Lottery Monitor Conference

Copy of the speech given on 3rd July 2002 by Dianne Thompson, Chief Executive of Camelot plc, at the Lottery Monitor Annual Conference, responding to the DCMS lottery licensing review

Good morning ladies and gentlemen.

I would like to start off by giving you some statistics.

After eight years, The National Lottery is still the most successful consumer brand in the UK. Around 60% of the adult population play the lottery on a regular basis, spending about £85 million every week. That’s more than we collectively spend on Coca Cola, Walker crisps or any other successful brand you can think of.

The enormous popularity of the lottery – more people play it every week than voted at the last general election – means that to date we have been able to raise over £11.4 billion for the Good Causes, and a further £4.4 billion for the Government in tax.  Over 97,000 projects have been funded by lottery grants across the length and breadth of the UK.

In short there are few – if any – people who have not been touched by the lottery phenomenon in one way or another.

I wanted to start today by painting the bigger picture because all too often we can get diverted and lose a proper sense of perspective. The National Lottery is – and continues to be – a great national success. Don’t let’s forget it!

What I want to focus on is how we  – at Camelot – are building on that success. As you’ll see it’s a tough challenge, and one that we can’t take on, on our own.

If The National Lottery is going to continue its winning streak it has to be a team effort involving all the lottery partners – the operator, our retailers, The Lottery Commission, the government, the distributing bodies - and of course all of you with a vision, however small or big, about how lottery money can best be spent.

So let me start by looking at what we are doing at Camelot, and then look at one specific area where I believe we can work better together with our lottery partners.

Our key challenge is to increase sales. The more tickets we sell, the more money we can hand over to the Good Causes and Government. It’s as simple as that.

During the first licence period we raised £10.5 billion for the Good Causes. We hope during this licence to improve upon this figure.

But it’s going to be tough, because sales of lotto – the main lottery game – are falling across the world. And the UK is no exception. Here lotto sales have fallen for the last four years but not – I’m glad to say – to such an extent as in some of the other major lotteries.

The New York lottery – the biggest in the US – has seen lotto sales fall by 36% during the last four years – that’s almost three times worse than the 13% drop we’ve suffered here in the UK. Lotto sales in Sweden have fallen by 16%; in France by 15%; British Columbia by 13 % and Texas by 9%.

Infact, in the same period 18 out of the 23 US lotteries experienced a decline in lotto sales 

And if one focuses on Europe over the last couple of years, half of all European lotteries have seen a decline in lotto sales. In the UK it was a 3% drop. This compares favourably with countries such as France and Spain where the decline has been much more significant at 16 % and 14% respectively.

However, some National Lotteries have been growing overall.  But the really interesting thing, when you look at what is happening overseas, is to see where the growth in national lottery sales is coming from. And the answer is in non-traditional lottery games such as sports betting, Keno and Video Lottery Terminals.

Let me give you examples.   In Sweden, lottery sales have increased by £305 million over the last five years. Of that growth 90% (£273 million) has come from VLT sales.    Over the same period in Quebec, lottery sales grew by £364 million. Of this growth 70% - £254 million - came from VLT sales.  In France, Rapido - a quick draw game played every 5 minutes - was introduced in 1998. Since its launch, over the last three years, total lottery sales in France have increased by £1 billion. 84% - £861 million - of this growth has been due to sales of Rapido.

Here in the UK, the good news for us is that lottery sales in the second half of the last financial year have stabilised. So although the overall picture is one of decline, we have a healthy platform from which to work.

But, the bad news is that unlike our foreign counterparts we can’t – because of current legislation – grow sales with the introduction of non-traditional lottery games.   We will, of course, continue to launch traditional lottery games but this is much tougher.

We remain extremely restricted with regards to what we can do, and so the key to our success in the future has to be marketing.

I would like, therefore, to share with you some of the marketing challenges we face and how we’re going to tackle them.

The first challenge is to inject new life into The National Lottery brand in a market which is nearly eight years old, where there is growing competition, and there is also lottery fatigue. As I have already said, international experience shows that lottery fatigue happens the world over.  People simply get bored with the game and the lack of winning experiences.

As I have found out to my cost, I now have to be extremely careful about what I say or I’ll get quoted out of context and end up in the news again with ‘You’ll be lucky to win a tenner’ headlines.  Naturally, that’s not true.  In any one week, about 1.3 million people win £10 and a handful of others win larger amounts of money.

But, the fact is that in the UK, week in, week out, around 29 million people regularly play the lottery.  That means that each week, nearly 28 million people are disappointed because they haven’t won anything. As you’ll appreciate this presents us with quite an interesting marketing challenge!

Secondly, we, at Camelot, have the challenge of operating in one of the most highly regulated environments in the world.

