changing wheels of fortune building a new player base

Changing Wheels of Fortune Building a New Player Base

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Measuring Change

Our investment in monitoring trends

ILR Jack Poll• Over 1,000 consumers

every month• Over 5,000 lottery players

surveyed this year alone

1,200+ Joes

4,000+ Jacks

Qualitative Research

Retailerin-depth

interviews

In-store observations / ethnography

Focus groups

25 ILR Jack Update Newsletters since October 2005

ILR Media Slide

Published more than 20 articles of actionable data for the industry

Interviewed for numerous national and local newspapers,

radio & TV stations

http://www.npr.org/

http://www.npr.org/

http://www.npr.org/

What’s Up With Joe and Jack?

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Playerbase• ILR developed the Joe and Jack classification to bring greater clarity to the definition of a

“Lottery Player” for the Industry

The question is, how do we get more Jacks to

play?

Plays 5 Times As Often As Jack

JackJoe

Spends Roughly The Sameas Joe When He Does Play

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Playerbase

Joes (22%)Jacks (78%)

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Playerbase

Joes; 14%

Jacks; 50%

Never Played;

33%

Percent of All Consumers (age 18+) in Lottery States

• In a hypothetical large population state, getting just 5% of Jacks to play Mega Millions or

Powerball at $5 a week (average spend) could generate an additional $90M in sales each year while getting 5% of Joes to spend $5 more a week only generates an additional $27M

Growth Potential

$5 More Per Joe

$5 More Per Jack

Contribution to Sales if 5% of Group Played $5 More on Multistate Games Per Week

$90M

$27M

$0M $20M $40M $60M $80M $100M

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The Impact of the Recession on Joe and Jack

Household Financial Situation Worse than Last Year

Sep '07

Oct Nov Dec Jan '08

Feb Mar Apr May

Jun Jul Aug Sep Oct Nov Dec Jan '09

Feb Mar Apr May

Jun Jul Aug Sep

33%32%

37%35%35%

38%37%

41%

49%

45%

42%

47%46%

51%

61%

56%

52%

58%59%

56%54%

55%57%

55%56%

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Trend Over Last 3 Decades• Last major recession in the U.S. in the late 70’s

– Gas lines– 17% interest rates

Jan '77 Oct '78 Jul '80 Apr '82 Jan '84 Oct '85 Jul '87 Apr '89 Jan '91 Oct '92 Jul '94 Apr '96 Jan '98 Oct '99 Jul '01 Apr '03 Jan '05 Oct '06 Jul '080

10

20

30

40

50

60

70

80

Easier Harder Same

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Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q2090%

10%

20%

30%

40%

50%

60%

22%24%

15%

22% 23% 23% 23%

30%

27%29%

45%

53%

21%

18% 18%20% 21%

23%

26% 26%

30%

35%

43%45%

15%

18% 17% 16%

21%23%

21%

27%25%

29%

37% 36%

Income Decreased in Past Year

Joes Jacks Never Played

Income Levels

*Not asked in Q206 12

Reported Frequency of Lottery Play is Down from Last Year

Play Once a Week or More

17%20%

11%

How Often Do You Play the Lottery?100% = Ever Played

2007 2008 2009

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One Third Are Playing Less, but 8% Playing More in Recession

Playing More8%

Playing Same61%

Playing Less31%

Lottery Play Currently vs. a Year Ago(100% = Ever played lottery)

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It’s Not Just The Economy, Stupid

Harder to Pay Bills Cutting Back on Standard of Living

Have Less Than Enough to Live Comfortably

69%75%

55%57% 57%

39%

72% 75%

55%

Playing More Playing Same Playing Less

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The Optimism Gap

Better Worse0%

10%

20%

30%

40%

50%

60%

51%

22%

Playing More

Expect Household Finances Next Year to be Better / Worse

Better Worse

-10%

0%

10%

20%

30%

40%

50%

60%

40%

32%

Playing Less

29%

8%16

Those Playing More Skew Younger

18-24 25-34 35-49 50-64 65+

21%

14%10%

6%3%

50%55%

59%64% 64%

30% 31% 31% 30%33%

Past-Year Change in Lottery Play by Age Group

Playing More Playing Same Playing Less

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The Next Generation

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So What Do We Know About Younger Generations and What the Future Holds?

