Blexr Q&A: Holding out for a hero

Malta is the world’s tenth smallest country. Despite being tiny in stature, its position 50 miles south of Italy, 176 miles east of Tunisia and 207 miles north of Libya has made it one of the most strategically important naval bases in human history. The island, which is smack bang in the middle of the Mediterranean Sea, is also the strategic hub for many of the world’s biggest egaming affiliates. One of these affiliates is Blexr.

The company, co-founded by Irishmen Ian McDonnell and Paudie O’Reilly in 2015, describes itself as ‘your performance marketing heroes’. Heroes perform at their best in situations of adversity, and Blexr is no exception. The company has had to cope with regulatory clampdown in the UK and being priced out of the top-tier M&A market, all while having to compete in Malta’s increasingly difficult and competitive egaming talent pool. Despite all this, Blexr posted an annual increase in organic growth of almost 25%. Here, McDonnell tells us how.

EGR Marketing: What were the highlights of 2018 at Blexr?

Ian McDonnell: The company has grown and probably doubled in the last 12 months. We have around 75 people in the office in Malta and we were around 35 this time last year. This year we have been investing a lot of money into our own platform, investing in things like business intelligence tools, content management systems, revenue tracking software and that kind of stuff. That has been a big investment for us over the last two years, but it has been launched for the most part, so we are starting to reap the rewards as we begin to get useable insights. Previously, that had been a big roadblock for us for the last couple of years, especially in achieving the growth we wanted. We have released all of the updates this year and that has marked a huge amount of progress for us.

EGR Marketing: What has the new platform changed?

IM: We weren’t using any organic platforms at all so we had no business intelligence platform and basically no way of centrally managing all of our websites and content. We had to manually get revenue data from all of our different partners so we have now interlinked everything into one system.

EGR Marketing: Are there plans for expansion in 2019?

IM: We are planning to expand into a second office at the moment. We will be opening a new office in Barcelona and the plans are well underway. We’ve planned out the initial infrastructure and have incorporated a company and we have an office over there for around 36 people.

EGR Marketing: Why Barcelona?

IM: Malta is quite a challenging marketplace right now because it is a small island so the talent pool is also quite small. It can be very cannibalistic in that companies are all working in the same talent pool, and then relocating people to Malta can be difficult if they also have the chance to work somewhere like London or Barcelona. We wanted to have another option so that if people don’t want to relocate to Malta, then the might consider Barcelona because it is more of a modern city rather than an island with limitations in terms of lifestyle. Malta has 450,000 people whereas Barcelona and the greater area has almost six million. It is also cheaper than Malta and we were quite surprised by that. Malta has become extremely expensive with staffing costs and the fact that everybody is looking at everybody else’s staff to see who might be good to fill their roles. It means you have to start competing.

Blexr executives will switch between Barcelona and Malta

EGR Marketing: Can working in Malta’s egaming industry feel a little claustrophobic?

IM: Yes, you tend to bump into a lot of people you know a lot of the time. We are still very much committed to Malta but we want to mitigate the risk here by having another office and offering people who want a city lifestyle a different option.

EGR Marketing: Are employees in Barcelona going to be new starters?

IM: The majority will be new starters but there will be a handful of people that transfer there full time. There are also a number of our key people that will be spending and equal amount of time between both offices, and especially the more senior people. They will be back and forth trying to build the culture and train the new teams. I will also be in both Malta and Spain.

EGR Marketing: What is the Blexr culture?

IM: We’ve worked hard on our company culture to make Blexr a place that people find fulfilling to work in and fun to be at. To show how invested we are in this, we’ve created a Book of Culture with the help of a communications expert that we use. This document explains who we are, how we want people to work together, and which values are important to us. All existing and new staff get a copy of it.

EGR Marketing: Are there plans to grow the Blexr brand in 2019?

