32Red dusts off an old model to conquer Italy

32Red dusts off an old model to conquer Italy

Monday, February 6, 2017 Posted by Andy McCarron
Italian business makes debut contribution to profits in 2016

Online casino specialist 32Red said it has turned a corner in Italy and moved into profitable territory after it canned its previous approach to marketing in the country and switched to a more product-led strategy.

The chief executive of the Gibraltar-based firm, Ed Ware, said that initially the company had attempted to crack Italy with a similar brand-led strategy to that employed in the UK, including high-concept TV ads featuring a comedian/magician.

“That turned out not be the optimum path,” Ware told TotallyGaming.com. “We were a new brand in Italy, so there wasn’t the resonance. We also tried something entertaining with the ads but the Italian market is not as mature when it comes to online casino as the UK. Also, we have the digital footprint in the UK and we didn’t have that in Italy.”

To enact a turnaround, Ware said the company reined in its marketing spend, stopped the TV ads temporarily and concentrated on the product. “The success of the new strategy manifests itself in search,” said Ware. “And as of today we have started advertising on TV again with an old ad from the UK featuring the music of Dusty Springfield.”

The extent of profits in Italy were not disclosed, however, the trading statement this week showed total revenues for the group rose 28 percent in 2016 to £62.3m with Italian revenues contributing £2.3m of the total. Total casino revenues including Italy and the acquired Roxy Palace business rose 26 percent to £58.5m while other products including sports, bingo and poker were up 60 percent to £3.8m.

Analysts at house broker Numis said figure for the year suggested a slow down in growth in the second half from the 32 percent rate enjoyed in the first six months of the year. The company said net gaming revenue growth for the start of this year had been robust with a year-on-year rise of 21 percent against a strong comparator for January last year of 27 percent growth.

Ware said the experience in Italy gave the company more confidence when it comes to potentially entering other regulated markets, particularly given the more attractive commercial arrangement signed with platform provider Microgaming last year. It is thought 32Red was able to negotiate a more beneficial deal due to its regulated markets profile.

The company was at the forefront of the attempt by the Gibraltar Betting and Gaming Association (GBGA) to get the point of consumption tax in the UK overturned, first in the UK high court and latterly in the European Court of Justice. The advocate general recently made public his view that Gibraltar and the UK should be treated as the same entity as regards EU law and hence suggested there was no case to answer in the GBGA’s complaint.

While Ware didn’t entirely concede defeat, he admitted the legal action was as good as dead with very little prospect of the Advocate General’s opinion will be gainsaid by the ECJ.

Totally Gaming says: The worth of 32Red’s marketing operation is displayed once more by these figures and the ability of the company to bend with the prevailing wind in a new territory bodes well for any further expansion plans. The slight distraction of the GBGA action aside, the company has made something of a name for itself with its marketing which has translated into high double-digit revenue increases in recent years.

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