How do we measure success in online gambling?

How do we measure success in online gambling? It feels like a simple question with an even simpler answer. Money. The operator with the most money is the most successful, the operator making more money this year than they were last year is successful and any strategy that generates more money is a good one. But that narrow focus does miss a few details. Over what timeframe are we measuring this? How sustainable is the growth? How valuable a long-term business are you creating? The revenue per player model all starts to look a bit fragile in the face of a suddenly shifting regulatory landscape. The killer marketing strategy that worked so well in 2020 might be inapplicable in 2021, and your revenue base that looked solid one year might fall off a cliff the next faced with market, product or other more subtle closures and adjustments. The trouble is while it’s impossible to predict the future, it’s just as hard to react to the present if you are only using metrics that gauge success against what worked in the past. The big issue the online gambling sector faces when trying to adjust and reshape itself as part of the modern leisure sector is it has been set up and built around measuring customers almost entirely based on financial metrics. This ARPU over all approach has in many ways become the tail that wags the dog. How easily, or even if at all, it can move from that to a broader definition of customer engagement and monetisation is an incredibly difficult question to answer.

The ROI problem

Everything currently is set to measure return on investment. Firms will measure cost of acquisition, revenue per user, cost of retention and a bunch of other numbers, but very little is set up to assess customer engagement, enjoyment and satisfaction. The obvious response to that would be those things are captured by churn or retention metrics, but that is not entirely true. And you could argue the new responsible gambling measurements also capture entirely different KPIs, but they mostly measure the same KPIs from the opposite perspective. I put this on Twitter and Matt Primeaux, ex-president of Fox Bet and a long-term industry strategy expert, said the following in reply. “I actually (re)thought about this exact same topic when in a meeting with Fox Sports and they asked “how many minutes” someone averages on our app. Unlike every other KPI, I didn’t have that figure readily available, and it reminded me just how many different angles we could look at the business in order to optimise.” “In fact, time on the platform was actually something that the Full Tilt Poker team measured regularly. It was a natural metric for a product-forward business and a means of measurement for customer engagement. At PokerStrategy, we cared a ton about a referral coefficient since we spent $0 in traditional marketing spend. All acquisition was driven from the community members, so viral loops were key.” “For many businesses in the industry, I think we crutch on the natural ease of acquisition (despite many internally being burnt on the product, it’s still very compelling) and ease of monetisation (we don’t have to crack the monetisation strategy like many others). So it becomes very easy to just fall into a core KPI tracking and optimisation circle. That then can befall lack of product, tech investment and more modernised marketing approaches as you’re just trying to perfect CPA/LTV versus moving wholesale forward.” This very neatly sums up the issue facing gambling businesses that need to change to become less weighted to pure monetisation strategies. Businesses are solving for one problem so completely that they are not aware of alternatives that additionally solve for other problems they only recently realised they had.

How to solve a problem

Being weighted to an LTV/CPA style strategy is clearly not “wrong” as such but it leads you so completely into one direction that trying to turn around becomes near impossible once it’s embedded in the way you work. If you are facing deposit, staking and additional limits on player behaviour is it not a better idea for the longer term to start to think about time on site, customer satisfaction and a bunch of other softer metrics and let them lead, naturally, to monetisation? A shift in mindset to trying to create games, products and experiences that result in customer satisfaction and engagement rather than just customer money would be tremendously empowering for growth and for reimagining the product for a new responsible gambling-led future. But it will require an enormous shift in thinking and culture. And the latter point should not be underestimated as there is still a sizeable section of the industry that doesn’t really get why people gamble. Who don’t actually believe the product is much fun. This should in theory be a disqualifier to running an online gambling site, but there are more than a handful of very successful executives at all levels who don’t bet, have never played slots or poker and who don’t really, truly, understand why their customers do either for any other reason beyond wanting to win money. And this is problematic. Or least it could be. It very much depends on what the future vision of the online gambling industry looks like.

So what now?

Does the industry want to continue to build on the existing model, with its sophisticated LTV modelling and ROI-driven marketing strategies or does it want to expand and extend into a more product and user experience driven model. The latter potentially enables the industry to not only adapt and thrive in new regulatory environments but to capture a larger share of the mainstream games and leisure sector, to appeal to a new demographic and find new ways to create value. This may also become a necessity rather than an option. With low stake sizes and low deposit limits the only way to generate value is through genuine long-term retention and time on site. And by creating products and experiences that enable this the industry may push itself into new and exciting places. The online gambling industry still mostly resembles the land-based industry accessed via a phone rather than something completely new and perhaps it’s the big shift in how we measure success that can take things to the next level? But it’s uncertain if anybody is willing to take that risk just yet.