Every marketer strives to gain customers and increase their profits while minimising budget expenditures. Affiliate marketers working on the promotion of iGaming products understand well the difference between spending money on attracting fleeting customers and getting loyal players willing to stay with the promoted platform for a long time.
Given how competitive the iGaming affiliate marketing is, Lifetime Value (LTV) is an important metric that shows how much value your referred customer brings to the company over their lifecycle. After reading this article, you will learn what customer lifetime value is, how LTV marketing for iGaming works and how to boost this metric to increase your profit.
When working with iGaming offers, it is necessary to constantly monitor campaigns, measuring various metrics to understand how effectively they work. LTV (or CLV – Customer Lifetime Value) is one of the most important metrics for long-term growth, helping you not only to understand how much revenue you can expect from a referred player but also to determine the strategy of interaction with visitors and existing users.
So, let's start with the LTV definition. In the language of marketers, the lifetime value of a customer is the total revenue brought by the user referred to the promoted platform for the entire period of his/her participation in the game. A vital metric for iGaming affiliates, it helps evaluate the profitability of marketing expenditures as well as the effectiveness of customer retention.
While some players spend a few hours or days on gambling/betting sites, others remain loyal to their choice for years. The higher the LTV, the longer players linger on the promoted platform, indicating that it is of high quality as well as offering favourable promotions. By tracking and analysing this metric, you will find strategies and channels to communicate with your target audience to ensure loyal users, thus making a sound marketing investment.
According to Forbes research, the probability that you will be able to sell a product or service to a new user is about 5-20%, depending on the field you work in. As for existing customers, the probability of their retention is 5-6 times higher. It turns out that it is more profitable for you to bring users to the iGaming platform capable of becoming loyal players than to drive large volumes of traffic not interested in online gambling and sports betting.
You can calculate CLV using a simple formula: multiply the average revenue per player by their average lifetime on the promoted platform. However, many marketers use a more complex formula that takes into account the cost of user acquisition and retention.
iGaming marketers also consider important things like betting frequency, average deposit amount and churn rate. For example, if the average deposit amount per month for a player staying on the iGaming platform for 1 year is $100, it is easy to calculate that LTV will be $1,200. However, if the cost of acquisition and retention was $200, the CLV would be around $1,000 or even lower. By using this metric to evaluate the effectiveness of your investment, you can adjust your marketing strategies more accurately.
LTV is an important metric for both affiliate marketers and iGaming platform operators. However, it is even more crucial to understand what factors influence LTV. Below, you will find things that affect the lifetime value of customers brought to promoted gambling/betting platforms.
Would you like to know how much profit players make on average for a certain period on the platform, for example, for 1 month? ARPU, which is used to evaluate the success of your overall marketing strategy as well as individual campaigns, will help you with this.
To better understand ARPU, let's look at an example. Let's say an iGaming platform with 2,000 active users generates $100,000 in revenue per month. This means that the average revenue per user per month is $50. Accounting for ARPU, the CLV formula is the product of the average conversion value, the average number of conversions for a certain period and the average time a player is active on the platform.
Perhaps one of the most frustrating things for marketers is a high churn rate for a campaign. This metric also affects CLV in sports betting or gambling. The lower the churn rate, the more likely you are to get a higher LTV.
To reduce churn rates, operators offer bonuses designed for both new and returning players and also analyse feedback. Reducing churn by as little as 5% can have a significant impact on CLV as each remaining player will continue to generate revenue for the operator.
Let's say you brought a player to the promoted platform. After reviewing the game library, they decided to go to a competitor without even registering. Such a player has no value for the operator with whom you cooperate as a marketer. This example clearly shows how important player activity and engagement are.
It is not enough to offer a deposit bonus or free spins to encourage users to play actively. Experienced iGaming operators utilise loyalty schemes with comp points, exclusive rewards and cashback. They also run competitive events with leaderboards and use gamification tools to keep existing users engaged.
According to Statista, the total number of online gambling enthusiasts in the world will be around 300 million in 2029. While this is still an impressive figure, it doesn't take into account lottery and sports betting enthusiasts. However, according to the LTV marketing concept, you don't just need to attract players to the platform, you need to retain them for the long term. Below, you will find strategies with which you can increase the LTV (lifetime value) of brought players and your profit.
