Promotions are pivotal in the expansive marketing realm of the gaming industry, as companies strategically harness promotional offers to bolster long-term profitability. In select segments and geographies, promotions and complimentary offerings play a substantial role, contributing approximately 30% to the industry’s overall revenues. Yet, the profitability of promotions becomes a multifaceted equation when factoring in discounted prices and the operational costs linked with campaign execution.
In the gaming sector, promotional strategies revolve around three key objectives: acquiring new customers, retaining existing ones, and reactivating “lapsed” customers. Framed as a player “lifecycle” or customer “journey,” around 40% of the total promotional budget is allocated to customer acquisition, another 40% to retention, with the remaining 20% dedicated to reactivation.
Broad strategies for Game Promotion
Gaming companies present two primary types of promotions to players at different stages of their gaming journey:
Freeplay
- A complimentary opportunity to play provided by gaming companies.
- Offered as direct incentives, prizes, or bonuses on deposited amounts.
- Encompasses free bets or free spins/chips.
- May be general bonuses for discretionary use or tied to specific events or games.
- Includes matched deposit offers, granting players a bonus multiple of their deposits.
Cashback
- Players receive a form of cashback for their activity, either as cash or restricted bonus funds.
- Cashback offers can be used for further gaming or withdrawn for other purposes.
- Distinguished from freeplay offers, which are exclusively for gambling purposes.
Distinct promotions serve specific business objectives. Freeplay promotions, often in the form of bonuses on customer deposits, are commonly employed for acquiring new customers. In contrast, cashback offers, including loyalty schemes and maximum losses, are integral to retention and reactivation strategies. It is crucial to differentiate between players requiring retention promotions for inactive players and reactivation promotions for attrited players with a lower probability of return.
While promotions theoretically promise substantial revenue boosts in gaming companies, the reality is more challenging. Let’s explore the difficulties faced by gaming companies in implementing effective promotional strategies and discuss potential solutions to maximize their impact.
While promotions theoretically promise substantial revenue boosts in gaming companies, the reality is more challenging. Let’s explore the difficulties faced by gaming companies in implementing effective promotional strategies and discuss potential solutions to maximize their impact.
Challenges faced while running a Promotion
Freeplay Promotions and Acquisition Challenges
Implementing freeplay promotions to drive customer acquisition faces challenges due to bonus abuse strategies adopted by some players, such as chip dumping in poker. To counter this, leveraging an analytics predictive model is crucial. This model can assess the expected Lifetime Value (LTV) of players by analyzing factors like location, device, age, and gender, allowing companies to determine the optimal amount of freeplays to offer new users and mitigate the risk of abuse.
Cashback Promotions and Customer State Understanding
In cashback promotions, understanding the customer’s state—whether they are inactive or attrited—becomes paramount. However, classifying players is not a one-size-fits-all rule, and the duration used for this classification should be tailored to individual player gameplay patterns. Here, data analytics plays a pivotal role, enabling companies to create models for player classification and recommend cashback amounts based on expected LTV and historical playing patterns.
A/B Testing for Promotion Strategy Optimization
A robust A/B testing mechanism is mandatory for a successful promotion strategy. Before launching a new promotion, it is highly recommended to follow the A/B testing approach. This method instills confidence in management, ensuring that the promotion budget is utilized effectively. By systematically comparing the performance of different promotional strategies, companies can fine-tune their approaches and identify the most impactful methods for driving user engagement and revenue.
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