Tuesday, January 11, 2011

Eyeballs are the Most Important Metric

I remember working back in the mid to late 1990's. A research report came across my desk on a dot com company that I had a bit of a laugh at. The stock was listed and had little chance of profit for a few years, but they were growing "eyeballs", so this analyst thought they were a buy. I telephoned a friend who is an investment banker and we shared that laugh. We both found such metrics completely false in determining profitability.

A couple years after the dot com bust happened, it turns out the metric was not a specious one, the stocks were just overbought. Eyeballs are a metric that any business needs, because when you have eyeballs, you have critical mass to make money. Just ask Google.

After several years in racing, where the braintrust has concentrated on trips to state houses for alternative gaming money, dealing with horse owner issues, raising prices or managing like bean counters looking at next weeks revenues rather than next years, it has completely missed the mark. They were not concentrating on eyeballs.

In our sport, an eyeball is a person that is betting money into our pools. We have pretty much completely ignored him or her. We have not tried to make them a better horseplayer, we have not tried to cultivate them as a paying customer, we have not tried to grow their gross number. It seems we have simply looked for ways to make them go broke faster; just like California's shocking takeout hike did in September.

Look at what one simple, forward thinking move can do in this regard: I spoke via email to a small player who had pretty much given up on our sport. He was playing in an ADW which did not give him a couple dollar break on takeout when he wagered - he might get a toaster if he bet enough, but no money back - this despite the massive economies of scale advantage the new medium was afforded. I told him he should try a new place, that each day would give him a 3% or 4% return on takeout. I said "if you bet smart, and try and churn some money, you will play for a little while and have a little more fun." It was a tiny salvo to try and save one player from leaving - to keep an eyeball.

A few weeks after he sent me the following via email:

I registered for the account and I must say I am impressed. All they need now is free video and programs. I like the smaller tracks like Monticello and Northville... I even tried a place ticket on a 3-1 greyhound...... best yet.... I started with 100........ betting frivolously and stupid, I blew it all... but the next day I had 23 dollars in my account.... and then last night.... I got the 23 all the way back up to 100 and then blew it all again ... but anyway I managed to bet about $700.... So now they throw $35 back in my account................ I'm back to the slow grind.

I have not spoken to him lately, so I do not know if he has stuck with it. However, this small, tiny player, ready to give up, instead sounds energized about racing. Not to mention, he contributed hundreds of dollars for purses.

Think about the difference of what California has done. They have not given that player back a couple dollars to replay, or to feel energized about racing, they simply tried to squeeze a dry lemon for the last few dollars in his pocket. And the results bear this out: This takeout hike has been an abysmal failure.

What can racing do if we start thinking about one thing only, and did it for say two years: Drive eyeballs. A customer that stays in racing can be an eyeball which can be cultivated and can contribute to our sport in dozens of ways for years. A customer who leaves racing is a lost eyeball who never comes back.

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