The Death of Television Advertising?

By Byron La Fleur

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1953 was the year advertising changed forever. For the first time, more advertising funds were spent on television than both radio and print—44% of Americans owned televisions. This is remarkable because there were only 7,000 televisions in the country in 1948. It took just 12 years from TV’s creation for it to usurp the advertising throne from radio. Fast forward to present day. The internet has been widely available for 25 years, and digital media marketing dollars are projected to reach $82 billion compared to TV’s $72.7 billion, according to a study by eMarketer. This has caused some marketers to theorize that digital advertising will be the death of traditional media. How is the lottery industry responding?

Digital Advertising

Digital marketing is defined as any advertising appearing on the internet. However, not all digital advertising is equal. A banner ad will not drive the same results as the interactive “Ice Bucket Challenge,” which raised $220 million for amyotrophic lateral sclerosis (ALS) research. Like a good TV ad, an online campaign doesn’t just show the product; it elicits an emotion and ties it to the product. A digital campaign doesn’t just show the product and elicit an emotion; it also begins a conversation. To start a strong dialogue with their customers, companies must show that they are personalizing content for their users and listening.

“Digital media can be specific and personalized. When planning, purchasing, and placing digital media you can target individuals based on websites they visit, companies they like or follow on Facebook, and actions they take (such as an abandoned shopping cart or incomplete registration),” New Hampshire Lottery Marketing Director Maura McCann stressed.

The second key element of digital advertising is being able to track the success of the campaign in real time. By reviewing traffic, conversion rates, engagement, impressions—or any of the other plethora of options—companies (and their ad agencies) can make sure that campaigns produce results. “Digital advertising is essential to the marketing mix since it has become a central part of people’s lives,” Texas Lottery Executive Director Gary Grief said. “The one thing that digital media provides us over traditional forms is the access to more precise and robust performance metrics to evaluate campaign performance.”

McCann agreed: “Digital media is more easily measurable as compared to traditional media. So not only can you target a particular audience, but you can also track their behavior through the purchase process to see if your digital advertising resulted in an increase in sales. This allows for highly accurate ROI calculations, something that is very important to the modern marketer.”

The last element to digital advertising is actionable ads. “Customers can click on ads and are immediately able to register with Michigan Lottery’s site or take advantage of an offer in a seamless experience. This allows for a better customer experience, resulting in less drop off,” Jeffrey Holyfield, Director of Public Relations, Michigan Lottery explained.

The Arizona Lottery is quickly becoming a pioneer in digital advertising for the lottery industry. They have recognized how critical a strong digital presence is. That is why in FY17, the Arizona Lottery increased digital marketing budget to $2.1 million, a 150% increase from FY16 when they spent $845,000 (La Fleur’s 2017 World Lottery Almanac). It now represents 31.4% of their media spend (combined TV, radio, print and internet). Over the past few months, the new focus on digital marketing has resulted in some interesting campaigns that utilize the key elements discussed above.

First and foremost, the bedrock is metrics. Every month the Arizona Lottery has a meeting on metrics where staff analyze data from traditional and digital campaigns to see how everything is working. After spending an hour with their ad agency going over metrics, they then determine how much they’re going to spend on new campaigns and who they are going to target. “From looking at these types of metrics, we have shifted who our targets are depending on the ticket that we launch. A lower price ticket is going to have a different demographic than a ticket that is $10 or more,” Chris Rogers, Director, Product & Marketing at Arizona Lottery, said.

“We are also developing targeted strategies based on a geographic analysis of player concentration. We have a database of more than 400,000 records of second-chance players. Using those addresses, we created heat maps of our various markets in Central, Southern and Northern Arizona, to develop integrated marketing plans to support significant ticket launches. We’re using data points from player-submitted data, but we’re also looking at campaign performance to fine tune our approach” Rogers explained.

However, they also focused on communication. In one campaign, Arizona Lottery bought back their old mascot Windfall Willie, who was retired in 2014. In the early stages of the campaign, they released a teaser TV spot of a mysterious man being awoken, asking the audience to “Guess Who’s Back”. In February 2017, the campaign continued when mysterious pick axes were erected in in Tucson and Phoenix. Next to each pick axe was a sign with the #GuessWhosBackAZ. People were asked to take pictures besides the pickaxes, to share them, and then vote on them on the microsite guesswhosbackaz.com. The person whose picture got the most likes won $1,000. “When we think about promotions, we think about ways we can give away money to further demonstrate winner visibility. This is a proven way to show we have robust games that feature vast prize pools,” Rogers said.

The Windfall Willie campaign clearly began a dialogue with its players. The hashtag campaign was successful because it was a two way street between brand and consumer, not simply broadcasting a message. The players were asked to participate and they did.

The Arizona Lottery isn’t ending the conversation with this campaign. The 2017 version of Windfall Willie is an actual person—no bobblehead, unlike previous iterations of the mascot. “Windfall Willie is kind of like that crazy uncle everyone has. The actor we ended up selecting has a quirkiness to him that really brings Willie to life, and he’s likable at the same time,” Rogers said. “We brought Willie back because he’s a vehicle to connect more with our players, whether that is on social media or in a retail environment, Windfall Willie gives us that ability.”

