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Sports Betting – Researching the Revolution

The sports betting industry is poised for dramatic growth as legislative barriers to single-game betting are relaxed in North America. High quality focused market research will maximize your business success. You can start with asking 9 key research questions.

Editor’s Note: Sports betting has taken on a new life as increasing numbers of US states have legalized betting on a variety of sporting events.  Now that the industry is out in the sunshine and can operate widely, it needs to operate like a “normal” business.  Included in that is understanding customer and potential customer needs, how well they are meeting those needs, etc.  In a valuable piece, Chris Wiggins takes us through a number of research issues that legal sports betting companies must tackle on their way to ongoing business success.

In the 1980s, professional sports went through a revolution as broadcasting rights and cable sports broadcasting spurred a remarkable growth in revenues, profits and fan engagement. Leagues expanded, players’ salaries skyrocketed, gate receipts multiplied, and cities rushed to build grander sports venues.

Today we sit on the verge of another worldwide transformation: the revolution in sports betting. While media rights will continue to be the largest component of sports revenue, other streams of activity such as digital platforms, merchandising, sponsorship and legalized betting, are growing at astonishing rates. Recent PwC research suggests that revenue from sports betting in North America could total 80 billion dollars by 2022. The recent ICE Conference on Gaming in London mapped dramatic developments.

In September 2018, the NFL relaxed its existing policies on accepting advertising from casinos. The NFL is now accepting sponsorships from casinos that offer sports betting (with restrictions). A few weeks ago, the US Supreme Court struck down the Professional and Amateur Sports Protection Act that had barred single game gambling on football, basketball, baseball, and other sports. This action is a green light for legal single-game betting. The floodgates are opening as more jurisdictions relax restrictions on sports betting.

As more companies capitalize on the opportunities, the biggest challenges will include undertaking high quality focused research to fully understand the “sports bettor” and this category. We know the unique appeal of sports betting and how diehard fans have sought legal and illegal ways to gamble on sports. Moreover, sports betting is associated with a higher degree of knowledge, engagement, and attachment to particular sports. However, we still lack a deep understanding of the complexities of “sports bettors” and the milieu in which they operate.

Ask these 9 research questions to maximize your company’s chances of success in sports betting:

1. What are the deep underlying motivations for sports bettors?

While people can consciously tell us why and how they bet on sports, there is also a subconscious set of forces and needs at work below the surface. It is important to uncover this hierarchy to ensure that the customer relationship is resonating deeply and compellingly. Psychoanalytic exploration can be a powerful approach to uncovering hierarchies. Semiotics help us understand the power of signs and symbols associated with this category and those in many cases are cues for subconscious factors.

2. What are the cognitive biases associated with sports betting and how do they impact behavior?

A behavioral science lens can be invaluable in uncovering the cognitive biases that influence customer decision making. It can also assist in identifying nudge points that exist in the customer experience that help define this experience. Consider the irrational and rational biases for behavior in connection with sports betting for guaranteed positive customer experiences.

3. In what social and cultural context is sports betting situated?

Ethnographic research immerses us in the world of the sports bettor to understand the context of the activity. Ethnography uses observation and questioning cued by these observations to understand lifestyle, experiences, environmental, and socio-cultural factors that impact and influence ability and motivations that drive behavior and decision making. Ethnographic exploration can be done in-person or with digital platforms.

4. How can sports betting experiences be optimized against financial, functional and social objectives?

If we don’t understand and quantify the customer journeys of sports bettors, then we have little hope of having any influence over their experience. CX and UX testing can play a critical role in quantifying their journeys and ensuring the platforms used are functioning effectively and delivering a positive customer experience. Successful companies will have to develop powerful experience and usability metrics and KPIs.

5. To what types and combinations of messaging do sports bettors respond most positively?

The road to success is littered with companies that develop great products and services but end up communicating and promoting them with wrong messaging. Message modeling using discrete choice designs allows for optimization of messaging elements for maximum effect with the target consumer. Messaging campaigns will have to be on target and optimized to break through in this busy new category.

6. How do sports bettors choose betting services for the sports with which they engage?

Marketers must have a full and predictive understanding of how customers make choices about what products and services to use. Lack of knowledge can result in poorly designed products with features or combinations of features of little interest to target consumers. Discrete choice modeling allows for powerful simulation of actual decision making and helps in predicting future success.

7. Which sports betting offerings have the best probability of success in the marketplace?

Companies are creating products and services at a dizzying rate. There is neither the time nor the resources to evaluate new ideas with traditional test marketing research. Using prediction markets to leverage the “wisdom of the crowd” can be a powerful technique for screening new ideas and evaluating relative probabilities of success through clearly differentiated results validated with in-market performance.

8. What are the parameters of emerging consumer brand equity in the category?

Very often, companies have little understanding of their consumer equity, particularly when business is growing. Failure to understand why and how your customers value you relative to other brands is critical to maintaining strong business performance. Creating brand equity segments allows us to clearly identify prospects, loyal and “at risk” customers and understand their differing equity perceptions. This also helps identify and define the magnitude of risk posed to a brand’s customer base by competitors.

9. How do we define and take action related to the key consumer segments in the marketplace?

Have an accurate and actionable understanding of your market’s consumer groupings. Properly conducted segmentation analyses will yield good estimates of the size, value, and composition of the generated consumer segments. It will also yield accurate pictures of the differing product/service usage habits and the demographic and psychoanalytic needs and backgrounds of the segments. This allows companies to take properly targeted and grounded action for enduring success.

By answering these nine questions, companies operating in this new sector can expect measurable success. The category will be chaotic, crowded and volatile as it develops. Companies not doing their homework risk being left on the side of the “yellow brick road” of sports betting.

This article was originally published on research strategy group. 

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Chris Wiggins

Chris Wiggins

Vice President and Chief Research Officer, research strategy group