Today's players are becoming more and more demanding of what they are offered. They appreciate the unique experience provided by personalised promotions and loyalty schemes. Below are the most popular marketing techniques to increase the LTV of iGaming users:
· First deposit bonuses for new players.
· Tournaments and bonuses on more complex games such as live dealers.
· VIP programs to reward those who spend a lot of time on the platform.
All these offers, designed with the players' interests and preferences in mind, incentivise them to return to the iGaming platform again and again.
There are thousands of iGaming platforms in the world that differ in terms of convenience, game variety, bonus offers, winnings payout speed and other features. If your promoted site or app is not to your potential client's liking, they will go to your competitor without hesitation. Therefore, to retain players, you first need to provide a smooth user experience.
Good iGaming operators invest in improving interfaces and platform compatibility with popular devices as they realise how important it is to increase CLV. From registration and the variety of payment methods available, to live dealers, eSports betting and tournaments that diversify players' leisure time, every aspect matters.
Would you rather not waste your marketing budget on players who don't bring value to the platform and don't generate revenue for you? Using LTV, you can optimise your marketing efforts to get the best return on investment (ROI).
While the high LTV players are of most interest to you in terms of revenue, there are also dormant users and casuals just burning through your marketing spend. When designing your campaigns, you should segment your audience and focus your resources on the most profitable ones. The table below clearly demonstrates the main segments of iGaming users and approaches to budgeting marketing efforts.
iGaming is a unique sector due to several factors including legal peculiarities, unpredictable user behaviour, difficulties with real-time data processing and user retention. So, measuring LTV correctly can be a challenge, especially for novice marketers. Below, you will find the key challenges in measuring this metric:
· You must have access to accurate and up-to-date data as player preferences can change literally in the blink of an eye.
· High turnover when players spend only a short time on the platform thus making it difficult to predict customer value.
· High probability of error in data on key player characteristics, such as their average income level.
If you make serious errors in customer lifetime value calculations, you risk spending significant marketing budgets on groups of players that are not really generating substantial revenue for the operator.
Thanks to the development of AI, today you have access to a variety of automated data analysis tools that can process large streams of information and detect anomalous activity. These tools use algorithms capable of learning from current and historical data to predict player behaviour.
In iGaming, trends replace others almost instantly. For example, a game that attracted a large number of users yesterday may lose its audience tomorrow due to a new release or other factors. To get accurate information and make correct predictions, you need to use AI-based tools that take into account the age, preferences, level of engagement, financial capabilities and other characteristics of different groups of players.
The more accurate data - including LTV - you get about your campaigns, the more opportunities you have to fine-tune them. Since competition among affiliate marketers in iGaming is extremely high, you should invest in quality analytical tools to adjust to trends and maintain the interest of users, thus keeping their loyalty and increasing your revenue accordingly.
Analysing LTV and other metrics is becoming an increasingly complex and multi-layered task. However, artificial intelligence and machine learning used for computer models can provide a significant competitive advantage for marketers looking to keep up with the times.
Real-time monitoring of players today can pick up on any behavioural changes in players and react to them instantly. For example, on noticing that a player is showing interest in a particular sport or slot, the system will offer him a bonus that will remove last-minute doubts.
Given the growth of the AI sector, analytical tools will soon be available to almost every marketer. So, using AI-based monitoring and analysis solutions will become a necessity for anyone who wants to keep the loyalty of referred players for the long term.
According to Robin Recovery, the average attention span of a consumer has dropped from 12 seconds in the 2000s to 8 seconds today. The short attention span of potential customers and the incredible level of competition in iGaming are factors hindering the success of many marketers. Therefore, analysing and managing such an important metric as LTV is the key to success today, as it allows not only to measure the value of a particular player but also to understand which marketing efforts will pay off and which will not.
Most gamblers and bettors come to platforms through marketing channels. Using this metric, marketers can measure the real value of a player thereby determining how cost-effective the investment in attracting and retaining them is.
According to the simple LTV formula, you need to multiply the average revenue of a referred customer by their average lifetime activity.
Customers of iGaming platforms show more unpredictable and unstable behaviour in contrast to, e.g., customers of online shops. Therefore, marketers have to use more accurate analysis and forecasting tools to avoid unfortunate mistakes.
Use a customer segmentation method to ultimately focus your marketing efforts on the groups with the highest value.
Instead of investing more money in developing creatives, you can improve the interface and navigation of the platform, expand the game library and add other features that improve the user experience.
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