RakeTech CEO on the future of egaming affiliation

Since launching in 2010, RakeTech Group has firmly established itself as one of the Nordic region’s egaming affiliate power players. And while the Gameday Group-owned company’s strengths in SEO and product have been widely recognised, including two EGR awards, it’s the affiliate’s recent management restructure and M&A ambitions that have really made its rivals sit up and take notice.

The Malta-headquartered firm announced earlier this year that its founder and previous CEO, Johan Svensson, had stood down to take up a new M&A-focused role within the business. This restructure was made soon after it completed a €70m (£60m) funding round to finance its new
aggressive acquisitive strategy aimed at adding sports and casino affiliates to the 15 businesses it had acquired over the previous two years.

Former Gameday Group CEO, Michael Holmberg, has since taken the reins at RakeTech, leaving Svensson to do what he does best at a time when the competition to land new affiliate acquisitions is increasing. “Johan has always been driving the acquisition side of the business and with this move, his full focus will remain on acquisitions and I can lead the rest of the business,” Holmberg says. “We have an ambitious acquisition plan so this transition is logical and has been working really well.”

Michael Holmberg, RakeTech Group’s new CEO

And after strengthening its senior management with the appointment of a new CFO and the addition of ex-Evolution Gaming CFO Fredrik Svederman to the board, RakeTech has put in place the building blocks to take the company to a new level. In his first major interview since becoming CEO, Holmberg tells EGR Marketing how the affiliate marketing firm is aiming to stay ahead of the M&A curve and utilise its in-house SEO expertise in new markets.

EGR Marketing: Congratulations on your appointment as CEO of RakeTech earlier this year. What was your background before joining the company?
Michael Holmberg (MH): I first got involved in the gaming industry back in 1999/2000 when I wrote my Master’s Law thesis on a gambling industry subject, titled The Swedish Gaming Monopoly in a European Community Law Perspective. Around that time, I joined newly-founded sports betting company Expekt.com as their third employee. I was involved in building that company from the start, when Unibet and Ladbrokes were our only real competitors in the Nordics and companies such as Betsson had not yet been founded.

After six years with Expekt.com, I joined PokerStars.com as regional marketing director to head up their Nordics launch. I stayed at PokerStars for 10 years in various roles, most recently building the dot.EU side of the business as general manager in Malta from 2012 to 2016, leading more than 200 employees.

EGR Marketing: What attracted you to the role at RakeTech?
MH: During my time in Malta, I got to know RakeTech and Bethard founders Johan Svensson and Erik Sharp. I joined the group over a year ago and my reasons for joining was a mix of great personalities, amazing company culture, fantastic growth potential and the challenge to transform what was an entrepreneurial group of companies into a more established business.

Over the past year, I headed up the group of companies as we know it today, the Gameday Group, which consists of RakeTech (affiliates), Bethard (operator) and Together Gaming (gaming platform service). It was a welcome challenge coming in at a fairly early stage and being part of the journey so far. My main focus is now on RakeTech and this is where we are experiencing exceptional growth.

EGR Marketing: Did the opportunity to work on the affiliate side of the industry persuade you at all?
MH: Having spent 17 years on the operator side, primarily in marketing roles, I have of course been exposed to all sides of the business, including the affiliate side. What I see happening right now, which is an interesting development and a big part of the reason why I find myself on this side of the table, is that the value chain in the industry has started to change. Historically it started with the suppliers, then you had the operators and then the affiliates. If you like, you can now spin that around.

“The affiliates deserve a much stronger position in the industry than they historically had. And I want to drive that development”

You can argue the affiliate side is the most interesting part of the value chain at this point in time. The affiliates control the consumer, which is of course the bread and butter for the other parts of the value chain: the operators and the suppliers. And so as we get organised and grow, organically and via acquisitions, we make it easier for the operators to work with the affiliates, who appreciate dealing with larger scale affiliate companies. So my point is that the affiliates deserve a much stronger position in the industry than they historically had. And I want to drive that development.

EGR Marketing: What makes RakeTech different from some of the other super affiliates out there?
MH: I don’t want to comment on what our competitors are doing, but RakeTech is agile, focused mainly on SEO, has built our systems in-house and managed to attract some of the best SEO brains out there and bring them in as partners. We are also known for delivering high-quality traffic and are then able to get the right prices from the operators. Expensive but worth it if you wish.

EGR Marketing: In the last few months you have won two EGR affiliate awards. What do you think accounts for this success?
MH: We have a great team of people working at RakeTech and it is down to hard work and teamwork across all areas of the business. We have grown a lot over the past year and this has allowed us to hire more skilled employees. I am thrilled we achieved both EGR awards to show that good work doesn’t go unnoticed.

EGR Marketing: How easy is it to secure funding in the current climate and how do you go about doing this?
MH: If you have strong assets, a well organised company and a strong cash flow with a proven track record, obtaining funding is not that difficult. You just need to be prepared for going through a proper due diligence and be able to demonstrate a realistic growth plan. We spoke with a couple of the largest investment firms in the Nordics and from there it was a pretty straight forward project.

Holmberg: Affiliates are the most interesting part of the value chain

EGR Marketing: Do you feel like there is an increasing investment appetite in the egaming affiliate marketing sector?
MH: Yes, there is a lot of money in the market, both from the institutions and high-net-worth individuals. That in combination with low interest, a strong track record of successful investment in gaming companies, and the Catena Media IPO about a year ago, there is surely an appetite. The investors now see the affiliate segment as part of the overall gaming sector.

