IGT
PL: This industry is hugely competitive, and that means that if you stand still you are quickly left behind. And that is a positive about the industry, not a negative. I do look at the quality of products out there now and wonder how some of them can actually get better! So the answer is yes, it is getting harder to improve the product, but that is where companies like IGT enter the market. With $200m a year spent on Research and Development we are in a prime position to be able to lead the online industry in the same way we lead the land-based industry. Stricter regulation will make product improvements harder and more expensive in the long run.
CIO: Are affiliates as key as they once were? PL: Yes, they
are. Arguably they still demand higher revenue shares than most of them are worth, but they are still a crucial part of any marketing plan. What will be interesting is how they are regulated going forward. Affiliates have had a pretty clear run of regulation in Europe, where suppliers and operators have had to adapt. We know in Nevada affiliates will be required to apply for a Class III license. I can see the most successful and powerful affiliates getting larger and larger, and being viewed as strategic partners alongside operators rather than affiliates. While at the same time barriers to entry will emerge which will stop the smaller affiliates either starting-up or growing to a reasonable and sustainable size.
“The ability to target specific demographics and other data within Facebook is something that will become of increasing importance.”
CIO: What do you think many companies are doing wrong? PL: I would say that historically “over- spending”
has probably been the biggest issue, with some companies prepared to acquire customers at any cost without any thought for the long term economics of that player. I don’t see too many examples of that today though.
CIO: How big a factor is customer service in
retention? PL: I would say some marketing departments look
down on customer service as a lesser part of the retention strategy than they are, and that is wrong. I
always use the example that a player may not remember every email you send them or advert they see, but typically if they are contacting a customer service department two or three times a year, they will remember that experience precisely.
“When it comes to CRM the land-based industry are streets ahead of online”
CIO: Is there anything online companies can learn from the decades of experience land-based casinos have? PL: If you had asked me that question 18 months
ago I would have answered no, but after spending the past year and a half in the US, arguably the home of land-based casinos I can assure you there is lots and lots they can learn. I think the online operators perform the acquisition marketing tasks better than land-based, but when it comes to CRM the land- based industry are streets ahead of online. Think purely of loyalty cards; the guys in land-based understand these loyalty programs so much better, they analyze gameplay, they set thresholds, they reward instantly. I think CRM is something which US culture in general does far better than Europeans. In terms of product then the big learning from land-based casinos is in terms of slots. I was amazed at the level of planning and complexity which goes into the creation of every slot game. I think in the past I considered a new online slot as new images, but after working at IGT I can assure you that the creation of a new slot games is a long scientific process which starts with market research and goes via maths models and art and engineering to finally deliver a world class game. No stone is left unturned in order to ensure perfection on each new game. When you add to that the big popular culture brands which can be added to slots, more so than other gambling forms, you have a very powerful combination.
CIO: Looking at the next few years, what do you think will be the winning factors when it comes to acquisition and retention? PL: For acquisition the biggest factor will be
regulation, in particular in new markets. I don’t just mean what products can be offered but also where online companies can advertise. Half a decade ago it was unthinkable the UK would allow TV advertising of online gaming – but look at it now! Google and Facebook are becoming more and more powerful in online advertising, although both appear willing to work with gaming companies in regulated territories. For retention I think the main factor is technology
and how it is implemented to improve customer lifetime values, from front end web improvements (probably around personalization) right through to the databases which power our knowledge of these players.
MAY 2012 67
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