Case Study - Digital Promotions
How machine learning and hyper-targeted digital promotions are boosting Illinois Lottery sales and profits.
Digital promotions have helped the Illinois Lottery increase the number of active weekly players after a major jackpot is won, increase incremental sales, and generate ROI of more than $10 for every $1 invested.
By Richard Bowman, Head of Customer Analytics, Camelot LS
As jackpot levels rise, the more ‘casual’ lottery player starts to buy a ticket or two for the next draw. As the roll series progresses, more casual players start flocking to buy tickets to be in with a chance to win the big prize. What goes up, must come down and the jackpot is eventually won.
What happens next is that legions of these casual players churn – that is to say that they disappear. Likely biding their time until the jackpot starts to climb again before buying their next ticket.
How to keep players active after big jackpots are won? It’s an age-old problem for the Lottery industry. And even now in the digital age, proven solutions have been few and far between
At Camelot Lottery Solutions (Camelot LS), we see firsthand how players churn following big jackpot wins thanks to our iLottery and digital marketing work with cutting-edge global lotteries such as the Illinois Lottery, and the UK and Irish National Lotteries.
A prime example of this occurred after the $400m Mega Millions Jackpot was won on June 9, 2020. Predictably, active iLottery players in Illinois promptly dropped 22% the following week. So far, so normal.
However, using a new digital promotions capability built and delivered by Camelot LS, the Illinois Lottery was able to double active players in the week following the Mega Millions Jackpot win
Crucially in the current era of squeezed marketing budgets, our data shows that digital promotions provide excellent value for money and positive ROI – the Illinois Lottery generated an incremental sales rise of over $10 for every $1 invested in this specific promotion campaign.
Hyper-Targeted Digital Promotions
Everyone is familiar with customer promotions. Buy one get one free. Save 10% by signing up to our newsletter. Buy an instant ticket at the gas station and get a free coffee. Promotions, when done well, work.
What is exciting for the lottery industry is that hyper-targeted, real-time, digital promotions are now possible – and the data shows they work extremely well.
Growing engagement for higher-margin Draw-Based Games is a key ambition for many lotteries. Through a new digital promotions capability, built and delivered by Camelot LS, the Illinois Lottery recently ran three campaigns all designed to boost incremental Draw-Based Game sales.
The three campaigns ran simultaneously to different segments of players:
—-‘Active’ MegaMillions (‘MM’) Players – Players who bought a MM ticket during the more recent roll series
—-‘Lapsed’ MM Players – Players who didn’t buy a MM ticket during the most recent roll series but had bought MM tickets in previous roll series
—-‘Casual’ MM Players – Players who bought a MM ticket during the most recent and in previous roll series, but who only buys a ticket once the jackpot is over $100m.
All campaigns delivered digital promotions alternatively by email, push notifications through the Illinois Lottery App, or real-time notifications to players on the Illinois Lottery website. A control group, who received no promotion of any kind, was established in order to benchmark the results. The chart below summarises the three campaigns:
Through a Broadcast campaign (campaign 1), every active Mega Millions player on the Illinois Lottery’s iLottery database, as defined by our propensity-to-play models, was offered a promotion to buy one line of Mega Millions and get one free.
The uptake of this offer, as one might expect when in the middle of a large Mega Millions jackpot roll series, was extremely high at 53%.
The results of the campaign 14 days after the promotion launch delivered an ROI of $1.58 for every $1 invested by the Lottery. Not bad. However, with pressure on marketing budgets increasing, many lotteries will be looking for campaigns that deliver much higher ROI returns.
The targeted campaign (campaign 2) delivered a significantly more impressive ROI. This campaign was aimed at reactivating ‘lapsed’ Mega Millions players and had the same offer as the first campaign: buy one line of Mega Millions and get one free.
Reactivating lapsed players isn’t easy, as we all know, and this campaign saw just over 6% of coupons for a free Mega Millions line redeemed.
However, 14 days after the launch of this second, more targeted digital promotions campaign, the incremental sales gained from this cohort of previously ‘lapsed’ Mega Millions players delivered an ROI of over $10 for every $1 invested.
The hyper-targeted campaign (campaign 3) focused on cross-selling the Illinois Lotto game to casual Mega Millions players who don’t normally play any other games. These are the players who usually disappear, or churn, after a large jackpot is won.
Rather than using a broadcast approach, this campaign was powered by a machine learning model that identified players most likely to churn and therefore most likely to offer the highest ROI if the Lottery was able to keep them engaged.
It’s a rollercoaster of active players and sales as jackpots grow and are struck, with every lottery aspiring to keep these players active outside of large jackpots. Cross-selling another game is a great way to do this.
Through a hyper-targeted campaign, every casual Mega Millions player was offered a free line of Lotto when buying a line of Mega Millions.
However, to be able to offer that promotion, we needed to know a wealth of information about this cohort’s playing history. To respond with the right message or promotion at the right time, we need to understand the behavior of each player. We also need to be able to respond in real time to changes in that behavior (i.e. if a lapsed player buys a ticket today they will no longer be considered lapsed). The Customer Data Platform, built by Camelot LS and deployed in Illinois, makes both of these things possible.
The redemption rate of this promotion, 34%, was much higher than the targeted campaign (campaign 2). This makes sense, as we are cross-selling to players already inclined to make a purchase, not trying to reactivate dormant purchase behaviour.
This campaign delivered an ROI of $8.89 for every $1 invested by the Lottery.
Most promisingly of all, players who were offered a free line of Lotto in the hyper-targeted campaign (campaign three) were twice as likely to continue playing after the MegaMillions jackpot was won when compared to the control group.
More time is needed to draw further conclusions about customer lifetime values and retention over time. But this is strong evidence that digital promotions can have a profound impact upon the industry-wide issue of keeping casual players engaged following a large jackpot win.
Digital promotions harness the power of machine learning and can be tailored to individual player behaviour with real-time customer data and cutting-edge personalisation.
The Illinois Lottery’s experience has shown that digital promotions can work incredibly well at keeping casual players engaged – and they can provide a significant ROI for increasingly scarce marketing dollars.
Richard Bowman is the Head of Customer Analytics at Camelot Lottery Solutions, within the BI/CRM team.
The BI/CRM team, led by Jon Everitt, use their many decades of experience in the lottery industry to help build, deploy and manage real time Customer Data Platforms that drive player engagement and incremental sales on behalf of Lotteries around the world.
To find out more about Camelot Lottery Solutions, click here.