With player acquisition costs exceeding $500, Chalkline CEO Daniel Kustelski’s (pictured) team has built a business case for Free-To-Play games as a cost-effective way for sportsbooks to educate, convert and retain bettors. He explains the value of the vertical.
As US states continue to legalize and regulate sports betting at a rapid pace, operators and media companies are aggressively applying for licenses in order to leverage the tremendous first-mover advantage that can be had by launching before their rivals.
Those that are already live are indeed blazing a trail when it comes to marketing and player acquisition. From multi-million dollar sponsorship deals to high profile TV ad campaigns and affiliate partnerships, many operators are sparing no expense to build their brand and acquire customers.
Having run a regulated sportsbook, I can tell you that customer acquisition is the biggest challenge for any brand, especially those targeting newly regulated markets such as the US. As the competition increases, so does the cost of acquiring players.
Currently, affiliate CPAs are between $200 and $300 but operators are consistently reporting customer acquisition costs of $500 – $1,200 per customer through other channels. This is staggeringly high and, quite frankly, unsustainable for any great length of time.
This means that operators are going to have to look at other ways of engaging, entertaining and ultimately converting players into payers and Free-To-Play games present an incredible opportunity to acquire customers at scale and for a sensible ROI.
F2P games can play a significant role in customer acquisition.
Free-To-Play games allow operators and betting brands to educate and acclimate new players to their brand and sportsbook; the American Gaming Association estimates that 25 million US bettors will place their first legal bet by 2025.
Of course, the best way to allow bettors to get used to your product and how online/mobile betting works, while also fostering trust with your brand, is to let them try your product for free and that is where Free-To-Play games come into their own.
They can also be used to activate sponsorship partnerships between sports betting brands and sports teams/leagues ahead of the operator’s real-money sportsbook going live. This is what PlayUp USA did with its New Jersey Devils partnership.
Educating and acclimating new players can have benefits.
Freeplay games allow sportsbooks to enter states across North America prior to the activity being legalized and drive awareness among players before their rivals. In addition, customer acquisition costs are significantly cheaper in soon-to-regulate states.
By launching free-to-play games in these pre-regulated states, operators and media companies can start to build relationships with bettors and educate them as to how online and mobile betting works ahead of go live.
By doing so, they can also leverage the lower customer acquisition costs and drive a much higher return on their marketing dollars. Once real-money sports betting is approved, the transition from free-to-play to pay-to-play is smooth and seamless.
The same applies to land-based operators in soon-to-regulate states that already have a database of players – whether they are casino customers or sportsbook customers in states where land-based sports betting is legal.
F2P games allow these operators to engage their database, leverage its value and ensure that other betting brands do not come in and raid their player-base by undertaking their own marketing activity in the state.
There’s no cure-all, but solid marketing alignment drives optimal freeplay ROI.
While freeplay games provide many upsides, they are not without their challenges and plenty of operators have tried to use them to market to players and failed. This often comes down to a failure to localize, personalize and differentiate.
State-level marketing is critical to the success of freeplay; building games for local teams touches the fan’s passion point – everyone wants to back their team – while also allowing the operator to drive engagement and stand out from their rivals.
Of course, freeplay games must fit into an operator’s wider marketing strategy, but they do allow them to engage players early and get them used to placing sports bets online and via mobile before they play with real-money.
This is only just the beginning for F2P and as the US market matures we will see more operators offer freeplay games to players, and not only for sports but online casino, lottery, bingo and more.
Savvy operators will get in on the action now and use freeplay as a launchpad not only for their brand but also for new products they will roll out to bettors and players.