The UK National Lottery is the most regulated lottery anywhere. And here in the UK we are the only company I can think of which has its very own regulator – one that looks after Camelot only.  We are regulated by The National Lottery Commission and we have some 2,000 licence regulations to abide by. This tight regime prevents us from doing many of the things you would expect from most marketers, particularly those who are managing the UK’s largest consumer brand.

And this brings me on to the last, but extremely important, challenge: to build and sustain The National Lottery brand in a more competitive market.

We don’t have the divine right to the pound in people’s pockets: we have to compete both in the retail environment and in the gaming market.

In the retail environment we’re up against any other impulse purchase – newspapers, magazines, confectionery – you name it.

In the gambling market, not only is there now more competition but a much wider variety. New technology such as the internet and interactive media are offering players more choice. Gambling has become a social activity with more customer friendly betting shops, sport cafes and Bingo Halls in the High Street.

The recommendations of the Budd Gambling report will open up the market place still further. Competitors will have new freedom whilst not being restricted by the same financial and regulatory constraints as The National Lottery.

So, given these challenges, what then is our marketing strategy moving forward?

The huge interest in 1994 around the launch of the lottery can never be reproduced.  

However, what we can do is re-engage the public by putting the fun back into playing.

When we launched the lottery, the “one size fits all” approach was the correct strategy for both our players and our retailers.  We wanted to create a huge mass-market brand – and we did.  But now we have to adopt a more sophisticated approach to our marketing.  We have to segment our players and reach them in different ways.

And we are doing this by ensuring that our games and our marketing are relevant. 

There will be new games aimed at niche groups.  We will also be more topical. You will, I hope, have been aware of the Golden Jubilee special draw – you may even have taken part. Well, there will be more games like this. If players are celebrating a special event - The Queen’s Golden Jubilee or Valentine’s Day, we want to be there – the same for Christmas.  We want and need to be part of the retail calendar.

Put simply, we will work hard to ensure the lottery is always on our players’ agenda – whether at home, the workplace, the corner shop or at Tesco’s.

This is not the time for half measures.  There is not one element of the National Lottery that we have not re-appraised and re-invigorated. 

I don’t plan to go into all the detail today but just want to pick out some key changes and the thinking behind them.

First of all, the brand.  As you will be aware, we have renamed the main game LOTTO.

When the National Lottery was launched in 1994, the decision was taken not to follow the 85% of other lotteries around the world who call their main game LOTTO, but rather to launch just one brand “The National Lottery” with its “National Lottery Game”.  This was because we didn’t want to confuse players by launching two brands on the same day.

Now nearly 8 years on, separating out the main game, LOTTO, allows us to promote the overarching brand - The National Lottery - around betterment - the money raised for Good Causes and the transforming power of the lottery that so many communities around the UK have experienced.

Having a new name for the main game will allow us to talk more specifically to our players about the game itself – which is not changing - and focus attention on the excitement and dreams of winning life-changing amounts of money.

All our marketing activity is designed to engage players with LOTTO and establish the brand.

And with the new name, we wanted a new end-line.

“It could be you” encapsulated the excitement of the launch when everyone believed they would win.  It wasn’t a case of “will I win” – more, “when will I win”?

“Maybe, just maybe” continued to encourage us to believe in the possibility of winning. 

Our new line “Don’t live a little, live a LOTTO” – conveys the sense that those people who play the lottery are up for life itself.  People who are prepared to have a go and live life to the full.

We’ve chosen this end-line because LOTTO’s not just a name - it’s an attitude.  It’s created for dreamers and optimists. It brings out the best qualities in everyone. For a moment you’re a winner- who just hasn’t won yet. The losers are now the people who don’t play, not the people who play but don’t win.

Our aim is to reverse the conversation about the lottery from ‘ why would you play’, to the simple question ‘ why wouldn’t you’.

To help us establish LOTTO in the hearts and minds of the public we also needed a great personality. We turned to Billy Connolly -  someone who commands a lot of good will and affection.  Someone irreverent and funny.  A man of the people, for the game of the people.

It’s a new start, and a new injection of dynamism into the brand.  We’ve looked at everything from the player’s viewpoint, to make sure that every time they experience our brand, they’re living a LOTTO too. 

This is not just a name change, but a broad programme of concrete changes that will reinvigorate the Lottery experience for every player. 

Every interaction between player and brand is changing and changing for the better.

So in the street or on the sofa, Billy is helping to drive the message of LOTTO to the players in everyday life.

We also have a new show.  ‘In It To Win It’ is the new Lottery show where five people battle it out for a major prize.  As you probably know, it’s a tense and exciting new quiz format hosted by Dale Winton and with a new presenter – Gigi Morley.

