Sportradar, a global sports technology company that creates immersive experiences for sports fans and bettors, recently released a whitepaper that addresses one of the most important and timely challenges facing the betting industry. The study “How to Control Customer Acquisition Costs in Sports Betting” presents the CPA (acquisition cost) x LTV (life cycle) relationship and provides a series of guidelines for operators to reduce the acquisition cost and boost the cycle of customers' lives for a more profitable operation.
“The higher the CPA, the higher the LTV will have to be,” explains Rodrigo Cambiaghi, LATAM ad sales director at Sportradar. These metrics, according to the executive, are intrinsically linked and that is why the subject is addressed in the whitepaper.
The document was prepared from the company's experience in more than 20 years of operation in the world market. Below are the main excerpts from the interview.
GMB – The company recently released a whitepaper on how to control customer acquisition costs in sports betting. How did this idea come about at Sportradar to deal with this very important topic?
Rodrigo Cambiaghi - Sportradar is a company with over 20 years of experience and over 900 customers worldwide. Today, we have more than 100 active acquisition campaigns for different brands of different sizes around the world. So, this whitepaper is nothing more than a compilation of a lot of learnings and insights that we've been working on very closely with these customers.
It is an in-depth, 32-page study on the topic. How long did it take to develop and what was the process like?
This work compiles more than three years of data that we are operating on our ads and acquisition front. We compiled all of this, gathered the experts of our team to produce this material.
Who do you think should not miss the opportunity to download this whitepaper and understand it very well?
This is a whitepaper that was produced for anyone working in the field of acquisition marketing, but it also contains a lot of strategic information on how to set a marketing budget and acquisition cost cap. This is important for decision makers, C Level staff and the board. And also for those interested in the betting market, which is growing a lot and where many opportunities are emerging.
Does this group include football clubs, which are heavily sponsored by bookmakers, as well as sports entities of other modalities?
Certainly. We see that most football clubs partner with bookmakers and [the whitepaper helps] clubs understand how our market works and what is important for them to highlight. Thus, we were able to create healthier and more sustainable partnerships to grow together.
To give a broader view to those interested in obtaining the whitepaper, how would you explain what customer acquisition really means?
When we talk about acquisition, in the most practical term of our industry, we talk about FTD, a metric called “first time deposit”. Most bookmakers have this as their main acquisition KPI. But that's just the tip of the iceberg. In order to have a sustainable acquisition cost, it is important to understand the context in which this acquisition cost is. Therefore, it is important to understand other metrics, such as “life time value” and create more complex attribution models.
Are the customer acquisition costs, today, in Brazil, high or are they within the average compared to the world market?
A lot will depend on the size of the operator and what their ecosystem, marketing and platform are like. When we look at the acquisition cost in Brazil, compared to Europe, where the market is already more mature and is not growing as fast as in the Brazilian market, we can consider the acquisition costs to be cheaper in Brazil.
What are the key differences between customer acquisition and lifecycle value? There is a balance between these concepts...
I'll try to simplify it in a very easy way for everyone to understand. When we talk about CPA (cost of acquisition), it is a metric linked to new customers. They are those who enter our platform making the first deposit, which is the FTD. How much does it cost to bring in this new user? This not only includes the cost of the campaign, but also the bonus to be offered, the cost of operating the platform. All this is important to compose the acquisition cost.
Sponsorship too?
Sponsorship too. And when we're talking about life-time value (LTV), which is another metric, we're talking about retention. So, it's a metric that generates profit. How much profit does this customer generate for us over the lifecycle they will be with us? So, think that CPA is what generates cost and LTV is what generates profit. So, if your CPA is much higher than your LTV, you will take a loss on the trade. Your trade will not close the account. So the higher the CPA, the higher your LTV has to be and you have to match these metrics every time. That's why they are intrinsically linked and that's why we talk about them a lot in the whitepaper.
So, what are the main strategies that the operator should consider to seek to reduce acquisition costs and increase the final result of its operation?
I like to say some. One that I really like and talk about a lot with my clients is changing the attribution model. From the last click model, where we consider only the last click as responsible for the conversion, to the multi touch model, which is the most widely used model in the industry – and not only in betting, but also in other industries that work with online acquisition. It is being able to look at the entire consumer journey and the conversion funnel in a more complete way, in which it is possible to assign different weights to the different means of acquisition. It's like I usually say: we don't make a decision just in a Google search or just in a banner we click on. The conversion process is much broader and more complex, so we should look at this metric in a broader way. Another point I like to look at is to create an acquisition ecosystem. The more we diversify the means, the more interesting, easier, more beneficial and cheaper for the operator to convert new customers to their platform.
There is a fundamental role in the segment that are affiliates. How do they enter this process?
The affiliate is of utmost importance to our industry. We know that it is a backbone for many operators around the world, will continue to be and will never cease to exist. But what I always point out to my clients is that you can't just depend on your affiliate for you to grow. We realized in practice and observing the campaigns of the operators we work with that those who more diversify their media investment and do not depend only on the affiliates, have cheaper acquisition costs than the operators that depend only on the affiliate. The more means he has, the more complex the acquisition funnel and the more touch points he has with the customer, the cheaper the conversion. This even helps the affiliate to convert more customers who pass through their properties.
Are there any factors that influence the acquisition cost? Are they the same in all markets? How can the operator, in Brazil and Latin America, address this issue of understanding acquisition costs well?
In general, yes, they are similar factors that influence acquisition costs anywhere in the world. I'll give you an example. In the market in Brazil, the United States and in some African countries, where sports betting is still a novelty and a market that is growing a lot, operators are able to grow without having to “steal” the customer from the competition. So it is possible to grow by educating new users. When we talk about the European market or Mexico, which are more mature, the growth rate is a little lower, so in order to grow, you need to “steal” the customer from the competition. I often joke with my clients that, at the moment we are in Brazil, there is no need to fight between operators. There is a market for everyone to grow now.
Since you mentioned Brazil, how does Sportradar currently position itself in the Brazilian market and how has its growth been locally?
The growth has been very interesting in the region. We have invested a lot and we are in very close contact with the main operators, both Brazilians and foreigners who operate in Brazil. The relationship has been very good, we see a very promising market and we bet a lot here.
And with everyone waiting for regulation!
Everyone waiting for regulation.
A copy of Sportradar’s Whitepaper ‘How to Control Acquisition Costs in Sports Betting’ (available in Portuguese, English and Spanish) can be downloaded here.
Source: Exclusive GMB
