Monday, September 28, 2009

Marketing Summit - You Can Beat a Race But You Can't Beat the Races

This week the NTRA Marketing Summit is being held in Las Vegas. This event is for insiders to discuss how to market horse racing. A noble pursuit, yes, but will it make a difference?

Vic Zast opines that no, it won't. I tend to think he has a point, solely for this statement, "the sport shouldn’t spend one penny more in trying to bring people back until it develops features and benefits that some stranger wants."

To gamblers, racings tag-line is "you can beat a race, but you can't beat the races." Hmmm, so that seems to tell them, "please come to the track, spend a pile of money, and expect to lose with vicious takeouts." Marketing ice to an eskimo might be easier, considering that the people who we are trying to get to look at us can play a football game at a cheap rake, and grind some scratch, among other things.

To the general public on the other hand, our message seems to be, "come to the track, pay to get in, pay for a past performance line that you probably won't understand, sit outside and watch horses you don't know, with people you don't know, wait a half hour between races, and maybe enjoy a $3 coffee and $4 hot dog while you wait. Oh, and if you don't want to wait around, head into the simulcast area where there is 47 events going off at the same time, exactly like the one you are watching here."

Wow, sign me up.

One of the hardest things to market is a game or product with a negative stigma attached. People have been to the races, millions upon millions of them. People have bet the races, millions upon millions of them. It is not like we are springing something new on them. They came, they saw, they did not like it; and after knowing what it is about, they came back in smaller and smaller numbers.

Completely overhauling a business that has preconceived notions attached can be done, but it is extremely rare. Those who have done it have done so with tremendous vision, and a little serendipity. A few decades ago Honda made only motorbikes - and damn good ones. Thinking they could use their good name and engineering prowess to expand, they decided to move into carmaking. It was a complete dud. The potential customers in Japan had their preconceived notion that Honda made bikes, not cars, and they wanted nothing to do with them. The stigma attached to the Honda brand overcame everything else. Moving the market overseas to America was the only way this new vision could become a success and that they did. The US market was not married to the notion that Honda could not make a car because they make bikes. They had the ingrained notion that Japanese technology made good stuff and they wanted Honda cars because of that. The rest is history.

Vic writes, "No amount of advertising, sales promotion or public relations will convince disinterested people to like horse racing" and he does make a strong point. Sure they might come for big days, or for a festival, or so on. In fact, I agree that racing should be doing quite a bit more for big days and admission based events (as opined here). But these folks rarely become long-term fans. I think it is because we have fundamental problems in racing and until we fix those problems, a little bit of flash, a little make-up and a new shirt and tie won't do much good at all. Customers are smart and informed and hoodwinking them does more harm than good.

As for bettors of other sports, well what more evidence do we need than Betfair? Oodles of folks are playing betfair for racing because they are offering something that they want - a good interface, excellent customer service, fun, excitement, and low takeout. Betfair took the racing product, flipped it over, threw it around, and changed it. Old, boring, slow, impossible to win at? No way, sister; not there. It took a complete revamping of the brand to get people interested in racing again, and it worked.

Marketing writer Seth Godin in his book "Free Prize Inside", sums it up for us nicely.

"Your growth will come instead from the dissatisfied and unsatisfied. The dissatisfied know they want a solution, but are not happy with the solution they’ve got. The minute they find it, they’ll buy it. Yahoo’s best customers were not google’s first users. Nope. The happy Yahoo customers were not looking for a replacement. Google focused on dissatisfied web surfers - people who were online but were not blown away by what they had been using (and who wanted to be blown away).

The unsatisfied are the folks who do not even realize they have a problem that needs solving. That is why focus groups are often so useless. The people you really need to hear from are the great unwashed, the people who are not even looking at you. That is where you will find the customers you need when your current line becomes obsolete.

The problem is that management really likes those satisfied customers. The first question they’ll ask about any innovation is “Will our satisfied customers like it?” Of course, this is a silly question, because satisfied customers already like what you’ve got. The question you ought to ask first is, “Will people dissatisfied with what they are doing now embrace this, and, even better, will they tell the large number of unsatisfied people to go get it right away?”

I think the lesson we should all learn is that without a solid product to market, we might as well not market anything at all. We must work on fundamentally changing racing to make it an attractive 21st century gambling game, or a superior entertainment destination, before we throw money at it. The market - the dissatisfied, unsatisfied, or even the satisfied - sees right through anything else.

This piece is contributed from a HANA member with a career in internet marketing.


El Entrenador said...

That was a nice piece and I enjoyed reading it.

Horseracing needn't look any further than the internet where online poker has taken young adults from all over the world by storm.