And I am delighted to say it’s doing well – very well infact. The first show was watched by nearly 8 million people – that’s almost double the amount of people who were watching Blind Date that evening. And they obviously liked what they saw because the majority of them – around 7 million – have continued to watch the programme every week since.

So at home with the National Lottery is also a totally new experience.

If we want our players to live a LOTTO, their experience of the brand has to be exciting and consistent – everywhere they see it.

Our retailers are a vital point of contact between players and The National Lottery.  The player’s experience of the retail environment is inextricably bound up with their view of The National Lottery.

I talked earlier about the one size fits all approach and said it was right for the launch of the lottery.  But a maturing lottery needs a different approach.  We are working more closely with our retailers and aligning our plans with their own business cycles to ensure playing The National Lottery is a great in-store experience.

We need a new look in store so we are changing everything - from the play slips to the retail furniture to the technology the players use.  And in every area we’ll express a consistent and strong brand look and feel.

Further down the line we will be offering the internet, interactive television and mobile telephony as platforms to sell tickets and raise funds for the Good Causes.

My shareholders have given me the £45m I need to invest and build the platforms that will deliver The National Lottery through these media. The delayed bid process did impact our development plans but I’m pleased to say we have caught up.

And, of course, we are also introducing new games as well as enhancing the main game. All the new games are designed to offer the rewards that our players want - to more and more of them, in more and more ways, to suit more and more tastes. That’s what the future of The National Lottery is all about.

Finally, as part of the overall marketing strategy for The National Lottery, we have also been looking closely at our own image – that of Camelot’s.

Sadly, because of the fat cat crisis in 1997 and the subsequent political rows, the Camelot brand came to the fore and at one stage eclipsed The National Lottery brand. What we have now is two very high profile brands, strongly interlinked with each other.  Any bad press about one, has an impact on the other.

From a marketing perspective the consequence of this is that we have to work very hard at the Camelot brand if The National Lottery brand is going to continue to be successful and credible. The Camelot brand values must, therefore, reflect those of The National Lottery and vice versa.

For this reason, a key part of our marketing strategy has been to work at and change the Camelot brand, moving away from those days of fat cats. This has involved turning the company inside out and re-evaluating everything we do.

Camelot has been through a radical transformation.  We have a new vision, a new organisational structure, a new grading scheme and a new working environment.  We have also created a whole new training programme – ‘Winning Ways’ - that the entire company has gone through. This shows the new ways of working and behaviours I expect from our people. By making Camelot a fun, inclusive, innovative, more ‘edgy’ company to work in, we can take these very same values outside the company to the benefit of our other stakeholders, most importantly our players.

So there in a nutshell is what we are doing to relaunch The National Lottery. We’re changing everything from the inside out. And at the heart of all the changes is an overriding commitment to the importance of the customer – our players – and branding.

The end objective of the relaunch is – as I have said – to increase sales and money raised for the Good Causes. But if you’re expecting a major uplift in sales overnight, then you’ll be disappointed. This isn’t about quick fix solutions. It’s about long-term growth. We’re investing in creating a healthier brand, which in turn will lead to an increased level of sales which can be sustained, not just in the short term, but way into the future.

And as I have shown we are investing in everything – the infrastructure, the organisation, the games and, of course, the marketing. To give you some idea of the continuing investment in marketing at Camelot, approximately 1.5% of our sales – which are currently running at around £4.8 billion a year - is committed to supporting our brands. At £72 million, this makes us one of the UK’s largest marketing spenders.

So, I am confident that we have the right package and level of investment  to increase sales in the long-term and build on the success of the lottery.

But we can’t achieve everything we want to alone. As I said at the beginning, sustaining the success of the lottery has to be a team effort.

The Government must continue to recognise the national importance of the lottery.

Camelot needs to work more closely with its regulator in exploring the best ways to maximise sales, while properly protecting the vulnerable and the integrity of the lottery.

And we need to work with the distributing bodies and beneficiaries of lottery funding to see what more can be done to promote The National Lottery.

And it’s on this last point that I want to now focus – how we can work more closely with the distributing bodies and beneficiaries to promote The National Lottery.

We’ve always said – and I think everyone now knows - players play the lottery because they want to win life changing amounts of money. It’s a £1 to dream. It’s as simple as that. But once they’ve played, they also want to know how their money is being spent. And who can blame them? They’ve got every right to know.

As part of our ongoing commitment to social reporting, we carry out regular research amongst the public to find out their views on lottery issues. Where we can, we are addressing the issues they raise. The level of profit and fat cat salaries were classic examples. People thought they were too high and so we did something about it – we cut them.

