put a noose around our neck."

The result? A booming multi-billion dollar industry that can't buy much advertising, despite the fact that there's no Federal law against it.

So, online gambling marketers have had to get creative. Here's our behind-the-scenes look into how three of the larger sites are coping.

Quick online gambling stats and legal backgrounder

According to Calvin Ayre, CEO Bodog.com, interactive poker legality is a grey area. The US Justice Department has danced around the issue while exerting pressure on media outlets to not run ads.

Ayre says his legal experts tell him media outlets running ads for international gambling companies are protected under the Constitution, until such time as a US judge of competent authority rules otherwise. So, US media refusals to accept ads from online gambling companies is not actually a legal issue, but one of policy right now.

Media reluctance to accept advertising hasn't kept the industry, ranging from online poker playing to sports betting, from almost unbelievable growth. For example:

--Online poker revenue has grown from $318 million in 2003 to $3 billion in 2005, and the number of online poker rooms has grown from 30 in 2002 to over 300 in 2005 (PokerPulse). As of February 2005, there were roughly 1.2 million active online poker players in the US, accounting for about 70% of the worldwide online poker market.

-- Online sportsbook gross win was approximately $3 billion in 2003 (Global Betting and Gambling Consultants)

-- Total global online casino gross win grew from virtually nothing in 1998 to approximately $2 billion in 2003 (Global Betting and Gambling Consultants)

-- Global online gross win was $5.7 billion in 2003 and is expected to grow by over 20% per year for the next several years (Christiansen Capital Advisors)

--Global spend on online gambling represents a little over 3% of the total global gambling market, and is expected to grow to 8% in the next four years.

--Busiest time of year is during football season and March Madness (basketball). Traffic peaks at its highest during September and October, with another, slightly lower peak, in February.

--Weekends are the busiest days of the week.

Online gambling profile: BetCRIS.com

BetCRIS Sportsbook provides sports wagering on sporting events, as well as horse racing, online casino games, poker, and bingo from any location in the world. It also offers wagers on elections, how many hurricanes there will be in a given year, and a "plethora of different options," says Mickey Richardson, CEO.

He says the company has grown 10-15% over the last 12 months.

While Fridays and Saturdays are the highest volume days for customer service and sales, Saturday and Sunday mornings see the highest volume of traffic online. As online increases, Richardson has been able to cut back on customer service reps, down from 400 operators to about 70 right now.

BetCRIS' marketing strategy is two-pronged:

#1. Mainstream media mentions

"We try to get into the mainstream media," Richardson says. With that in mind, he puts out an average of two press releases a week, sending them on the wires (he wouldn't share the name of the newswire he uses), in the hopes of getting picked up.

For example, when the National Enquirer ran a story about the possibility of George Bush falling off the wagon, "We decided to put up a wager," Richardson explains. "Will he be exposed for drinking? Will he admit to drinking? Will he convert to Judaism? Will he convert to Muslim? Then, we put out a press release."

When Eva Longoria was dating a basketball player, he put out a press release announcing a wager on her relationship, "So now we have a chance to get our name in local newspapers, it will give us some brand recognition, some traffic."

"I might get a small town newspaper in Iowa to pick it up, or get lucky and the New York Post picks it up. It depends on whether it's a slow news day in sports, a slow news day in entertainment," he says.

#2. Print ads

"I actually prefer print," Richardson says. "Finding publications that are based on gambling is relatively easy." The hard part is getting them to accept the advertising, but it's simply a matter of persistence.

"Say I call XYZ, tell them I'm interested in advertising, tell them about my business. They say, 'No, we feel that accepting your ad could put us in harm's way.' But as time passes, and they're maybe not hitting their sales goals, they're willing to take a chance with you."

He doesn't call every week or act overly aggressive, because he wants to negotiate a good price. "It's a cat and mouse game. We do our best to leverage our position," he says.

 

[GM]

continued...

Online gambling site profile: BetOnSports.com

BetOnSports hosts three gambling sites: BetOnSports.com, BoSpoker.com, and BoScasino.com. According to Nielsen/NetRatings, the main .com site's unique traffic for October 2005 was 418,000, however this is only a fraction of the site's true traffic (see below). The average visitor spent :49 seconds, indicating they're very familiar with it, get on, make their bet, and get off.

The company has an average bet size of $109, with an average size of $72 online and $201 via telephone. Football season is their largest money maker and most demanding time.

In the third quarter, the number of new customers increased 37% to 20,926 from the previous year, the number of bets placed increased 40% to 10.9 million, and the gross margin increased 20% to $20.8 million.

BetOnSports.com relies on four main marketing tactics to gain and keep customers:

#1. Create a dot-net

Because most big media companies -- newspapers, radio, TV, online media -- won't work with gambling sites, the gambling industry has come up with another solution, according to Will Griffiths, Director of Marketing. That strategy is to create free gambling sites, under a dot-net rather than dot-com URL.

"We have BoSpoker.net, for example," he explains. The concept is that the average consumer won't type dot-net. Rather, they type dot-com, landing on the pay gambling site rather than the free site. With that in mind, Griffiths is spending millions of dollars on radio, newspaper, and internet ads for BoSpoker.net.

