The success of the music subscription service in mastering the art of personalisation and changing the way people listen to music is something the igaming industry should try harder to emulate, says Scott Longley.
There can be no doubting the success of the music streaming provider Spotify. Taking on all comers in the field – including most recently the behemoth that is Apple Music – the Stockholm-based company has, in the parlance of the music biz, shot up the charts since it first launched its paid-for subscription service late in 2008.
The company’s subscriber numbers tell their own story, with the most recent numbers for the year to June showing the total topping 60 million. (See chart)
The stratospheric rise is no doubt music to the ears of the company’s venture capital backers. According to recent reports they expect the firm, which was valued at the time of the last funding round in 2015 at $8.5bn, to opt for a direct listing in New York at some point this year.
What is relevant for the gambling sector, though, isn’t so much the headline numbers as the reasons why Spotify has proved so successful – and why there are lessons to be learnt from how it has achieved pre-eminence in the extremely cut-throat music streaming market.
“I think its offering is incomparable to the competition, and that includes Apple Music and Google with YouTube,” says Andrew Sharland, chief executive at marketing automation provider to the gambling industry Fresh8 Gaming.
For Sharland, Spotify has played a significant role in the evolution of how we all now listen to music. “It’s changed the nature of our listening habits so that genres as we once understood them are no longer truly relevant,” he adds.
“It gets who the user is, clocks what they are listening to, understands what they might want to listen to next – including ideas on stuff that they didn’t know they might like – and gives the users playlists and recommendations that ensure every one of them is engaged with the app.”
Solving the choice dilemma
In short, Spotify has mastered the art of personalisation and in doing so it has answered some of the questions posed by the so-called ‘paradox of choice’ that was first spoken about by the author Barry Schwartz in his book of the same name published in 2004.
It is one of the problems of the long tail. Spotify, for instance, has more than 20 million songs available to stream, of which more than four million have not even been played once. But it avoids overwhelming the user by properly utilising algorithms to judiciously select playlists and suggestions.
“There is a common belief in betting that because bookmakers have so much content, that the best way of pushing that in front of customers is to provide huge lists of events, markets and games and let the consumer find what they’re looking for,” says Rob Morris, chief executive at digital marketing agency Two-Up Digital.
“What Spotify, and also Netflix, are proving is that suggestions are better than options. The most obvious example is Amazon’s ‘because you bought x, you might like y’.”
Morris points out that such recommendation engines are never afraid to make suggestions that may not have occurred to the user previously.
“Spotify isn’t afraid to make suggestions that may or may not fit in with their consumer choices, but know that by doing so, it is offering the consumer a new way of discovering music,” he adds.
“For Spotify, more plays mean more revenue and so to introduce consumers to new genres/artists and play on the investigative aspect of the brain is incredibly clever.”
Suggesting without seeming intrusive is the best way for a consumer to be encouraged to delve deeper into a product offering, letting them believe they have made the discovery on their own. Betting can work the same way, suggests Morris.
“I’m a firm believer that there are two types of sports bettor; the customer who knows what they want to bet on, and the customer who just knows that they want to bet, but are yet to determine the event. In both scenarios, suggestions rather than options work.”
The discovery channel
Like music distribution, betting and gaming are also commodity products with very little by way of differentiation between the consumer-facing offerings. But while Spotify chose to fight its battle for supremacy on the territory of personalisation, the online bookmakers have historically opted for other areas to take on the competition.
“The sports betting sector’s focus is different from Spotify’s,” says James Waterhouse, head of data science at Sky Betting & Gaming. “Things like price competitiveness, market coverage, ease-of-use, speed of bet placement, availability, promotions and product features are all more important to the bettor.”
But while personalisation is gaining in importance, there are hurdles that need to be negotiated before full implementation. “It can be a tricky subject matter,” says Waterhouse. “A recommended bet is only relevant for a period of time, as once an event starts or there is a change in the score the market will change or close,” he points out. “Spotify doesn’t have this problem when recommending music.”
Then there is the issue of trust. “If Spotify recommends a track and you don’t like it, you don’t listen again,” says Waterhouse. “There’s no damage done, except maybe to your ears. If SkyBet was to offer you a recommended bet and you don’t win, then you’ve lost money to SkyBet. It’s another consideration, which combined with the technical complexity is probably why nobody has produced results in this area.”
The provenance of a bet recommendation is key. “It’s about finding the right balance between a suggestion and stimulating the consumer into trying something new,” says Morris.
One route comes from iSport Genius, which recently announced a deal with Sportsbet in Australia that will see it working on the latter’s new interactive and customer-facing ‘Locker Room’ product, which gives contextual information and betting insights about an event or game but without giving direct tips.
Co-founder and partner at iSport Genius Nathan Rothschild says personalisation is an area that he sees the industry increasingly concentrating on. “Personalisation is purely a data play,” he says. “What people bet on, why, what engages them is all data which you can use to serve up a relevant experience. In the case of our product, it means this data drives what data you serve up to the punter.”