What, might you ask, does poker have over horseracing? Certainly not excitement (grinding poker can be quite boring). Certainly not intellectual challenge (although poker is quite close!). And certainly not the chance to make a quick score (to make a quick score (1K+), you might have play for HOURS online in a single tourney).

Nope, none of the above! What horseracing lacks is at the heart of fundamental ecomonics: THE LACK OF A PERCEPTION THAT IT IS PROFITABLE!

Why do the young kids play poker? Because they perceive that if they work hard enough at it, they will eventually become +EV long term. NO SUCH NOTION exists with horse racing.

Consider that you can find online training sites for poker ad nauseum. Just do a quick Google (or in deference to your contributor, a Yahoo! search) for "online poker training" and you will find some outstanding training sites for relatively little money that can have you near-profitable in a couple of months of hard study. NOTHING like this exists for horseracing; instead all you get is people peddling lousy tips, speed figures, and for the most part, useless or superfluous information.

In addition, you can go to NUMEROUS sites online that list DOZENS of winning "poker pros" whose results are documented and posted. I challenge you to find and list FIVE "horseracing" pros that are profitable and whose names are public. Oh, these five may exist, but no one knows of them, and more importantly, because no one knows of them, they cannot help the sport attract what it needs: interest from young people that think or believe they can beat the game in the long run.

The solution to racing's woes is obvious: make people believe that they can win money long term by betting horses. NOTHING MORE and NOTHING LESS. If this was done, the issues of admission, the cost of a DRF, the odds changing after the bell, the drugs, the "super-trainers", field size, and all other "issues" would magically disappear. Easier said than done,isn't it?

And with that, sir, I proclaim the eventual slow death of racing as the cancer of takeout metastasizes and brings it to its Hospice in the caverns of Belmont, Hollywood Park, and Churchill Downs.

Good luck at the windows and thank you for your time.

Anonymous said...

Until NTRA and others in the industry realize this game is about gambling they are wasting their time. Market the large pick 4 guarnatees, the possibility of 4 and 5 figure payouts in exotic wagering. Not free t shirt day, or even the equine and human interest stories. The chance for a big score with a little wager has to be the only way to communicate to the casual fan and one score can get them hooked for life.

Anonymous said...

Well said QP.

Somebody start a Death pool.

Anonymous said...

Dennis (Ohio, USA) says:
06 Oct 2009 at 05:32 am | #
Alex Waldrop, NTRA CEO, asked after the summit:

How would you answer these fundamental questions? Are we selling the right product to the right people? Why have most track experiments with lower takeout failed to generate new handle? Do you pay attention to takeout when you play? Let me hear from you.
My comments fit there and here:

Dennis (10/01/2009 9:04 PM)
Gambling of any kind involves price; that is odds. And; equally; integrity. Horse racing has severe problems in both areas. They refuse to admit it. They refuse to accept the path that must be taken to correct it. So, decade after decade, they have meetings and discussions that always lead to the same results.

Nothing is done. More events involving bobble head dolls, 50 cent hotdogs and $1 beer. The class of gambler attracted by this offering bets very little and does not return very often. They play, they do not think or invest. Your thinking pros and semi-pros always consider price.

The direct affect of take/breakage on pools is always smaller odds. Small odds means one of two things to your real player. Wagering only when you are provided with the rare case of value. Or wagering with an entity that provides a percentage of return that offsets playing lower odds due to take/breakage. Neither of which increases churn. Your $2 bettor could care less.

Consider that, with less take/NO BREAKAGE, odds increase which in turn increases perceived value opportunities which increases wagers. More opportunity equals more churn. I also believe this provides tracks/ADWs a chance to compete with the offshore’s rebates.

Experiments, and that is all they were, in this area have been isolated, short lived and hidden. If you are going to do this, make the numbers real, make everyone do it, and advertise the hell out if it well before starting it. I played seriously for more than 30 years and quit after the pic-6 scandal when only lip service was paid to correcting the ancient system that is racing’s wagering system.

My opinion, racing has to die before it will make any real attempts to adapt. They must choose survival or extinction. $2 bettors will not replace serious players. And your serious players are dieing or wagering somewhere else that allows them to survive as well. A poorly publicized trial at some cheap bottom claimer track for two weeks with only WPS wagers reduced 1 or 2 points will NOT prove anything but what the tracks want to believe now, that less take/no breakage will not increase churn. They have a death wish and it is coming true for them.

I would return to racing if I saw cheating trully punished rather than overlooked/encouraged, a modern flow established for wagering info that instantly updates all outlets as each wager is placed (think wall street) and my own areas, WPS reduced to 10% with no breakage. That is my opinion.

For now, I continue to play poker and a few handicapping contests where I figure to have an edge. I see no value in racing as it is today, for anyone, tracks included…