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Lotteries after lockdown - Part 2
In the second part of Joanne Christie's analysis of how lotteries must evolve after lockdown, discussion turns to the content and channels of marketing campaigns, and the importance of a digital fallback for the core retail offering. Read part one here.
As well as the changes to its site, Chvatal says Sazka has also shifted its media mix towards online media to attract more players.
Drew Svitko, executive director at Pennsylvania Lottery, says it took a similar approach. “We have slightly shifted our advertising strategy. For example, we are increasing our digital and TV buys as lottery players are staying home instead of purchasing outdoor billboard space.”
In this respect, Firestane says the problems experienced in the sports betting industry have created some opportunities for lotteries. “We have started spending a bit more on Google and PPC than we did before because there are opportunities for keywords that weren’t there in the past. Because the whole sports betting industry has collapsed, effectively there is less competition on those keywords.”
It’s possible this has also led to a demographic shift, he says. “One thing I can say cautiously and it is anecdotal, is that surprisingly we are getting more younger people online than we used to. I don’t know what to attribute it to, whether it is the targeting that we are doing in our advertising or just younger people having more time on their hands right now and thinking that it’s an interesting proposition for a good cause, but I am seeing more of them. It’s a silver lining.”
However, some lotteries have found what they were already doing marketing-wise has given them an unexpected boost. “We do a lot of TV advertising so there are actually more people sitting watching television at the moment because they are inside so we are getting a bit of a benefit from that,” says David McMorrow, managing director at the Scottish Children’s Lottery.
Consequently, he says “our normal business levels are holding up well, with no downside”, thanks to increases in online offsetting any fall in retail sales. He adds, however, that its business is somewhat insulated to the falls seen elsewhere due to the fact a high percentage of its players have subscriptions.
Good causes push
And while the Scottish Children’s Lottery has largely stuck with its usual media channels, McMorrow says it has adapted its message. “There is quite a lot of charity focus at the moment in terms of the NHS and lots of other things, so people are probably thinking more charitably at this point,” he says. “We’ve upweighted that aspect of what we do. Rather than ‘buy tickets to win cash’, it’s been more of a charity-led message in this period to fit in with the mood of the nation.
We don’t want to be too commercial in this period.”
Camelot has taken a similar approach, says Brocklehurst. “The National Lottery Community Fund recently announced that up to £300m will be used to support the most vulnerable in communities across the UK. And the National Lottery Heritage Fund has set up a £50m emergency fund for British heritage sites after almost 50% said they will not survive beyond six months if the coronavirus shutdown continues.
“To highlight this contribution, we very quickly turned around advertising to support the £300m community-focused fund – this uses user-generated video content from a wide range of beneficiaries across the UK thanking National Lottery players for their enormous contribution during this difficult time.”
Indeed, the impact on both charities and state coffers from the decline in lottery sales is likely to be stark, especially in the US where in many states there is no online fallback.
“We estimate that lottery contributions to the state could be $50m lower than projections for fiscal year 2020 as a result of the Covid-19 virus,” says Gordon Medenica, director at the Maryland Lottery and Gaming Control Agency.
“Maryland would of course benefit from online sales, especially in times such as these, but implementation would require buy-in from both lawmakers and our retailers, many of whom still believe, against all evidence, that online lottery sales would hurt traditional brick-and-mortar businesses.
“In Maryland, state law prohibits online lottery sales unlike states like Pennsylvania, which introduced online lottery products in June 2018. Anecdotal evidence shows that states offering tickets online have seen those sales surge.”
In actual fact, the evidence is more than anecdotal. “Before the pandemic hit, Powerball and Mega Millions online sales were making up about 2% of total weekly Powerball and Mega Millions sales. In recent weeks, online sales are making up an average of 6% of total Powerball and Mega Millions weekly sales. However, we have had days above 10%,” says Svitko.
This isn’t enough to make up for the retail shortfall, though. “While we are happy to see that growth online, a majority of our sales still come from our traditional games, which have decreased 25% since mid-March, and it’s important to note that the increase in online sales is not enough to offset the sales the lottery has lost on the traditional side of the business,” he says.
Still, the evidence that states with iLotteries are mitigating the impact in some way is likely to prompt others to consider going online. While Maryland is prohibited by statute from doing so, most other states without iLotteries could set them up if they chose.
“We have spoken with some other states regarding how New Hampshire approached our iLottery programme,” says Cleland. “Given that Covid-19 could come back this Fall, I imagine many states are determining how they can help their programmes become quasi-pandemic-proof to ensure they maintain revenues for good causes.”
New Hampshire has some pretty impressive statistics from the Covid-19 period, with e-Instant sales up 92% between 21 March and 25 April and online draw-based games up 39% over the same period.
Cleland says even slightly before month-end, April was a record month for both total deposits and net gaming revenue.
Numbers like these are certain to provide food for thought for those US lotteries that have– thus far been dragging their heels on iLottery. Elsewhere, Covid-19 looks set to continue to prompt lottery operators to focus their attention online to try and recoup the losses being seen in retail.