Rather than talking with a company, players should feel like they are talking to someone they know and be more comfortable maintaining a conversation with the Arizona Lottery. “Bringing him back in this more modernized way helps humanize the Arizona Lottery brand a little bit more than we ever have before,” Nikki O’Shea, Communications Specialist at the Arizona Lottery, said. “From a social perspective, we can directly engage with our players, asking them questions and getting direct responses that make them feel like they’re having a conversation with a brand that they really enjoy.”

The Arizona Lottery’s humanizing effort transcends the Windfall Willie campaign and includes another social campaign. In January 2017, the Arizona Lottery asked Arizona-based artists to submit their designs for a Día de los Muertos contest. The winning artwork will be featured on a Día de los Muertos scratch ticket to be launched in September 2017.

“We have never done anything like this before so we didn’t have a baseline to go off of, but I believe the exact number was 40 [submissions]. We were pleasantly surprised with that number and as far as content goes, we saw a lot of impressive artwork from artists that are really well-known in the Arizona art community,” O’Shea said.

The hope is that lottery art by native Arizonans will create a strong connection. “I hope the ticket is successful; I hope it sells. More importantly, I hope it shifts affinity. We want players to know that the lottery is part of the Arizona community and we are interested in engaging with that community,” Rogers said.

While Arizona Lottery’s recent efforts have led the way, many other U.S. lotteries have increased their ad budgets for digital marketing. According to La Fleur’s 2017 World Lottery Almanac, the U.S. lottery industry will allocate 17.1% of its overall media spend on digital marketing in fiscal 2017. For reference, TV was allocated 57.1% of the FY17 ad budget, followed by radio at 22.8% and print at 2.9%. Five years ago in FY13, digital media spend represented just 9.7% of the total industry ad budget. It is also noteworthy that from FY13 to FY17, digital media was the only category to increase its percentage of overall spend on advertising (total U.S. lottery industry’s advertising expenditures), while TV, radio and print all declined. However, 17.1% is still comparatively small, and many lotteries’ advertising budgets allocate less than 10% for digital marketing. In a recent survey done by eConsultancy Digital Report, the average marketing spend on digital in 2017 will be 38.4% (based on a survey of 310 companies).

TV overwhelmingly still represents 57.1% of media spend industry wide. However, the gap between television and digital is shrinking for more and more state lotteries. Texas Lottery, for instance, spends $4.5 million on TV and $4.52 million on digital marketing. “Digital advertising is essential to the marketing mix since it has become a central part of people’s lives,” Grief said. “Consumer preferences drive sizable shifts towards non-linear mediums like social media and cross-channel streaming video. Digital has been essential to the Texas Lottery, as we follow the consumption habits and preferences of our audience.

This trend will likely continue as social media becomes more and more ingrained into our society. “Every year we go through our rigorous ad planning process in which we reevaluate shifts in consumer behavior and market trends. This has informed our YOY increases in digital as well as experiential spending and we believe that there is further growth ahead for our digital presence as the vehicles to reach consumers continue to expand,” added Grief.

The biggest boon to digital advertising, however, would be more lotteries being able to sell online. Three lotteries (Michigan, Georgia and Kentucky) currently sell lottery products online, and multiple states saw legislation this year that would allow them to sell online. Business that sell offline and online see a more healthy mix of marketing investment because there are more actions consumers can take when interacting with an online ad. For instance, a lottery that can sell online can promote a large jackpot in an ad, and if clicked on, can immediately take the potential player to a cart to purchase.

“The ability to buy products online was introduced to players at the end of FY14. This new ability to offer our products to customers online and drive incremental revenue through digital interactions presents an enormous growth opportunity for the Lottery, a traditionally offline industry. Accordingly, the Michigan Lottery increased its digital media advertising, which supports both traditional and online sales,” Holyfield said.

Is TV going away any time soon? No. “Over the next few years the percentage invested in digital media may increase; however, traditional media will continue to make up a significant portion of the Lottery media budget for two reasons. The first is that traditional media continues to be a trusted vehicle for communicating lottery information to consumers, whether that be through jackpot amounts on billboards or new ticket and game announcements via TV and radio. Second, traditional channels are far more costly than digital and as a result require a considerable investment to be effective,” said New Hampshire’s McCann.

It would be rash to predict TV’s death from a historical standpoint. Consider that in the ‘50s, people must have also thought that radio was on the way out with the advent of television. Yet, here we are today and radio is still an essential element of the marketing budget. “All media types are important as they each have a role to play in achieving a campaign’s objectives,” emphasized Grief

TV will not be abandoned, but it will be replaced as the lion’s share of the marketing budget. Yesterday, marketing campaigns were focused on TV, and relied on radio and print ads for campaign support. Today, the world’s largest companies are recalibrating their marketing plans by putting digital marketing at the forefront of their campaigns, and using TV, radio and even print as auxiliary support.

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