To what extent has Sazka modified its communication and marketing strategy under the new ownership and your management? Upon arriving at Sazka, you declared that the company needed to be transformed into a "market-driven business".
I stand by that statement! Under the new owner, the KKCG investment group, Sazka has made far-reaching changes in its overall communication strategy. We firmly believe that a national lottery needs to be managed in a marketing-oriented manner and that the market has potential for further growth. Compared to other lotto corporations elsewhere in Europe, Sazka is operating on a relatively small market. The first thing we changed was the visual identity, which reflects the content of the brand, in Sazka's case the notion that the brand awakens people's desire to fulfill and live their dreams. At the same time, our strategy was adapted to the Europe-wide trend that sees lotto companies provide assistance for public-benefit activities. In that regard, we mainly want to support youth sports in the Czech Republic.
You spent five years as the head of marketing with Paegas/T-Mobile and another ten years as the managing director of foreign operator firms. Sazka, however, is in a different market segment. To what extent have you been able to put your experience to work?
When Paegas merged with T-Mobile, we organized a campaign for this global brand. As soon as the project was successfully completed, I transferred to Slovakia to handle a similar task – the rebranding of Eurotel to T-Mobile Slovakia. Telecommunication firms are big brands that communicate with the widest public. The same applies to Sazka; its brand is known on a nation-wide scale, as opposed to catering to a restricted target group. Our challenge is to make the brand relevant and familiar for one-half of the population. That is what penetration – the percentage of bettors in adult population – amounts to in advanced countries, while it is only a third in the Czech Republic. A comparison of betting revenues with the Czech GDP also shows that the lottery business here is below its potential. It might be because Czech customers have not been offered a truly modern relevant national lottery. We want to demonstrate the closeness and modern nature of Sazka's games on a daily basis, and we're starting in an old-fashioned way – by showing what we look like, where and how we can be found, and what people work for us.
Sportka has a 95% share of the Czech market for number lotteries. You want to increase the revenues and customers of this "national" lottery. What marketing tools will you use to achieve this goal?
First of all, we need to be visible and have a modern and relevant image and communication strategy. That requires sizeable investments into communication and advertising. We have increased advertising expenditures by 25%, and at the same time, we are innovating our betting games. Revenues have responded to these efforts accordingly. Our actions are not centered on advertising only; we are also focusing on products per se and try to innovate them. We have launched a pan-European lottery that features a jackpot that is shared in 17 countries. This way, people can play for a jackpot with a size that could never be as high in the Czech Republic alone. We have also increased the number of our points of sale from 6,500 to 7,000, thanks to which we'll be much more visible in supermarkets, such as Penny, Coop, and Tesco, and our terminals will be at all post office branches. In the meantime, we are interconnecting our terminals with in-store cash registers. This will allow customers to pay for their lotto tickets at the cash register when leaving a store as opposed to treading to a terminal somewhere in a back corner. The same convenience will be available at every post office. In other words, we are reshaping our portfolio and communicating in a better and more focused fashion.
Any plans to implement these innovations using the new law that provides for lottery betting and casino operations via the Internet?
The final text of the new Lottery and Gambling Act has not been published. We appreciate that the regulator understands that the sector comprises lotteries and games on the one hand and hard gambling on the other. A line needs to be drawn between the two. In our opinion, this is a key factor – the government has to make a distinction between the sector's individual segments. Another aspect is ensuring that advertising regulation is not overly restrictive and that it differentiates between lotteries and gambling, such as casinos and slot machines. Yet another issue is the fact that the Internet has become a gaming space, and it should be legal to place bets online, for instance for Sportka or Eurojackpot. The regulator must make an effort to drive away illicit operators who avoid paying the lottery tax in this country.
Sportka and your other products are an example of betting relatively small amounts, where you earn profit thanks to a high number of clients. Do you want to enter a different segment, such as the previously mentioned casinos?
We are a company that operates number lotteries and odds betting, and we have to plans to change our specialization.
If you want your revenues to continue to grow in order to get closer to the Western European standard, however, innovations are a must.
Naturally, we are looking into other formats that are used elsewhere in the world and have the potential to complement our betting portfolio in the Czech Republic. Eurojackpot was introduced last year, and we now need to give it time to take off. We are also preparing other formats, such as e-tickets for Sportka and e-tickets for online betting.
What are Sazka's plans for digital communication?
When we began preparing Eurojackpot and considered ways of approaching potential customers, we received feedback from both bettors and non-bettors that this is exactly the kind of lottery they would like to play. The reasons were several, such as a big jackpot, the international dimension, and the game's global aura. What's more, Eurojackpot has brought us a high number of young customers and people who have not betted until now. I'm absolutely convinced that we would be even more successful if we could sell Eurojackpot through mobile phone transactions already now. Even the campaign was based on the notion that 35% of all expenses would target digital media and social networks. In addition, the campaign featured a different concept. An example is the Dreamwall project, where we have teamed up with our customers to generate hundreds of ideas about what to do with various amounts of money, such as what you could do if you had one, 20, or 100 million. Thanks to bettors, we receive user-generated content, which is what is so highly popular everywhere in today's social media. It's a dialogue between us, and our products, and people who have the courage to dream. We use the same approach to public relations, as testified by the highly successful launch of the World of Sazka portal. Its content is also created in collaboration with our customers and supporters. This way, Sazka transcends the boundary between marketing and PR communication.
Does that mean that you take online activities seriously?
As has been the case in other segments, I am certain that the Internet will have a significant effect on our business. Both as a playing space and as a space for interaction with customers. Digital marketing will be different. Personally, I learned the nuts and bolts of brand marketing at Procter & Gamble for which I am grateful because it was the best marketing education I could get. That being said, when I look at how dynamically digital marketing is developing – from acquisition to communication ability – it's now a completely different world from what it was at the beginning of the 1990s. That brings me to another issue: we're attracting young people who realize the digital potential of our games and who want to work for us. This way, we're becoming a highly desired employer, as opposed to a company that is stuck in its past.
Sazka is endorsed by Jaromír Jágr. What is your strategy for using prominent athletes to promote your company?
Sazka has decided that its primary strategy will not rely on sponsoring popular athletes or paying them for encouraging people to play Sportka. We want our clients to know that betting can help them make their dreams come true on the one hand and that by buying a lotto ticket, they make a contribution to youth sports on the other. That is the objective of our communication. Jágr is an exception. Besides, he endorses a particular segment of odds betting, where we believe that his involvement makes sense because 99% of bets are placed for the results of sports events. We have intentionally decided not to associate ourselves with celebrities in the case of Eurojackpot and other games because we think that doing so would be detrimental to our credibility. Sazka's advertising campaigns are more about emotions than luxury houses and expensive cars. In contrast, the Eurojackpot campaign is more about how winning makes dreams come true and sets people free from everyday worries. Sazka's new incarnation has been working together with Jaromír Jágr since the beginning. He supported us at a time when it needed to be said, "Sazka's been around for 50 years, and I believe that it will get back on its feet …," which is exactly what has happened. Jágr correctly sensed that Sazka is here to stay for another 50 years.
Author: Aleš Hudský, External Collaborator