Hitting the jackpot: Why online casinos are turning to non-bonus incentives

The bonus is dead, long live the bonus’. Such would appear to be the attitude of most operators and suppliers in the face of regulatory pressure in the UK and elsewhere over – to date – the most fruitful and prevalent marketing tactic in online gambling.

As much as the Competition and Markets Authority (CMA), in conjunction with the Advertising Standards Authority (ASA), has cast a deal of shade over the practice of bonuses and free bets, they remain popular with the players. So says Peter Marcus, an online gambling consultant who points out that the basic question is, are bonuses replaceable?

“The problem is the CMA has only heard from people who don’t tend to like bonuses,” he points out. “We know the CMA don’t like it, but the customers really do. They want the bonuses; they want the free spins. So short of the UK Gambling Commission banning bonuses altogether – and I frankly wouldn’t rule that out – I think that bonuses will always be there.”

New ways of thinking

Perhaps a better question is not whether bonuses will be replaced but whether a reliance on using them masks a wider lack of innovative thinking when it comes to promoting games.

For Helen Walton, chief commercial officer at games developer Gamevy, this is definitely a problem. “I worked in FMCG and retail for years; we realised that we had created a promotions monster with buy one get one free offers and the like,” she says. “Customers were dedicated promo shoppers, everyone was addicted to them, and they were destroying all of us.”

Such marketing efforts produce a vicious cycle with prices being high the rest of the time in order to effectively pay for the deep discounting at other times of the year. It means that innovation takes a back seat and the brands involved are devalued in the eyes of the consumer who believes that only products ‘on sale’ have any value.

“I see the casino industry stuck in the same trap,” she says. “Focusing on bonusing and free spins, not as a trial mechanic but as the primary communication feature, devalues the casino brand and the games on them. As suppliers and operators try to claw back margin in other ways, including with tricky terms and conditions, trust is eroded between all parties.”

There is a need for more promotional tools to be deployed, suggests Walton. “All casinos should be thinking about brand first and returning promotion as a concept to what it’s best at – rewarding VIPs, encouraging trials and upping spend,” she says.

Jackpot city

One obvious approach is jackpots. “We saw, through customer research, the value of jackpots and how sticky they are,” says Joe Legge, head of the Vegas casino business at William Hill. “The customer’s understanding of things like bonuses and promotions can be hazy, but jackpots cut through all that. It’s a simple proposition and from an operator’s view, they are self-funding, so it’s a win-win.”

William Hill has been working with Red Tiger Gaming on its jackpots since October last year when they introduced ‘Jackpot triggers’, whereby there is a time limit on when the jackpot must be won. It has become a key part of how the games are presented, Legge suggests. “We break up the rows and rows of game tiles, and focus on the countdown, sharing who won each jackpot, when it goes off, so customers know how close they are to winning it,” he says.

Legge says that the launch of the Red Tiger jackpots has led to double-digit incremental growth on the Vegas tab, bringing with it more players, increased retention and extending the end of night peak to after 11pm. “And we see a halo impact on other brands,” he adds. “It’s had positive impact across the entire gaming portfolio. I wouldn’t risk my colleagues’ wrath by saying the recent uptick in gaming revenues was all because of jackpots, but it’s certainly been in the mix and supporting that growth.”

The success of placing jackpots as a central element of the gaming proposition demonstrates how other engagement factors can be used to engage players, says Gavin Hamilton, chief executive at Red Tiger Gaming. “Bonusing is just one tool in the box,” he says.

“If our goal as an entertainment industry is to ensure that players have a good time, then it’s entirely rational that there should be other ways to give them plenty of fun without bonusing. Jackpots are certainly one of them, as are tournaments and other gamification. We’ve worked really hard to deliver the best suite of games and complementary software in the industry and offer clients a wide range of tools to give the players a great time.”

Time-limited jackpots are one form of reward while the other is the progressive jackpot and they serve different needs, says Marcus. “[Progressive jackpots] are the ones that everyone wants to play – they are the lottery type games,” he says. “It’s exactly the same mentality – I might as well have a go, seeing as it’s there. The bigger the jackpot, the more people want to get involved. The cleverness comes with the marketing here.”

