Lottery manager ramping up advertising budget

The Hoosier Lottery’s new manager plans to launch a branding campaign in the spring as part of a business plan that calls for a significantly larger advertising budget.

That could be good news for Indiana ad agencies, seven of which are competing to work for Providence, R.I.-based Gtech Corp., which struck a 15-year management contract with the Indiana Lottery Commission on Oct. 12. 

Gtech spokeswoman Angela Wiczek wouldn’t disclose the names of the seven firms, but she said they all have offices in the state.  

Four of the seven agencies currently work for the lottery, which spent $10.2 million on advertising in the fiscal year ended June 30. Creative work is split between Boyden & Youngblutt of Fort Wayne and MeyerWallis, which has offices in Indianapolis and Milwaukee.

Optimedia International, a subsidiary of Publicis Groupe, which has an office in Indianapolis, handles media strategy, while Asher Agency, which has an office in Fort Wayne, buys media.

The lottery spends about 1.5 percent of its sales revenue on advertising, marketing and promotions, but Gtech contends that it will need to spend more money to make more money.

“The appropriate advertising spend can significantly optimize the revenue potential of the lottery’s portfolio,” the company states in its initial business plan.

The exact size of the planned marketing budget remains under wraps, but Gtech said it will increase “significantly” to support all its efforts around a brand re-launch and new-product promotions.

Gtech promises to bring the state income of $410 million by fiscal year 2017. That would be 80-percent increase over the $227 million that the lottery reaped in the year ended June 30.

Gtech doesn’t take full control as manager until July 1, but it’s already laying the groundwork as part of a transitional period in its contract.

During the transitional period, Gtech will spend $7.25 million more on personnel, technology and marketing than the lottery had budgeted for fiscal year 2013. Gtech will recoup those costs through the annual management fee that the lottery must pay, starting in fiscal year 2014.

Wiczek said Gtech is working on the brand transformation now, and it will hit the market in March or April. The first new-product launch is set for April. Gtech could hire one or more of the seven competing agencies, which are due to make presentations on Nov. 15, she said.

Gtech’s marketing plan calls for less concentration on television advertising in favor of a multi-platform strategy, including more promotional events. The business plan hinges on expanding the player base, so the branding effort will try to engender warm, fuzzy feelings about the revenue the lottery provides to Indiana.

“It is important to develop a sense of heart and passion for the lottery among the Indiana adult population, and to progress from the lottery being a random entity to being part of the fabric of the life of the community,” Gtech’s business plan states.

One step toward that goal will be post-jackpot promotions that call attention to the revenue generated by Powerball and Megamillions. Gtech said it might even publicly present the governor with a check to the state. “This ‘good-will halo’ will make players feel good about their purchase and look forward to playing again,” the company says.

Hoosier Lottery advertising account used to be a plum contract — for recognition as much as fees. Then, in 2005, the lottery began partnering with other state agencies on media-buying services and awarded a smaller advertising contract to a Louisville-based firm, Bandy Carroll Hellige. The former Roman Brand Group, which had been the lead agency since 1999, didn’t bid on the work.

The local advertising industry hasn’t been enthusiastic about lottery work since that time, said Bruce Bryant, principal at Promotus.

The lottery seems to take a project-by-project approach to advertising, Bryant said. “It’s clear that it’s been just getting along,” he said. “I don’t think they’ve had real serious strategy sessions.”