The Marketing of Sports Betting

Just as the many white-collar moviegoers are fascinated by the stories of the mafia and gangsters, I’ve had a similar interest in how internet companies on the edge of legality market themselves.

One of the most competitive (and seemingly profitable) industries that fits into this category is sports betting.

I ended up spending a few hours this morning checking out the various sites, search results and landing pages they used and it was interesting to see some of the most aggressive online marketers at work.

Here is a short analysis and some observations of what I found:

Landing Pages + SEM

Much like poker and mortgage sites, users are frequently in a ready-to-buy mindset and these sites employ a razor-like focus on getting the user signed up and betting as quickly as possible.

Many of these sites rely heavily on search engine marketing that direct users to sales-focused landing pages. Accord to this Adwords article, this type of advertising is only legal in certain countries.

A few more landing pages: PaddyPower, LadBrokes, Coral and Bet365

Here is a very common themes in almost all of the SEM landing pages I came across:

• 1-2-3 Almost all of the landing pages used “1-2-3″ to sell the idea that its super-easy to signup; for example: “1 – Register, 2 – Make a Deposit, 3 – Start Betting”
• Imagery: All used imagery specific to the sport that was searched for, for example “football odds” brought me to a page with a soccer player who looks like they just won a game (I used Google UK, Google Canada has no gambling ads)
• No Sign-up Forms: Unlike mortgage/education landing pages, very few sports betting sites included signup forms on their landing page
• Call-to-actions: Instead of forms they all had giant “Join Now” call-to-action buttons linking to the forms
• Familiar Logos: All used logos that users are familiar with: major credit card logos, verisign, company partners like “FIBA”
• Engaging offer: most had an engaging offer, for example, free bonus money to start with or rewards

The average cost per click in Adwords is around $2-3, which is pretty standard for competitive keywords. Some keywords such as “sports spread betting” can cost up to $10+ a click.

Homepages

Organic search results linked to either 1) a landing page style homepage or 2) a section tailored to a specific sports.

These pages were frequently just large landing pages with the pure focus of getting the user to sign up. But some featured todays games and some articles.

Here were some commons themes among them:

• Dark designs, I was surprised by how many sites with black backgrounds I came across. It might be to mimic the appearance of the type of bar’s where you’d find sports bookies.
• On-page SEO: internal linking structures, titles, articles etc
• Imagery: a mix of happy sports players and sexy models
• Javascript Clocks: many sites had a live clock on every page, sports betters eagerly anticipate when games start and when they find out if they won or lost

The two that really stood out were SportsBooks and BoDog.

Affiliates + Content Sites

Sports betting seems to rely very heavily on affiliates to bring in traffic. The average payout among the top sites was around 25% of what the customer spends. Based on the number of spammy sites and affiliate landing pages I came across, I got the impression this is a hyper-competitive market.

One of the most common approaches by affiliates was to create content sites that followed this pattern:

1. Create a series targeted articles filled with keywords
2. Create a press release of the same content and get it index on sites like news.google.com and ezinearticles.com
3. Surround the articles with Join-now buttons for sports betting sites

For example: RedNose and CrunchSports

Conclusion

There are a few things startups in more conservative markets could learn from these hyper-sales focused sites.

Sports betting sites have the luxury of having visitors that are frequently ready to buy and each has the potential to bring in a lot of money. This means that quite a bit of marketing dollars can be spent on acquiring each customer.

But at the end of the day, I don’t want to give sports bookmakers too much credit given the addictive nature of gambling.

Conversion Optimization: Tracking Form Validation Errors with Google Analytics

After all the effort of getting your users interested in your product/service, the last thing you want is for them to exit your site because form validations were an afterthought.

Losing Conversions from Indian Street Addresses

For the last few weeks at Learnhub I’ve been trying to optimize the conversion rate of our school application form. This form is lengthy compared to most and we required that potential students entered their home address.

As an experiment, we hooked up Google Analytics to track every time a validation error happened.

We were surprised to discovered that 20% of users failed to enter their street address properly and half of those users then exited the site. This was a big warning sign that our validations need improvement.

So we began to look into why this is happening in more detail.

We realized that our indian users were skipping the address not because they didn’t want to share it but because Indian addresses are really complicated.

In India, especially in smaller towns, street address’s are not as established as other parts of the world. If they did know it, it frequently looked like this: 83, LAXMI APPT., SEC-5, PLOT NO-27/8, ROHINI.

Asking someone to type that out is a usability nightmare.

From this data we now had a new starting point for improving conversions: by making the process of entering address easier or by making the field optional.

How Did We Track Validation Errors with Google Analytics?

In Google Analytics they have an awesome feature called event tracking that can be easily trigger by on-page javascript.

Our site was developed with Rails so when a field fails to validate, it automatically gets wrapped in a div.

So we wrote up a tiny script that:

1. scans the page for any divs with fieldWithErrors
2. grabs the ID of the form field
3. sends an event to Google Analytics with the label “Validation Error” and the value as the fields ID

The script (prototype):

With this data you can see see how many exited the form, what country they are from, validations per user, etc.

Fixing the Problem Fields

It may be beneficial to minimize the required fields to get that initial commitment.

Just like the old sales adage, if you can get the customer to say yes the first time it will be easier to get them to say yes later on for the bigger commitment.

Making fields a requirement is always a tough balance between hurting the forms usability and getting the information you want.

If you do decided to skip the tough questions early on, a process could be set up to get the needed information later on from something like a follow-up email or secondary form.

Either way it helps to have the analytics data to back it up those decisions.