IM: Yes, we are investing in a brand-new company website, which will explain who we are and provide a great recruitment experience for anyone looking for a job with us. We are also making a bigger effort than ever before in improving our brand awareness and company profile. We’ve appointed a new PR and branding manager, our very active social media is growing fast, and we’re also looking at sponsorship opportunities. These are both for industry events and also relating to social responsibility projects in Malta, and eventually Barcelona. We’re doing all this because we want our staff to grow as the business grows, and for Blexr’s reputation to spread as well.

EGR Marketing: How does Blexr compare to other affiliates in EGR’s Power Affiliates list?

IM: A lot of companies like Better Collective, Raketech and Catena Media are public companies. Because they are public, their shareholders are constantly looking for growth. As a result, they need to expand aggressively and achieving the numbers they need through organic growth is very challenging if you are doing things in a long-term, holistic way. That is why they all aggressively go after acquisitions. Because of that, we have seen the price of acquisitions go up to a level where, for us, as a privately-owned company, it doesn’t make sense for us to compete.

With certain purchases or earn outs, these public affiliates could be paying out for between five and 10 years. They can immediately see an ROI on the value it adds to the business, whereas if we pay five years’ income, we need to actually get that money back and that is not always easy to do. Five years is a very long time when you are depending on Google for a lot of your income.

EGR Marketing: Does that rule out M&A activity then?

IM: We have been a lot quieter with acquisitions than we used to be because the value hasn’t been there in the marketplace. We have completed some acquisitions but at more favourable multiples where it made more sense for the business and ensure we see a ROI on it. For us, we would much rather get an ROI in an asset in two to three years than in five years’ time. Our plan for next year is to look to get back into acquisitions but they have to make sense. Even the big public affiliates are slowing down now because they can’t take smaller businesses anymore.

A business making £50,000 per month is not going to move the needle when the market cap of the company is something like £500m or £600m. They need to look at bigger acquisitions that can show significant growth to shareholders. We think the market will slow down a bit and get back to a level where we can be more competitive. In terms of acquisitions, we’d be looking at affiliates that are making between £50,000 and £300,000 per month. They would make sense for us in terms of where we are currently.

The Blexr booth at SiGMA

 EGR Marketing: Have you managed to offset that through organic growth?

IM: In 2017, for example, we didn’t do any acquisitions because we were focusing on our new platform and improving our business processes, but we still grew around 25% year-on-year through organic growth.

EGR Marketing: Is the new platform the key to future growth?

IM: Yes, we can’t wait to utilise the new platform now. We can launch new projects much quicker and it was built to be able to scale the business quicker because previously we had huge problems with having enough developer resources and design resources – the standard stuff all businesses run into at some point. The platform is huge for helping us launch products and get them to market quicker, as well as collecting more usable data from our websites and users that can help us improve our conversion funnels and our on-site user metrics.

EGR Marketing: Which markets does Blexr operate in?

IM: Our key markets are the UK, Canada, Germany, New Zealand and we are looking at other regulated markets. That is the key focus of the business, so we are looking at the Nordics and Spain where there is legislation in place already. We want to increase our exposure in markets like that.

EGR Marketing: What about the US?

IM: We have been looking at it but we haven’t started promoting any products there yet. It is in the roadmap for 2019 to try and launch in New Jersey and Pennsylvania. We want to launch regulated sites for both sports betting and casino in the US market. I think casino over there has exceeded people’s expectations. Only one state [New Jersey] has legal online casino and they set a record month in November for gaming revenues, so it has been a success. The US is a market of 300 million people so when we look at markets like Sweden and the UK and Germany, they are still very small compared to the US. The potential of the market there is absolutely enormous.

EGR Marketing: How did Blexr cope with adapting to compliance measures in the UK?

IM: We have people in compliance roles now and that is something that we never even thought about two or three years ago. It has been an absolute pain in the arse meeting the GDPR and the Advertising Standards Authority guidelines. We like to be ahead of the curve on these kinds of things, though. The UK Gambling Commission is going in a direction where everything has to be extremely transparent, so rather than face sanctions for misleading terms on our website, we have taken the stance of being 100% transparent for the sake of sacrificing some conversions we might get.