By 2010 Gen Y will outnumber

Baby Boomers….96% of them have

joined a social network

By 2010 Gen Y will outnumber

Baby Boomers….96% of them have

joined a social networking site

Generation Y and Z consider e-mail

passé…

Generation Y and Milennials consider email

passé…

How many years does it take to reach

50 million users?Radio (38 Years)

TV (13 Years)Internet (4 Years)

iPod (3 Years)Facebook 100M users (>9 months)

iPhone apps: 1B downloads(9 months)

Newspaper circulation is down

7 million, while unique readers

online are up 30 million

How many years does it take to reach

50 million users?

Newspaper circulation is

down 7 million, while unique

readers online are up 30

million

More than1.5 million pieces

of content areshared on

Facebook…daily

More than1.5 million pieces of

content areshared on

Facebook…daily

More video was uploaded to

YouTube in the last 2 months than if

ABC, CBS and NBC had been airing

content 24/7/365 since 1948

More video was uploaded to YouTube in the last 2 months than if ABC, CBS and NBC had been airing

content 24/7/365 since 1948

Americans have access to

• 1 Trillion web pages• 65,000 iPhone Apps• 10,500 radio stations• 5,500 magazines• 200+ cable stations

Joes Jacks Never Played

7%

39%

54%

14%

46%

40%

15%

53%

32%

17%

51%

32%

12%

42%45%

18-24 25-34 35-49 50-64 65+

Joes and Jacks by Age Group

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Different Prizes Appeal to Younger Players

New or Used Car Furniture Major Appliance Computer

40%

37%

22%

25%

33%

29%

17%

20%

28%

23%

14%

17%

22%

16%

11%

15%13%

10%8%

5%

Major Purchases Considered by Age Group

18-24 25-34 35-49 50-64 65+

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22Young Adults 18-34 Older Adults 35 +

Instant Tickets Preferred by Age(Source: Oklahoma Lottery Game Plan Studies)

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Different Media are Relevant to Younger Players

Any Social Network Site Facebook MySpace

54%

42%

32%

56%

44%

30%

37%

30%

14%

22%

16%

6%

16%

11%

2%

Active in Social Network Sites by Age Group

18-24 25-34 35-49 50-64 65+

The “Millennial Generation” is Satisfied with Less Income

Median Household Income (thousands)

Age 18-27$26,900

Age 28+$52,000

Have enough income to live comfortably

Age 18-2753%

Age 28+54%

SOURCE: National Poll, April 2009 (N =1,000) and Millennials Survey, April 2009 (N = 400)24

“Millennials” Place Greater Value on Corporate Responsibility

Age 18-2779%

Age 28+64%

Extremely or Very Important to Work for a Socially Responsible Company


“Millennials” Feel Less Affected by Financial Crisis

Hurt by Current Financial Crisis Have Money Invested in Stock Market

Age 18-2738%

Age 18-2722%

Age 28+49%

Age 28+44%


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As a Result…It’s Beginning to Look a Lot Like Christmas

Under 35 35 - 54 55+0%

5%

10%

15%

20%

25%

30%27%

23%

15%

Plan to Buy Lottery Tickets As Gifts This Christmas

Family

Friend

Coworker

0%10%

20%30%

40%50%

60%70%

80%90%

100%

74%

31%

26%

70%

24%

20%

87%

29%

12%

Giving to…

55+ 35 - 54 Under 35% Yes

Making Research Actionable: What Does This All Mean for Lottery Brands?

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Is Your Brand Relevant to aNew Generation of Players?

Is it even understood?

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Younger Consumers Are Brand Conscious• Despite their willingness to get by on less, brands do make a difference… for the young

as well as the older consumers.

