Lotteries should include promotions in their strategic marketing plans because they provide long-term benefits above and beyond a strictly short-term financial return on investment.
In assessing the success of a promotion, there are basic metrics to add up: increased sales during the promotion period versus the costs of the offer plus advertising and additional sales commission. The resulting incremental lift is often declared to be the hard measure of a promotion’s success. But there are intangible benefits to lottery promotions that are as important and longer-term than the limited time metrics of the promo.
These intangibles are often disregarded as unquantifiable, soft benefits. But the value of brand loyalty, awareness, player engagement and satisfaction that good promotions build cannot be measured in the limited term. These factors build long-term playership and thus, sales. Their metrics are often found in player tracking studies, focus group discussions, motivator/barrier studies, and long-term sales growth.
Lottery promotions should work as a two-fold proposition. The first obvious objective is to raise sales and awareness of the featured product to core and lapsed players. The second proposition the promotion should accomplish is to act as a new incentive to participate in the game. Think of core players who are in the game for every draw. Their commitment to the game is largely based on winning (or near-win) experiences. In the draw game world, the relatively lower payouts and limited playstyles can turn loyal dreamers into lapsed players given enough non-winning experiences. But a well-designed promotion can create more winning experiences and/or the perception of better value that in turn justifies ongoing play. The “afterglow” sales are often harder to quantify or credit to the promotion activity, but a winning experience or a positive value experience lasts long after the promotion ends.
Promotion equity extends game equity. Promo equity can be created by running a familiar, popular offer in a consistent timeframe. For example, the New York Lottery’s 50% Bonus Thursdays promotion works well because, after repetition, players and retailers have come to learn how the promo works (there is a 50 percent bonus on Quick Draw prizes on wagers over $10) and when the promo runs (every Thursday, 5-7 p.m.). Familiarity with the promo means the lottery spends less on advertising. Awareness is already there; the retailers and players don’t need training or education every week. While the promotion is limited to only two hours each week, the excitement it generates and its positive effect on Quick Draw is long-lasting.
A lottery can use the promotional period to not only advertise the promo itself, but also as an opportunity to describe a game or brand that typically doesn’t get featured. For example, in Michigan, the numbers games Daily 3 and Daily 4 have been around since the 1970s. Consistent, strong sales from a loyal player base on a relatively low payout game create a wonderful profit picture. However, for games like these, lotteries can’t justify spending on a media campaign and hope that the sales needle is moved on the merits of the ad alone. Awareness of the brand is already high, there are no jackpots to advertise, etc. But when a Daily game promotion is scheduled, there are compelling reasons for the lottery to activate an advertising campaign. Now an ad campaign has the larger purpose of announcing and describing the promotion, and of course, it is an opportunity to advertise the games’ broader benefits. Michigan Lottery has created television and radio spots that describe the features of Daily games for all players with a centerpiece of the promotional offer. The net takeaway is promotional AND brand awareness. After viewing the ad, a core player knows about the promo and his or her reasons for liking the games is reaffirmed. A lapsed player who sees the ad may decide the offer is great and choose not to participate, but still retains some positive game attitude for another day. If a non-player still isn’t motivated by the offer to try playing the game, at a minimum, they have awareness of the brand. Efficient and meaningful media spend is achieved. The advertising costs assigned to the promotion had a much larger, longer impact than the promo period alone.
To summarize promotion intangibles:
- Promotions create more winning or value experiences, which counterbalance the lower payouts and win frequency of draw games.
- Repeated promotions can enhance the brand equity of the base product by creating player satisfaction with the promotion itself.
- Promotions create advertising opportunities that raise base game awareness and reinforce value propositions.
Plan and budget your promotions well, but don’t limit your assessment of their success to a single equation.
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