SBC News Voice of the Sports Betting Industry
A look at the free bets and bonusing player incentive debate amid the challenges of UK Poc on igaming operators
The UK online gambling industry is set to undertake its first operational month under the new taxation imposed by the Point of Consumption (PoC) tax. Throughout 2014 the PoC and its definite revenue impact has driven industry agenda, commentary and debate
The PoC is set to challenge all operational mechanism and values of igaming operators who will seek to maintain revenues and margins under differing market conditions.
Several industry commentators have pointed to the igaming industry needing to reform its promotional and bonusing strategies in order to sustain player margins. The commentators have primarily focused on the curbing of free bets and free bonusing promotions by UK operators.
There can be no doubt that free bets and free bonusing are a key customer acquisition tool used by all operators from Coral, to 888, to William Hill, and Skybet (example: http://www.freebets.co.uk/sky-bet-sports/freebet/25 ), nevertheless the customer incentive has garnered criticism within industry circles. Many labelling free bet incentives as an unsophisticated acquisition marketing tool undertaken by operators to garner cheap traffic.
Additionally the industry commentators have pointed out that free bet promotions are a defunct player incentive tool, which served its purpose during the igaming industry’s rapid growth stage, where operators looked to take advantage of quick growth and growing player numbers for its online verticals.
Put simply, the argument registers that igaming operators should look to get rid of free bet and free bonus incentives, as betting consumers have become too sophisticated and knowledgeable to be attracted by free bet incentives, at least to any degree of stickiness.
At first glance the debate against free bet promotions looks to be very credible, as in theory industry operators should aspire to better consumer incentives, marketing mechanisms and messaging.
Nevertheless the theory is far from the actual practice. Throughout 2014 the UK consumer has been bombarded with free bet promotional advertising on all media verticals. In fact free bet promotional advertising has been on the increase in 2014 as operators looked to take advantage of major sporting events such as the FIFA 2014 World Cup. Additionally casino free bet promotions have been regularly promoted on UK night time broadcasting.
The argument against free bets, becomes further weakened as the commentators have labelled free bets and free bonusing incentives as primarily marketing and player acquisition mechanisms. For igaming the reality is that free bets play an integral part in player retention, reactive and operational services.
Under this current context it appears that free bets and free bonusing incentives are very much alive and still the preferred incentive tool for online casino and sports betting operators.
It must be stated that the regular use of free bet incentives by operators does not override the concerns and debate regarding the subject matter, which remains a potent one for industry governance.
In October independent gambling industry watchdog, the Senet Group (founded by William Hill, Ladbrokes, Coral and Paddy Power) set a voluntary ban on advertising of free bets and free money gambling offers before the UK TV Watershed of 21:00 hrs.
The founding members of the Senet Group hoped that the action to ban free bet promotions on UK TV would alleviate public and media concerns regarding the impact of aggressively marketed gambling advertising.
The actions of the big four igaming operators represented by the Senet Group have placed free bets at the top of the igaming and sports betting agenda. Their efforts to curb aggressive advertising are of genuine concern to the industry’s current messaging and promotion.
UK operators have been forced to be more in-tune with public concerns regarding their marketing promotions and communications. However the banning of pre-watershed free bet advertising serves to hide the current inefficiencies in the betting operators’ messaging and branding.
For a number of years igaming marketing has been primarily driven by price and value differentials, even the use of celebrity and sporting figures cannot hide the fact that free bets have been the core message and hook to an operator’s advertising.
Under these conditions, it can be argued that the majority of operators have failed to create any impactful brands that could surpass price and value messaging.
The inefficiencies witnessed by operator marketing and branding have further shifted to general product offerings, where the consumer sees little to no differentiation between the online gambling products that they are served. With no product differentiation in place for the igaming industry, it is no wonder that consumers have latched onto free bet and free bonus promotions.
The reality, is that the igaming industry currently competes on pricing throughout marketing, player acquisition, retention and product services; free bets and bonusing are therefore an organic tool which services current industry values. Free bet and bonusing promotions may not be sophisticated in messaging and marketing, however under current market conditions they are still its most effective tool.