Innovators Dilemma: Disruptive Opportunities for Start-ups

I spent the last week at Algonquin Park and had the chance to finish reading The Innovators Dilemma. I would recommend this book to start-up founders before anything else. It introduces a type of opportunity that gives small companies advantages over big market leaders, by taking recent innovations and creating new markets.

Four Types of Business Opportunities

There are four main types of opportunities you can pursue when creating a software start-up:

1) New technology in a new market, you create a new innovative product in a previously unserved market. Example: Overture (acquired by Yahoo) creating the pay-per-click technology to create the search engine advertising market.

2) New technology in an established market, this most likely starts with, “this product sucks… I could make something better.” You take advantage of recent advancements to build a product that improves on the existing solutions. Example: Last.FM creating a social music application that gradually learns your tastes in music, a significant improvement over the existing online radios.

3) Applying a proven technology to a new market, you see an opportunity to take an existing product and tailor it to a new market. Example: 37Signals Highrise, CRM applied to smaller businesses like web design firms.

4) Applying a proven technology in an established market this is where a start-up tries to compete head-to-head with market leaders. There’s generally a lot of money at stake so there will be a lot of entrants. Example: Cuil building a search engine with a fast indexing technology to compete against Google and Yahoo.

Disruptive Opportunities

Disruptive opportunities generally fit into the first too categories. Although, it’s not just an improvement over existing technology. It’s an innovation that causes a significant shift in the market (see Wikipedia entry).

For example, Mint created an online finance application that took aim at Quickens desktop software. Mints founder, Aaron Patzer took recent improvements to web applications and combined it with an innovative monetization system that allowed him to launch an effective competitor to the cluttered desktop alternatives.

If Aaron took the usual approach and created the desktop software it would of just been another new product, trying to compete in an established industry. Instead he created a disruptive innovation, an online financial application with an automated system that helps people save money, and helped create a new market (plus its free).

Whats stopping the big competitiors from copying you and using their market access?

Big companies have a history of failing to adopt disruptive technology, the author gives a few reasons why:

1) By adopting the technology they cannibalize their current customers by offering a product thats usually at a lower price point.

2) Big companies are not organized to build out disruptive technologies because the markets for them are too small to begin with to make it worth the companies time.

3) They can’t gauge how big the market is because there is no current market to base the research off of, making it hard to sell to the executives making the decision.

These are things that start-ups can take advantage of and makes disruptive technology can be much more effective then the other types of opportunities

Why are disruptive opportunities better for start-ups?

It’s easier to answer this in context with the types of opportunities mentioned above:

1) Being first to market tends to be difficult because the companies end up spending a large amount of money laying the ground work, for example building awareness and facing unknown difficulties.

A good example of this happening right now is the Enterprise 2.0 market. Jevon Macdonald wrote a great post on the lack of an established market for Enterprise 2.0.

“There is no Enterprise 2.0 market. Enterprise 2.0 budgets do not exist, except where some early adoptors create them, and there is no Enterprise 2.0 sales cycle.” – Jevon Macdonald, Firestoker.

The businesses in that market have to either invest in building awareness through media, wait until the market develops, or building off of existing markets. For start-ups that can be very costly unless they can ensure a return.

If you building a “new market” disruptive technology you can benefit in the long run from being the leader and championing the technology. It allows you to have first-mover advantages that gives you a competitive edge when other competitors enter the market.

2) Just creating a better product then your competitors can also very difficult. A big company has the resources, brand and access to existing customers that would require much more then just a slightly better product to effectively compete.

In the tech world I see that most new companies seem to fall into this area. Just spend a few weeks watching Techcrunch and you can see just how many people are creating me-too companies.

These founders see the big companies making money and want a piece. They end up modeling their business around the leading companies and offer little differentiation. To make it worse their business models rely on low-margin advertising.

If you take a different approach by bringing a disruptive technology to an existing market (called “low-end disruption”) you can target the customers that were left behind by the current market leaders. Those leaders usually have a high-performance and expensive product thats out of reach by certain segments.

Once start-ups have some market share they can improve the technology until it’s capable of being valuable to the larger mainstream market.

3) Applying a proven technology to a new market usually has the lowest barrier to entry mainly because it involves little innovation. This is a trap I fell into myself when I created Contrastream. The product was essentially a derivative of an existing product Digg (but not nearly as bad as most Digg-clones) that I applied to a new market, indie music.

The problem with this approach is that it’s difficult to gauge whether there is actually a need for the product in the new market.

It’s a common trap to have built a new technology and see all the ways it could benefit peoples lives. But that does not mean there is a need for it. If you are relying on the theory that “great products spread online by themselves” you better hope that people are aware of something lacking in their lives and are looking for a way to satisfy that need.

For online marketing to be effective its essential that people are already searching for a solution. You can’t spend a ton of money on advertising just to make people aware that their need exists.

Of course, some products have a viral nature, like being invited to Facebook or emailing Youtube videos to your friends. But viral marketing is not something that can be created, only assisted.

4) Bringing a proven technology to a well-developed market is an area left to the ambitious entrepreneurs.

You will be facing some tough competition by companies with years of experience in the market. When markets reach a certain point its generally very hard for a small company to compete. This is because those big companies are spending all their time not only fending off the other big competitors but also securing their position in the market.

Approaching a Disruptive Opportunity

The idea behind Innovators Dilemma is to find a smaller market that can benefit from a new disruptive technology. Build the product, get some market share, make improvements and reiterate until it’s ready for a mainstream market.

Early on the technology tends to be more expensive or under-developed to be ready for a mainstream market, for example Flash solid-state hard drives are too expensive for the average consumer but the price continues to drop.

The key is becoming the expert in that technology and the company that pushes it forward until it’s matured. By the time the bigger companies see the potential in the technology they will already be way behind.