Contextual content is a fruitful area of enquiry for the marketers. Motti Coleman, director of new business at retention marketing specialist Optimove, says its approach is to tackle the personalisation issue through targeted marketing campaigns, which are all based on customer behavioural insights but can also be achieved through similar work on site.
“The bottom line here is to try and value the various types of player personas that you have, and then work on personalisation methods that help convert players to your highest performing personas,” he says.
Coleman cites as an example of a company putting personalisation at the core of an offering the startup consumer-facing betting proposition Bookee, which dubs itself the Tinder for betting. Adam Wilson, co-founder and chief executive, says that what he finds interesting about the Spotify discovery mechanism – and what the company is attempting to emulate – is how it feeds off the acquired knowledge of the inclinations of the users.
He sees a direct correlation in betting. “If I bet on the final of a major, it doesn’t mean I like to bet on golf, it means I like to bet on what’s on TV,” he says. “So I’ll probably be interested in betting on a big rugby game too if it’s high profile enough and on TV – it doesn’t mean I like to bet on rugby.”
Pointing to Facebook’s ‘show me less’ feature, which allows users to edit their timeline according to taste, Wilson points out that personalisation can be about what you don’t bet on as much as what you do.
“If I have never placed a bet on horse racing, it’s annoying to see it as the featured sport in every app from midday until the last race or a football game comes along,” he argues. “Having the ability to personalise what you see in-app is really important.”
Wilson makes the obvious point that as a startup his company has the luxury of building a product from scratch, without having to deal with the issues thrown up by legacy tech. He points out, for instance, that bet365 is perhaps not coincidentally ahead of the personalisation game due to it not having a reliance in sport on a third party platform.
“With 365 we are talking about the only product that does near enough everything in-house,” he says. “That’s probably a good clue as to why as an industry we have been so slow off the mark here.”
Again, the industry is being talked about as a follower of wider technology trends rather than a leader. Juergen Reutter was previously chief experience officer at William Hill and is now chief executive at the soon-to-launch mobile betting consultancy Addison Global. He believes that a clear leader in personalisation in the gaming space is yet to emerge.
“More operators are launching UI personalisation for customers to actively order their favourite markets in the app but passive personalisation, predicting and offering the next best action, is still in its infancy,” he says.
The industry is still beset by relatively primitive marketing efforts such as one-size-fits-all push notifications sent out on a Saturday afternoon. But given the heightened consumer expectations, Reutter believes we can expect to see more efforts in this direction as the operators grapple with their data structures and attempt to modernise their systems.
“A flexible infrastructure ensuring fast, almost real time, interaction between the mobile front-ends and the back office will be key for success,” he adds.
‘Mobile mindset’ forcing industry to wake up
That sense of the customer being ahead of the industry on the adoption curve is widespread, and it is because of the efforts of Spotify and the rest of the app economy market leaders that together are driving forward with consumer-friendly services and products.
Jonny Robb is a UX developer and co-founder with the soon-to-launch BetBlocks, the latest attempt to crack the social betting market, and he believes that mobile first, highly agile betting products will soon emerge to challenge a sector awaiting the next seismic move in technology.
“Mobile is changing player behaviour in ways in which I believe the industry hasn’t woken up to,” he says, suggesting that WhatsApp and Messenger are now an increasingly important part of the betting lifecycle.
“The customer definitely expects more,” suggests Wilson at Bookee, who points out that users coming to betting from the worlds of mobile entertainment and leisure now expect a level of curation that is notably absent from the betting apps on offer.
“Having instant access to everything from information, to shopping to bank transfers – things it would have taken days to do in the past now take seconds, so the ‘mobile mindset’ has created a massive shift,” he says.
Morris at Two-Up Digital agrees. “The surge in convenience apps like Uber, Deliveroo, Amazon Prime even, mean it’s now easier than ever to get from A to B, whether that is via a journey in a car or a product getting to a consumer,” he says. “So while customer habits are changing, it’s the innovators in other industries that are changing these habits.”
Mobile penetration rates across Europe and further afield continue to rise. According to data from the World Bank, mobile subscriptions per 100 people globally have risen from just over 12 at the turn of the millennium to more than 98 in 2015.
In the wake of this rise, it is understandable that player behaviour is changing and more to the point, expectations are rising in tandem with penetration rates.
“If we want to be truly mobile-centric, which is of course our mission, then it’s not just about UI, it’s about instant gratification too, which is driven by customer behaviour,” says Wilson. “The mobile opportunity is probably a bit clichéd now with 80% of bets placed from your handset, but the difference it makes is incredible. Push notifications, SMS, phone calls, widgets, 3D touch – the phones get smarter and we as an industry need to capitalise on that.”