Interestingly, even on the dot-net site, he can't advertise for the dot-com, because other sites -- ESPN for example -- won't take the dot-net advertising if the dot-net links to the dot-com.

Griffiths also runs ads that make no mention of the actual website. "I can say, 'Come to BetOnSports (without the dot-com) to learn the spreads," he explains. Again, the average consumer would assume the site's address to be BetOnSports.com, rather than dot-net.

#2. Affiliate marketing

When Griffiths came on board with BetOnSports, the company didn't really have an affiliate program. Affiliates are important for gambling sites because they focus on search engine optimization, helping to drive significant traffic to the gambling sites. They are able to do that because they either don't live in the US or they say they don't live in the US

Now, Griffiths says, "We have a team of seven to 10 people working on new affiliates sites."

In his industry, you only need relationships with the top 50 affiliates -- but even of those, it's the top 10 that really matter, he says. "One top affiliate can generate more than a million dollars a month in gross win." So keeping affiliates happy is of utmost importance. Here's how Griffiths maintains affiliate relationships:

--Affiliates in the gambling business generally receive anywhere from 20-40% of net gross gambling revenue from the leads they send.

--"One guy might want to go out for a beer every week, another guy might want to receive his commission numbers on his mobile phone every day, another wants tickets to the Super Bowl every year," says Griffiths. And, what they want, he gives them. Relationship management is the most important part.

#3. Sponsorship and event marketing

NASCAR wouldn't accept advertising under the dot-com name, so Griffiths sponsored it under BoSpoker.net. We were the first gambling company to get into NASCAR, and through our infield marketing we generated thousands of potential leads from people interested in learning more about BetOnSports."

Griffiths also sends RVs and cruisers to tailgate parties at every pro football game throughout the season. They have 12 girls there, partying and handing out handwarmers, napkins, and other marketing materials printed with a unique telephone number, in order to track the campaigns.

#4. CRM

"How you segment your database into a format that tells you what they want to hear about, what they want to bet on? is the most sophisticated part of the business. It's about how we manage the margin," Griffiths explains. Obviously, if you attract a customer to play blackjack, you don't want him to remain only in blackjack, you want him to branch out into other, higher margin games.

He would say that he runs email campaigns to cross-promote. But the company also has a call center with 2,000 workers, who take and make calls to customers to upsell. For example, he says, "If [customers] say they want to deposit $50, our people say, 'If you deposit $100, we'll match it with $100.'"

Much of the company's customer relationship management focuses on good, old-fashioned customer service -- taken to the Nth degree. For example, Griffiths shared a story from a company he worked at previously:

One customer spent, on average, $100,000 per month with the company, and then abruptly stopped playing. After repeated emails and phone calls, which were not returned, Griffiths -- worried that the customer had begun patronizing another gambling site -- talked with the customer service reps who had spoken to the man in the past. "One remembered that he mentioned he liked Prada," Griffiths says.

The company sent a manager to the man's house, offering to either fly him to a Prada store and give him $25,000 to spend, or to bring Prada merchandise to him and allow him to choose products from the comfort of his own home.

"We got him back," Griffiths adds.

Online gambling profile: Bodog.com

According to Hitwise, Bodog.com is the top ranked US-facing online gambling brand and the 10th most visited site within Hitwise's Entertainment/Gambling category. It has three online product channels: Sportsbook (launched in 1995), Casino (1999), and Poker Room (2004). The company did $3.5 billion in wagers in the last 12 months.

While an international company, the site uses a single URL -- Bodog.com -- no matter the country of origin. Users can also call to place orders online, but there are "very few" people who actually phone in, according to Ayre. In fact, 98% of the business is done online.

Bogdog.com relies on a three-pronged marketing strategy:

#1. First, an unorthodox naming strategy and transparency

Ayre attributes much of the success of the company to the fact that he chose a name with a personality. "Most of our competitors picked names that are keywords, categories that you would search," he says. "They're names without souls."

Ayre also claims that his company was the first to "actually put a face on the website and say, 'This is who we are.'" The Bodog.com site offers background on the company, industry research, and thoughts on the legality issues of online gambling. "We pioneered transparency," he says.

#2. Further the industry

Bodog.com holds an annual industry event, the Bodog.com Poker & Sports Marketing Conference. "We sponsor the conference because it's good for the industry," Ayre says. "At the same time, we're using it as a platform to educate everyone who's interested in where the space is going."

Ayre holds the conference in -- where else? -- Las Vegas, plans unrivalled parties, and invites sports personalities like Mike Ditka, Reggie Jackson and Joe Montana to attend as special guests.

Bodog also holds poker tournaments tied to charity events to increase the profile of gambling. For example, an event titled "Bodog Salutes Our Troops: A Tribute to American Heroes" took place in July. The event included a concert with Snoop Dogg, and performances by comedians Colin Quinn, Wanda Sykes, and Paul Rodriguez. Proceeds were donated to the Fisher House Foundation, an organization that assists troops and their families in times of need.

The tournament -- a massive, no-limit Texas Hold 'Em -- included 15 other celebrities along with US troops and players from Bodog.

#3. Bodog.net, a free, educational website

Bodog also uses the dot-net strategy. "The play for free sites allow us to advertise on TV and magazines," Ayre explains.