Our third Social Report, which is due to be published next month, will show that the biggest criticism now about The National Lottery is around the distribution side. People are critical because they don’t know what’s happening to their money. There is widespread ignorance about how lottery money is being spent and it’s getting worse, not better.

And the real problem is that people not knowing the facts doesn’t stop them having opinions. The opinions just happen to be based on perceptions rather than the reality.

The research findings clearly showed disenchantment about how and where the Good Cause money is distributed.

Common criticisms were that people saw few benefits at a local level; they thought lottery money was going to the ‘wrong’ causes, and to those who already have money.  They believe that the distribution of money is unevenly spread across the UK, with London and the South East being perceived to benefit the most, and finally that lottery money is invested unwisely, particularly when it comes to local projects.

But the figure that amazes me the most is that 70% of people can’t even name a local lottery project – and as I have said, there are over 97,000 of them!

For those of you who have worked so hard at making sure lottery money is well spent these results must be disappointing. They must also be frustrating.

When you’ve got a great story to tell you obviously want people to hear it. If everyone was only aware of half of the diverse lottery projects up and down the country, then their views of the lottery would – I am convinced - change over night

As operator of The National Lottery the distribution of lottery funds is – in one sense – none of our business. But, then there again it is. And the reason I say this is because it affects the lottery as whole – and in particular the health of the brand. As I have highlighted, when you have a maturing lottery in a fiercely competitive market the health of the brand is critical to its long-term success – and survival.

As operator of The National Lottery we have undertaken a number of initiatives to try to promote the distribution side of the lottery – initially alone, but increasingly with the support of our lottery partners.

As part of our relaunch activities we have – as I’ve explained – changed the branding of The National Lottery. By giving individual lottery games their own separate identity, lottery grants can be promoted more clearly and effectively using the parent National Lottery brand.

We also launched The Nation’s Lottery Campaign which was developed in partnership with the Department of Culture, Media and Sport and the distributing bodies.

‘ You played, the nation won’, was a £3.2 million integrated campaign, featuring television advertising, point of sale and an intensive public relations campaign. For those of you who didn’t see the television advertising here it is [video].   

As you can see our approach was straightforward. The message was from the people who have benefited from lottery funding directly to the people who play. All we did at Camelot was to facilitate that conversation so that lottery beneficiaries could thank in person those who had raised the funds.

But the real focus of the campaign was at a local level - in our lottery retail outlets. Every single one of our 30,000 retailers had specially tailored point of sale material which highlighted five local lottery projects. The logistics – and expense – of such a tailored approach are considerable, as you can imagine. But to us the local message was critical.

The campaign was a success – in as far as it went.

The initial research findings show increased awareness about the fact that a proportion of lottery money actually goes to Good Causes; that the lottery changes Britain for the better; that it benefits ordinary people, and finally that individual local areas benefit from lottery money.

Positive feelings towards the lottery also rose, particularly amongst occasional players. The findings suggest that occasional players are more open to information about the Good Causes, as they search for a rationale to take part in the lottery beyond the immediate motivation of winning life-changing amounts of money.

Following the campaign more adults – 26% rather than the previous figure of 20% - also now agree that ‘knowing some of the money goes towards Good Causes has an impact on how I play The National Lottery’.

So as I said, the campaign was a success – but only in so far as it went.

We are never going to transform public opinion – and that after all is what we need to do – by one off activities. It is only by consistent and regular communications that a message will have real and lasting impact on the way people think.

Moving forward what is needed, we think, is a longer term and more coherent communications strategy based on a more sustainable level of marketing spend. At the moment the structure is such that we are all individually promoting the lottery in our own ways – whether we are the operator, the distributing bodies or individual beneficiaries. It’s a piecemeal approach which isn’t working.

We believe the time has come for the formation of a single body to promote better understanding of the benefits of The National Lottery to the nation. Such a body would need to have the full support and backing of all the lottery partners, but would have the obvious advantage of being guided by one clear goal – the promotion of the betterment of the nation through The National Lottery.

At the same time I hope individual lottery beneficiaries, particularly the larger ones, might start to do more to promote the source of their funding through their own marketing activity.

Again, I think it is something we owe our lottery players.

I started off my speech by painting the big picture – the success of The UK National Lottery. I think when it comes to promoting The National Lottery we need again to look at that big picture and how it can best be conveyed to all our audiences – whether they are lottery players, lottery beneficiaries or the public at large.

Remember the statistics – 60% of the adult population still play The National Lottery; £11.4 billion has been raised for the Good Causes; £4.4 billion has been handed over to the Treasury in tax, and over 97,000 lottery projects have seen the light of day.

It’s quite some success by any standards. Together we have created a great national institution, and I am confident that by working together in the future we can make it even greater.

Thank you.