Allan Stone, Co-founder of Intelitics, on why proprietary tech can be a fool’s errand for online sportsbook operators
Online sportsbook operators are constantly having to evaluate what aspects of their technology stack belong in-house and what aspects to outsource to a third party.
Proprietary technology can give you a significant competitive advantage, but it can be expensive and time-consuming to develop – and there’s no guarantee you’ll get it right.
Smart operators understand where proprietary technology gives the greatest edge, and where they can actually build something better and cheaper than a specialist provider.
For everything else, however, they know to outsource.
But if you’re unsure how to determine what should be kept in-house and what should be outsourced – here’s my litmus test.
If you’re spending resources building technology that isn’t core to your actual betting product, or that doesn’t give you a defensible advantage, ask yourself these two questions.
Does this technology move at the same pace as my industry?
For example, Google’s policies change monthly, adtech evolves weekly and new platforms emerge daily. If this pace is faster than the wider industry, outsource.
Am I competing with specialists who ONLY do this one thing?
The partners who build technology solutions wake up every day focused solely on that challenge while operators wake up thinking about their gaming product.
For example, an online gambling operator is not a payment company, they just need to move money efficiently and compliantly.
This is why the vast majority don’t build their own payment systems and instead use third-party solutions so they can focus their efforts on marketing, UX, etc.
Over the years, I have seen operators burn millions of dollars on creating technology that was obsolete before it even launched.
Meanwhile, their competitors were creating better gaming experiences because they were able to free up resources by outsourcing the right technology to the right third-party specialists.
You’re a gaming company, not an adtech company
Right now, we are seeing a lot of operators pump big money into developing their own adtech platforms and my question to these organisations is why?
You’re a gaming company, not an adtech company. Apply my litmus test above and it’s clear to see the juice isn’t worth the squeeze when building non-core technology.
Why? There’s simply not enough of a competitive advantage to justify the investment. Instead, operators need to be exceptional at what they can do and partner with experts for everything else.
Operators also need to be mindful of the long-term running costs of their proprietary technology, including maintenance and upgrades.
There are plenty of businesses out there that totally forget to calculate the total cost of ownership when developing proprietary technologies.
Changing perceptions
That being said, there remains a negative stigma around using third-party solutions – operators often believe that if they outsource, they are seem as being inferior to their rivals.
But in most cases, outsourced solutions work better and deliver a much higher ROI than those developed in-house.
It’s also important to address concerns about losing a competitive edge when outsourcing, as your rival brands can be using the same technologies as you.
In the case of adtech, for example, the platform is just half of the equation with the real difference coming from the marketing specialists that use it and the campaigns they launch.
Staying ahead of the curve
These experts also need to ensure they are on top of emerging marketing trends and that their adtech solutions allow them to deliver campaigns that align with them.
For example, many operators still ask affiliates for website URLs but the real money can be found in places they’ll never see.
It’s no longer about websites and blogs with long-form reviews of sportsbooks. Instead, consumer attention is found on Discord servers, Telegram groups and WhatsApp chats.
Some of these affiliates are delivering 1,000+ new depositors a month and they don’t have a website. All the action is happening in private communities that operators just can’t access.
Operators can only access these communities by working with the affiliates that run them, but their adtech needs to be able to provide the same degree of tracking, attribution, data, etc as for traditional website affiliates.
But if they have developed their affiliate platform in-house, they are unlikely to be able to quickly develop the functionality to allow for this.
Of course, a third-party affiliate platform specialist with their finger on the pulse will likely already offer this functionality, allowing its operator partners to get in on the action without delay.
And this is ultimately why operators are outsourcing more of their tech stack – today, there are plenty of examples of hugely successful brands that outsource pretty much everything allowing them to be exceptional at what they do best.
And that’s acquiring customers and giving them an unrivalled sportsbook experience.
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