The retail lottery sectors in Europe and the US are facing challenges. Fewer customers are buying tickets from brick-and-mortar outlets. However, at the same time, customers are becoming increasingly comfortable online. National and state lotteries are developing iLottery offerings as a result. These range from wagering online on local and international lotteries to playing instant win games and scratch cards.
Accompanying individual national lotteries in Europe, nine countries also participate in EuroMillions and 17 take part in the Eurojackpot. Nine states in the US currently sell online lottery products, including Michigan, New York, Georgia and Kentucky.
In the US in particular, online advertising for iLottery enjoys less restrictions than those imposed on traditional gambling, providing brands with a more diverse arsenal of digital marketing tactics to acquire players.
With the digital vertical likely to continue growing, we look at how online lottery brands can use online marketing and the affiliate channel in particular to grow their player bases.Retail Lottery Challenges Broadly-speaking, land-based lottery revenue is falling. The UK National Lottery’s ticket sales declined to £3.39 billion in the 1st April to 24th September 2016 period from £3.6 billion sales for the corresponding six months in 2015.
In addition, younger demographics are purchasing less tickets from brick-and-mortar outlets. Just 16% of retail customers in the US state of Michigan last year were aged 18-35, according to the Michigan State Lottery. By contrast, over a quarter (26%) of Michigan iLottery players are in the 18-29-years-old demographic. This demonstrates millennials’ desires to have instant access to lottery products.iLottery Digital Marketing OpportunitiesiLottery is not considered a form of gambling in many jurisdictions, including the US. This means that online advertising is also less restricted, allowing brands to use high-impact short-term acquisition channels such as Google AdWords. Given that Google prohibits AdWords ads for US-facing online casinos and poker sites, this provides US iLotteries with a competitive advantage over brands in these verticals.Social media is another marketing channel with strong potential for iLotteries, given the opportunity social platforms provide for engaging with younger demographics.. According to Sprout Social, over a third (36%) of Twitter users are aged 18-29, while 88% of all 18-29-year-olds use Facebook. This form of digital marketing also costs less than conventional advertising.
Obviously, Generation Y and even X aren’t the only online communities in 2017. Older users are becoming increasingly comfortable in the digital space. As reported by the Office for National Statistics, adults aged 65+ made up well over a third (38.7%) of UK internet users in 2016 – up from 33% in 2015. In terms of player acquisition and retention, an iLottery offering therefore also allows a brand to reach out to their traditional, older demographic as well as the younger ones.Affiliate Marketing Affiliate marketing mutually benefits both iLottery operators and affiliates. As programmes take time to grow, savvy lottery operators will develop and launch their affiliate strategy sooner rather than later. In the meantime, the less cost-effective but more rapid channels of PPC and promotional social media posts can effectively support player acquisition for iLottery brands.While it may take time to build, an iLottery affiliate programme is a highly cost-effective acquisition tool. Unlike PPC, paid social and media buying, brands only pay for conversions (new depositing players on either a CPA or revenue share basis) rather than click-throughs or ad impressions. This ensures strong marketing ROI, while also allowing more money to be budgeted in other areas (product development, other marketing channels, etc.).The third-party endorsement offered by affiliate marketing also benefits smaller brands who are likely to struggle in organic and paid search results. Marketing relationships with big affiliates will lead to greater brand recognition for iLottery brands.
Many affiliates also work across numerous verticals – from sports-betting to casino, poker and bingo to financial trading. Via the medium of affiliates, iLottery brands will be able to target online casino and sportsbook players and vice-versa. The end result will be more depositing players and overall revenue for operators, and more commissions for affiliates.Looking Ahead… Heading into the future, European and American iLottery brands’ success will be increasingly supported by a diversified digital marketing strategy that includes affiliate marketing. The US landscape is worth keeping an eye on: Who will launch the next digital lottery and when? How many states will follow? Targeting core demographics will continue to be important, as will acquiring players from Generation X and Y – who are key to prolonged success.