Nick Garner explains how the law of leadership from the book The 22 Immutable Laws of Marketing can be applied to the igaming industry.
This is part of a series of articles on marketing strategy based on the seminal book by Al Ries and Jack Trout. This book outlines the foundation principles for anyone involved in marketing strategy.
The first law is: leadership — it’s better to be first than it is to be better.
If you can be first in an emerging market category, you’re in a very strong position. If you come into the market too late, even if your service is better than the incumbent, it will be a huge battle to overcome the ‘first winner’.
The thinking behind the ‘law of leadership’
If I ask you which was the first betting exchange, what would you say? You might say Betfair. If I ask you which was the second betting exchange, would you remember? From a competitive point of view, it’s far easier to succeed if you are the first.
People remember the first winners. These first winners are brands that emerged as a market category was forming and broke through to ultimately dominate that market category for years to come.
If the market category breaks through and becomes huge, those first winner brands also become giants.
If you weren’t lucky enough to be one of the first winners and you want to get into an existing market, you have to accept that you’re either going to need to spend a huge amount of money or find a relatively uncompetitive market segment where you know you’ve got a good enough offering to overcome the inertia from not being the first winner.
The key is to pick the battle you can win. And this is where finding your own category and being first is ideally best.
For example, I mentioned Betfair as the first betting exchange, but it wasn’t actually the first. In the same year Betfair was founded, Flutter.com was also started and the two operators competed against each other until 2002, when Betfair bought Flutter out to kill off the brand.
However, it turns out the founders of Flutter.com were trying to develop the wrong market category: exchange betting for player-created markets. In other words, player ‘a’ would use Flutter.com to set up a bet with player ‘b’ for some event they both cared about.
Of course, Flutter.com offered betting on general sports events, but it didn’t focus on making mass market betting more efficient, as Betfair did.
The irony was that Flutter.com had a 2.5% commission on winnings, whereas at the time Betfair’s commission was roughly 4.5% on winnings, but Flutter.com was caught out by focusing on a dud emerging category.
Betfair managed to get traction, could get hold of the necessary money to buy out Flutter and thus ended up owning 98% of the exchange betting market category.
What is a good category?
I’ve spent many years looking at this question and I’ve noticed whenever there is some kind of enabling technology advancement that adds value to wealth creation, user experience or igaming legislative change, such as the ones we see in the UK at the moment, opportunity opens up.
Simply, a good winnable category is one where you have a competitive advantage to overcome the weak emerging competition and enough inside knowledge to know that category is going somewhere.
If you’re very lucky or on point, you might create your own market category, and by definition you are the first winner if that category has traction.
When there is change and turbulence, there’s opportunity.
In my own experience, I saw the emergence of blockchain and cryptocurrency as a huge long-term enabler for the borderless flow of money. Today, cryptocurrency is money for the internet. And where there’s borderless, global, frictionless money exchange for the internet, there will be gambling.
When I saw what cryptocurrency could give people, being within the igaming sector it just made sense to get on and set up my own crypto casino: Oshi.io.
I will admit that I would have been better off starting one year earlier… but in the big picture, I did get in early enough to carve out my place within this emerging market category.
The greatest game changer for gambling in the last 10 years has been mobile. It’s gambling in your pocket, tied in with a device you always keep close by. The mainstream brands started by offering a good mobile gambling experience, but LeoVegas offered a ‘mobile-first’ gambling experience.
Since LeoVegas was one of the early winners for ‘mobile-first gambling’, it consolidated and grew in line with the growth of mobile gambling.
Stick to what you know
There are a constant flow of innovations and any one of these could turn out to be huge. By the law of probability most innovations fail, so the key is sticking to what you know and looking at the innovations that are likely to come through in that area.
For example, virtual reality (VR) gambling has been talked about for a few years, ever since VR headsets started to percolate into the market via gamers. On the surface VR gambling is very interesting. However, when you get into the detail, you realise there are certain constraints that are hard to overcome.
VR headsets need powerful computers to run them and they are a hassle to wear. Many people feel dizzy using them and while having virtual lobbies with casino games in them is very stimulating, most people will never get to that point because of the difficulties with VR headsets.
To me the VR gambling category isn’t great, but if you could combine effortless virtual reality with smartphone handsets, then it could get interesting because of the huge dependence people have on their phones.
If you’re lucky enough to have large amounts of funding, you can do what the big operators do and wait it out, keep a close eye on emergent businesses that have been successful within a new market category and buy out that whole business. From there you can build on that already successful brand and grow within the new market category.
This buyout model seems to be something we hear more about because of the prolific number of buyouts by organisations such as Google and Facebook, and, of course, The Stars Group.
Being the first winner in a market category is ideal. Your fortunes will rise with the growth of that market category and ultimately, unless you make a huge mistake, you will be unassailable.
Next time, we’ll talk about the law of category: if you can’t be first in a category, set up a category you can be first in.
Nick Garner is founder of Bitcoin casino Oshi.io and has a background in online marketing and marketing strategy. He occasionally consults with igaming brands on marketing strategy and best practice planning for marketing operations.
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