The 22 immutable laws of marketing for igaming: First winners

Law 1: The law of first winners

“It’s better to be first than it is to be better.”

Or in other words, being first winner in a new market is better than having a better product in an old market. It’s better to be the first strong brand in a new ‘0 to 1’ market category than the underdog in a consolidated marketplace.

The main reason; people settle into their behavioural patterns and it takes a ‘10x’ product or service to drive consumer change.

0 to 1

Peter Thiel wrote a book: 0 to 1. Zero is nothing, one is something. Before the internet there was zero online gambling. Before cryptocurrency, there was zero virtual currency gambling. Before smartphones there was zero online gambling.  Simple idea 0 to 1, but very important.

As a market goes from ‘0 to 1’, there will be new opportunities to serve that market. In online gambling we saw Microgaming become the first recognised online casino operator. Nearly 25 years later, Microgaming is still here today.

When markets open up, consumers are disrupted and will change their behaviour. On the ‘pull’ side, they’ve got new technologies or services which solve problems or give them new opportunities. On the ‘push’ side, regulation and new laws also drive behavioural change.

The common theme: Change breaks old patterns and gives businesses an opportunity to attract consumers to fall into new habits.

There are three distinct steps in habit formation. There’s a cue or trigger that lets your brain go into ‘automatic’ mode. When you’re in ‘auto’ mode, you are not thinking so much and humans love to think less hard if possible.  You have routines which can be mental or physical. And again, routines help us avoid hard thinking. There is a reward which tells our brain whether it’s worth sticking to this habit or not.

Becoming a brand’s loyal customer is generally a way of avoiding the pain of constantly seeking out alternatives. Of course, sometimes brands offer the only choice available and consumers reluctantly habituate around those brands. State-owned gambling operators which have a monopoly or Ryanair are examples.

The main point about habits are they don’t change easily once formed. But when new markets emerge and consumer behaviour is driven to change, that’s when it’s best to jump in.

First winners

Exchange betting was a 0 to 1 idea. Betfair wasn’t the very first betting exchange. Also founded in 1999 was flutter.com. Up until 2001, the two brands competed. Ultimately Betfair.com won the betting exchange wars and was the ‘first winner’ in the betting exchange marketplace.

A first winner is the first dominant brand that breaks out in a new marketplace. Bitstarz.com dominated the hybrid crypto casino market. Leovegas.com eventually dominated the mobile-first gambling market.

Since consumer habits are hard to change, the way to break into a consolidated market is to have a 10x offering. This offering is so much better than anything before it, consumers overcome their inertia around habit change and gravitate to this other brand offering.

A better product is not enough. Just because one brand has a marginally better user experience than another will not overcome the friction consumers face when changing habits.

There is a rising tide of localised gambling regulations. We see diverse requirements having to be adhered to. If brands want to engage locally i.e. UK, Danish, Swedish…they have to follow local gambling regulation.

As more jurisdictions regulate, the only true winners are smaller local operators which can satisfy local tastes and manage localised regulation or large operators which can carry these heavy regulatory burdens.

In any event, where there is regulation, genuine innovation slows down. Brands look at the ‘risk/reward’ ratio and will err towards avoiding the risk of attempting ‘10x’ innovations. ‘10x’ rewards might be huge, but they are uncertain and the risks high.

Launching in a commoditised market

There is generally a correlation between how lucrative and competitive a market is. The only variation to the ‘more lucrative = more competitive’ paradigm is when a brand has a monopoly: Betfair.

Since white-label operators can launch with relatively little investment, we’ve seen a proliferation of ‘same as’ brands carving out small market shares.

Why can they do this? Consumers have been habituated to search for new welcome offers. New operators offer a new chance to get generous welcome bonuses. These ‘same as’ brands offer slight variations of a theme which some consumers like.

In the long term, it’s very difficult for white-label operators to build customer loyalty and revenues. Bet365, Ladbrokes, 888 and other large established brands have acquired customers who aren’t necessarily interested in ‘being there for the bonuses’.

The ‘0 to 1’ moment was where some operators saw this ‘bonus hunting’ behaviour and built portfolios of brands which pass customers along to different brands within the same ownership. The model works because the aggregate cost of acquisition has lowered.

Within every ecosystem there are market categories and segments which go from ‘0 to 1’. An operator might nail the Indian online gambling market or the Japanese one. New opportunities to be the first winners arise all the time.

You either see a ‘0 to 1’ opportunity where a vacuum is to be filled and fight to be the first winner in that emerging marketplace. Create a 10x better offering than your competition and draw customers to you. Unlikely in igaming as we know it.

The next ‘0 to 1’ opportunity could come from anywhere. No one knew the internet would happen before it happened. The same with smartphones, the same with cryptocurrency. All you can do is be open-minded

Keep looking at the fringes, monitor early start-ups and technical innovations that solve problems. Track economic change and monitor gambling legislation. At some point you’ll find your ‘0 to 1’ moment. Then you’ve got a real chance to be a first winner

This article was inspired by the 22 immutable laws of marketing by Al Reis and Jack Trout.

Nick Garner is an igaming specialist, marketing strategist and founder of RIZE Digital, an agency which specialises in web development for marketing applications. He writes prolifically and has worked within igaming for many years.