With time-limited jackpots, though, “people pile in because they know the jackpot must be won.” There are downsides to time-limited jackpots, however. “There are jackpot hunters,” says Marcus. “Plus profit margins on jackpot games are lower. The hope is that the winner then deposits some of the money back into their account. The chances are high they will do this if it isn’t a huge jackpot. But if it is a huge jackpot, they tend to disappear.”

The entertainment industry

Taking a wider perspective, jackpots should rightly be seen as being just one further element of the gaming proposition alongside other features which fall under the generic term of gamification.
“As an industry, we talk about fun and engagement and I don’t know if we’ve delivered on that in the past, but I think this is the next step,” says Legge. “There are good examples in Scandinavia in loyalties and achievements, and some people are doing that quite well, but product-led retention and engagement is the most rewarding thing for customers rather than buy-in or reload bonuses. It garners healthy retention rather than dip-in/dip-out, and is more sustainable for the operator.”

Walton points out that social elements – badges, league tables, adventures and tournaments among other features – are among the top features player care about. “People want raffles, free to plays, personalised journeys, new trials of different products, bespoke ideas, merchandise,” she says, but instead all they are fed are “free spins, deposit this, and get that”. “With a few honourable exceptions, most operators are so stuck in the bonus trap of their own making they can’t lift their heads to look beyond it,” she adds.

This comes partly down to what some see as a startling lack of innovation in the basic games put in front of the players. Ian Sims, previously an affiliate who more recently has dipped his toe into games design and development in conjunction with Leander Games and its new game Afterlife: Inferno, says that in his time he has seen “so many games” that were essentially “standard fodder”.
“Most of them didn’t try and connect with a wider range of players,” he says. “They didn’t try and push the boundaries, and those that did tended to get something wrong. The games developers need to make a profit and need something familiar. But from a player perspective, the game needs to do something differently.”

Islands in the stream

The pressure of games release schedules on the part of suppliers and a perceptible desire on the part of the operators to consistently push new games to players. Almost inevitably, it means that a lot of games get ignored.

“There are more and more games coming out and players don’t have the time to try them all,” he says. “You are drawn in initially by your favourite game and it is very rare for a new game to grab your attention and make you want to gamble.”

Sims points out that the main reason why a player will try a new game will be because of “how other players are reacting to it”. This is where streaming becomes an interesting proposition. “People can see what the new games look like. Players look for the potential – not necessarily the big win potential – but also the entertainment value of a new game. You don’t get that by just looking at a picture and a theme. That’s not always enough.”

It has become something of a sub-culture. “It’s cheap, it’s community and set up is quick and easy,” he says. “And with a bit of viral marketing, the platform is already there.”

Where streaming can really help is directing players to games where the volatility is attuned to their needs. Whether a game is high or low variance is, says Sims, the most important thing to any slots player. “Players unfortunately don’t understand the difference sometimes,” he says.

“That is one of the biggest challenges for slot developers and casinos, getting people to play the right game for them. Ensuring the right type of people are playing it, and that will help with the viral as well.”

Arguably one of the greatest misunderstandings among gaming operators is about the player they want. Both Marcus and Walton point out that many slots are aimed at high variance players at the expense of the lower variance, entertainment players – and yet staple casino games such as blackjack and roulette are at this end of the spectrum.

“Some of the biggest players in the world play blackjack and roulette, which are low volatility games,” adds Walton. “But certainly, I would say that casinos are hugely focused on yield per minute – and while I sympathise, I think it helps drive some undesirable behaviours that aren’t about long-term customer relationships.”

Whether any of the innovations around jackpots and gamification will actually wean the majority of gaming operators off bonuses as their main marketing weapon of choice is, of course, still open to question. Legge at William Hill points to debates going on at the operators. “We’ll continue to look to innovate around content, jackpots and other product features alongside, rather than replacing bonuses,” he concludes.

“Obviously, regulation is all headed in one direction, so maybe there’s a point in the future where you need another way to give value back. But whenever we do customer research, they all want bigger bonuses, more bonuses, easier bonuses, and that’s a hygiene factor. So to move away without it being a level playing field, you’d certainly risk being at a competitive disadvantage.”

Words by Scott Longley