32Red credits innovative marketing for revenue rise

32Red credits innovative marketing for revenue rise

Thursday, September 22, 2016 Posted by Andy McCarron
Casino operator also announces new deal with Microgaming

The chief executive of 32Red lauded the efforts of the company’s marketing team and its data-led segmentation effort after the company posted 24% organic growth for its main casino product in the first half of the year.

The growth contributed to a 63% rise in net gaming revenues (NGR) across the business as the £8.4m Roxy Palace acquisition from late last year made a debut contribution of £5.8m, pushing total revenues for the business to £30.4m. The company said mobile casino was a major driver, representing 50% of total casino revenues.

Speaking to TotallyGaming.com, Ed Ware from 32Red praised the work of Matt Booth, who has been in charge of the company’s marketing efforts since he re-joined the business in 2013. “We’re very fortunate to have him on board,” he said. “He’s a brilliant marketer.”

Ware pointed out that the 32Red Casino brand had responded to an accelerated and returns-driven marketing effort. “On the marketing spend, we’ve moved to dial up the investment because we are very confident we will get a decent return,” he added. “We think we have the execution right. It’s real-time marketing. Not everyone can do that. When we start doing full live marketing later this year, it will be something really exciting. It’s an evolving picture.”

The UK online gambling market has been the subject of a sustained marketing push across the board for the past two years since the introduction of the point of consumption (PoC) tax regime in late 2014. On the heightened industry spend, Ware pointed out that the “difficult bit isn’t spending the money, but measuring it”. However, he added that with most of the spending occurring in sports-betting as opposed to casino, he wasn’t concerned about spending more money in an upward marketing investment cycle.

Among its more high-profile sponsorships, 32Red is the shirt sponsor at English Championship side Leeds and Rangers in the Scottish Premier League. It is also an approved bookmaker with the British Horseracing Authority (BHA) and has agreed a new three-year deal to sponsor the Christmas King George meeting at Kempton Park.

Ware added that the proof of what 32Red added in terms of marketing came through the Roxy Palace acquisition where the benefits of applying the company’s marketing model were beginning to show through. “We applied the marketing model to Roxy Palace and the business is starting to see the benefits from the application of our data-driven approach,” he said.

In a note published in the wake of the results, analysts from Edison Investment Research said the marketing model was designed to be much more behavioural and predictive with customer segmentation that allowed 32Red to identify and fast-track quality players, improve deposit rates and win back lapsed customers.

“Together with a new front end it allows much more personalised marketing,” the analysts wrote. “Also at the heart is a shift in attitude from merely monitoring the difference between a player’s cost of acquisition (CPA) and lifetime value (LTV) to measuring the return on investment (ROI).”

Alongside its results, the company also announced a new deal with platform provider Microgaming that will allow it to bring in third-party content. Ware said the new agreement, as well as being of benefit in commercial terms, would also bring differentiation to the 32Red offer.

“We always look to add content and Microgaming have been very supportive of our deal with ITV, which is all about exclusive content,” he said. “Creativity is about the experience for the customer, not just the game in front of them. But it is about sourcing content from elsewhere. Certainly, one thing we hear from customers is that we don’t have all the content they like. So this might also help in gaining share of wallet.”

Ware said the availability of new content would be of help with the Italian operation which it said it hoped would break even for the first time in the first half.

The new deal with Microgaming comes into effect from 1 November.

Totally Gaming says: 32Red has been getting more than just the marketing right. Since 2012, net gaming revenues has risen from £22m in 2012 to an expected £64.8m this year, and the new Microgaming deal has already seen the analysts upgrade their 2017 EBITDA estimate by 11%. Still, 32Red’s recent performance is proof that marketing, when done right, should be considered a science not an art.

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