Betting: are punters price sensitive?
Changes in the UK market have pushed operators to adapt their pricing. Oddschecker’s head of commercial Guy Harding has been drilling down into the data to try and work out where the sweet spot is.
iGaming Business: What share of your customers demonstrate price-sensitive behaviour?
Guy Harding: You’d assume that all of our users would be best-price seekers and that’s why they’d come to an odds comparison site, but many will bet at sub-optimal prices. In fact, if you look at our Premier League betting markets, two of the three most used bookies are the two widest from an overround perspective. So there is something else that they are doing which is driving what you’d assume to be shrewd punters to their sites.
iGB: Which are those companies and what is that something?
GH: Sky Bet and PaddyPower. What they are doing is spending a lot of money on branding and their products. Both of them have very good products and very strong brands.
iGB: What other factors drive punters?
GH: Sometimes it is where their money is — not all people keep balances in their wallets across numerous bookies, so the ‘hassle factor’ associated with depositing comes into play. The hassle factor of signing up is a big issue too. Our users have around five to six accounts, versus the national online average of two to three, so the average Oddschecker user is still only signed up to around a fifth of the available bookies on our site.
The other things driving non price-driven brand loyalty is offer-driven bet dynamics such as best odds guaranteed, enhanced place terms and acca insurance. A lot of what we have been seeing recently – and this is normally in horseracing, golf or football – is enhanced place terms. So instead of paying out on the top four golfers each way, a lot of bookmakers are paying out on eight places. This is quite a big shift in the way the industry is operating.
iGB: How do you go about measuring and modelling your data, what are the primary data points?
GH: In terms of the effectiveness of brand we can see where people bet when we control for price. So we will look at different bookies when joint best price on an offering and be able to see where the market goes.
We’re able to provide accurate regular monthly insights to the leading operators on how they are performing against each other when their prices are controlled for. In terms of the overround analysis, we get that by looking at Premier League 1×2 prices 30 minutes before kick-off.
Then we can compare and contrast how wide or tight their pricing is with how attractive they seem from a user perspective and how many clicks they generate as a result. Just because you’ve got poor pricing doesn’t mean you’ll get low betslip clicks.
iGB: What is the ‘sweet spot’ when it comes to pricing? Did you come up with anything to define that?
GH: There is a sweet spot, but there is not one sweet spot that is the same for every single brand because they will be spending different amounts on branding and products, etc. However, there is a generic unsweet spot, an area on that continuum where you don’t want to be. You don’t want to be middle-of-the-road for price and poor for betslip clicks because you’re not doing one thing or the other.
You’re not protecting margin or giving better products or brand experience, and you’re not generating click share like bet365 does by having tight pricing. You have got to be one thing or the other. You’ve got the likes of PaddyPower and Sky Bet in one camp and bet365 in the other, and those bookies that are in the middle and aren’t resonating from a betslip-click perspective will be found out eventually.
iGB: Have you embarked on this type of project before?
GH: No, which is a bit odd really. Although we were allowing punters to check the odds, we weren’t doing much analysis ourselves. We’re in a unique position to give a credible, unbiased view of the industry and so it made sense for us to start this analysis and there will be plenty of further opportunities for us to utilise our unique and independent ‘industry-referee’ position.
Operators very much value the data we provide them, but it is probably too late by the time they get the monthly data we have been sending. We are looking at launching something soon that will be real time.
iGB: Are your insights applicable from the operator as well as the affiliate side?
GH: Of course, certain bookies via their brand power can offer inferior odds and still attract significant turnover – I guess the trade-off is whether to spend money on product/marketing or price. However, you could argue that for bettors who conduct all of their business within the Oddschecker ecosystem the benefit of product functionality is diluted. Our new app hopes to keep Oddschecker users in one place, our place, for longer.
iGB: Were there patterns/findings that emerged from the data that you found particularly surprising or didn’t expect to find before embarking on the project?
GH: The first time I performed this analysis was at the beginning of Premier League season. When I looked at the data for the first half of the season there was no comparison, so it was interesting to see where the brands were placed but I couldn’t see any movement period-on-period.
But looking back at the second half of the season, January to May versus August to December, there were some quite significant shifts. The most significant was 888 and 32Red becoming a lot wider in their pricing offering. They were two of the most competitive sportsbooks and they became sort of middle-of-the-road by widening their prices on average about two percentage points.
888 and 32Red, as well as Unibet, all rely on Kambi as their pricing provider, so historically they had always had exactly the same prices for the same markets.
I picked this up with Kambi and it appears they are now extending to operators the ability to have some discretion over their pricing. So evidently 888 and 32Red have chosen tactically and on a territory-by-territory basis to offer weaker pricing for the UK market and as things stand it hasn’t been to the detriment of betslip clicks. They have managed to take margin without haemorrhaging or losing market share.
Obviously that may change, but that is how things sit at the moment. In contrast to their moves, Betfair has gone the other way. It has really tightened its pricing and is now, with the exception of Marathonbet, the tightest priced sportsbook on our site.
iGB: How have things changed since UK operators started trying to move away from free bet offers?
GH: Free bets offers have diminished, there is no question about that, and enhanced price offerings are probably being more effectively deployed around big events rather than being ‘always-on’ where they began to be seen as wallpaper.
I see a lot more emphasis on pricing, as we have seen a huge amount of erosion in overrounds in the last few years. I think it is going to be the enhanced place terms that are going to be the incentive to both new and repeat customers in future. It is not necessarily purely an acquisition tool, it is an enhanced CRM tool as well.
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