SOURCE: LJS / Retailing Today Annual Top Brands Study

2008 Top Brands StudyUnder 35 35 – 54 55+

Have a Brand Preference…(Average across 14 key merchandise categories) 69% 68% 64%

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But Some Brands Do a Better JobWith Younger Consumers

Beverages (89%)*Under

35 35-54 55+

Coke 24 34 29

Pepsi 10 17 25

Juicy Juice 13 2 --

Sprite 7 1 1

HABA (89%)*Under

35 35-54 55+

Dove 15 7 7

Revlon 10 -- 3

Crest 2 11 6

Colgate 2 4 12

Suave 7 18 8

Candy (80%)*Under

35 35-54 55+

Snickers 33 14 3

Hershey 23 24 38

M&M 22 28 16

Skittles 11 6 --

Cameras (80%)*Under

35 35-54 55+

Kodak 29 30 48

Canon 18 11 6

Sony 28 18 4

Men’s Apparel (59%)*Under

35 35-54 55+

Hanes 22 35 17

Levis 9 18 16

Wrangler 15 6 8

Nike 15 -- 1

Women’s Apparel (43%)*Under

35 35-54 55+

Hanes 25 17 8

Levis 6 20 5

Victoria’s Secret 11 3 2

Nike 10 3 --

* ( ) Percent with any brand preference

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Measuring Lottery Brand Strength - PRODUCT

• All brands must deliver on product benefits. For lotteries…– Instant/online/multi-state

– Games that I like to play

– Games are fun to play (not dull or boring)

– Games are easy to play

– Available where I want them

– Money put to good use

– Supports our schools

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Are We Delivering?

Under 35 35-54 55+0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

29%

39%

32%

42%

33%

25%

Lottery Games Are Fun To Play…*(Top 3 Box Rating)

2008 2009*Based on a 9 point scale with 9 being “agree completely” and 1 “disagree completely.”

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Measuring Brand Strength - PERSONA

• Brands must also have a persona or “style” that resonates with consumers…

– Someone like me

– Outgoing

– Funny

– Spirited

– Caring

– Smart

– Friendly

–Modern

• Does your brand persona have a distinct character?

• Consumers, (particularly younger consumers) like to do business with brands that share similar traits and values.

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Do Consumers “Like” the Persona We Project?

Under 35 35-54 55+0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

34%32%

26%

42%38%

30%

I Like The Lottery In My State*(Top 3 Box Rating)

2008 2009*Based on a 9 point scale with 9 being “agree completely” and 1 “disagree completely.”

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Measuring Brand Strength – SPACE/PLACE

– Your State?

– Local Neighborhood?

– School?

– The Future (Your Future)?

– Virtual?

All lotteries are “local” brands in space / place and that connection is vital to our brand promise.

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Space / Place - Example

More than 1 in 3 are off-track –and this is even true for Joe, our core player.

2009

Correct Responses (State Specific) 63%

Incorrect Response 17%

Don’t know 20%37%

Do You Know How Lottery Proceeds are Used in Your State?

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Is the Situation Improving?For Younger Consumers, it May Be.

Top 3 Box Agreement Under 35 35 – 54 55+

2008 2009 2008 2009 2008 2009

Money Goes to Good Use in My State

Lottery Takes Advantage of People

24% 43% 37% 29% 26% 34%

24% 37% 40% 42% 45% 52%

IMPLICATIONS

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Observations and Implications

The bulk of our sales and profits come from a small group of Joes who have been hit hard by the economy

Observation Implications

Focus efforts beyond core players, especially during these times. Try to engage Jacks and new players who are open to our messages.

Getting just 5% of Jacks to play more generates three times as much as getting 5% Joes.

• Are our products and messaging “Joe-centric”?

• What does Jack think about us today?

• What do we WANT him to think about us?

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Roughly 1 in 10 adults are actually playing the lottery MORE in this recession. Initial observations suggest that they are:• Younger• More optimistic


Young adults are THE primary opportunity for lotteries, especially in this economy. Older players have less disposable income and are cutting back even more.

Have you thought about how our product, persona and place resonate with these younger players?

Are we where they are with the kinds of games, prizes and messages they are looking for and trust?

Do they even notice us?

Do they believe we share their values?

It’s not enough to just be on Facebook

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Most young adults we talked with were introduced to the lottery through a family member.

Holiday is the one time families come together to play the lottery.

This level of intergenerational gift giving and young adult purchasing happens only once a year.


What is our holiday strategy?

It must go beyond developing a few “cool” tickets for the younger folks.

How do we try to reach younger adults and tap into the strong emotions surrounding our brands during this crucial time?

How can we use holiday as an opportunity to capture their interest in us and consider us throughout the rest of the year?

Change is Inevitable – and Already Happening

“All things must change

to something new, something strange."

- Henry Wadsworth Longfellow

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changing wheels of fortune building a new player base

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