EGR Marketing: What do you think is giving rise to super affiliates like RakeTech?
MH: I see it as a combination of factors. An affiliate would traditionally be a one-man-show; entrepreneurs who are SEO experts, who also manage all parts of their business. This would include website development, content management, negotiations with the operators and managing their own ‘finance department’. With this structure, you can build your affiliate business up to a certain size. However, the real challenge is to grow without getting ahead of yourself and damaging the quality of your service. In some cases, an affiliate manages to develop a successful combination of all parts of their business and only then can they grow into a power affiliate like RakeTech.

EGR Marketing: And what about the increasing amount of M&A?
MH: We started acquiring companies a couple of years ago and at the same time set out a structure to manage hundreds of websites on a daily basis. To be a super affiliate you need to be well funded, capable of building business systems to automate some of the processes, have some of the best SEO experts in-house, can optimise sales, give the operators what they are looking for over time (good conversion rates and deliver high value players) and still give the same ‘love’ to your network of websites from a content perspective. I believe we have successfully managed to do this on a much larger scale compared with some of our competitors out there and plan to continue this going forward.

“The real challenge is to grow without getting ahead of yourself and damaging the quality of your service”

EGR Marketing: How else do you think the egaming affiliate marketing landscape has changed and where is it heading?
MH: From a product point of view a few years ago, a good domain and the right link strategy were enough to create a decent business, without really delivering much user value. Today, the starting point for all affiliate business has been shifted to the consumer. You need to create real user value to be relevant in the future. And that is also the way to stay relevant for the operators. If you look at sports betting for instance, if you deliver statistics, odds comparisons, TV times or good betting advice and campaigns for the operators, you have a user value. If you just provide a top list with bonus offers, your business is not sustainable long-term.

EGR Marketing: How would you sum up RakeTech’s acquisition strategy?
MH: Any gaming affiliate business can be interesting for us to acquire. So we start wide and drill down into the assets of the company we are eying. There can be multiple reasons for an acquisition and we look at a good fit with our existing portfolio of sites, geography, if we can find economies of scale, if we can attract talent we are looking for, software or other assets. And we value a business based on all those findings.

EGR Marketing: Do you think there needs to be more transparency with regards to affiliate acquisitions?
MH: When we acquire a key affiliate, we want to communicate this for a couple of reasons. Firstly, we are very proud of the hard work that goes into the acquisition process and announcing the deal will further raise our profile as a leading affiliate operator. Secondly, it makes business sense for current and future partners to know which websites we are operating so they know who to contact.

RakeTech founders, Johan Svensson and Erik Sharp

EGR Marketing: What was the thinking behind the BetXpert.com and Turtle Gaming deals?
MH: With BetXpert.com it made a lot of sense for several reasons. It’s the strongest sports betting community in Denmark with a 15-year history and great team that have joined RakeTech as partners. The platform is very technical and can be used elsewhere, providing us with a product that is driven by high-quality sports content. Turtle Gaming provides us with an even stronger position in Finland and is more of a traditional SEO-driven affiliate in the casino vertical. I am very proud of both acquisitions, which will drive a lot of business and variety to our portfolio of assets.

EGR Marketing: In what areas is RakeTech looking to strengthen in?
MH: We are looking at growing primarily in casino and sports betting affiliation in Europe, particularly in regulated or soon-to-be regulated markets. This can be with SEO-driven sites or other products from different verticals. For instance, we just acquired www.tvmatchen.nu, www.tvkampen.com and www.tvsporten.dk, which are the leading sports online TV guides and mobile apps in Sweden, Norway and Denmark. So this is a different type of asset that will complement our current offering to the operators really well.

EGR Marketing: Are you looking to diversify away from Scandinavia?
MH: Yes, but our home market will always be Scandinavia. We want to grow across Europe, and the markets that interest us are Italy, Spain, Germany and other markets that are undergoing regulation. Countries where we have a very good understanding of the local market and countries with similarities in consumer behaviour with the Nordic egaming industry also of interest to us.

“We are looking at growing primarily in casino and sports betting affiliation in Europe, particularly in regulated or soon-to-be regulated markets”

EGR Marketing: How happy were you to get Anna Nilsson and Fredrik Svederman to join the company? What will they bring to RakeTech?
MH: Both Anna and Fredrik will add a lot of value to the company and it makes sense they join the organisation at this point in time when we have recently taken the €70m loan and increased our focus on acquisitions even more. In addition to her vast CFO background, Anna adds experience from other sectors, such as online media, esports, M&A, and up and coming online business models, gained from MTGx and she also has a vast CFO background.

And Fredrik has great industry knowledge having spent his past six years at Evolution Gaming and will be a great addition to the board of directors.

EGR Marketing: What do you look for when partnering with operators? Has this changed at all in recent years?
MH: We look for operators who have a good product, care about their customers and care about the online gambling ecosystem. Being based in Malta means we are close to the vast majority of operators and suppliers, which also means we get to know them better and on a more individual level. For me, it is really valuable meeting someone in person and putting a face to the name.

One of our overarching objectives is to bring more people into the gaming industry. This means new or casual players that we provide relevant content and tools to use at their disposal and make an informed decision before signing up with an operator, trying a new promotion or playing a new casino game. We want our readers to enjoy their online gaming experience and, therefore, we only want to work with operators who will look after the people we are sending their way.

EGR Marketing: Does RakeTech own most of its own technology? And how do you make the best use of all the data you have?
MH: Yes, we own most of our business systems but we also use third-party technology. Making best-use of data is evolving everyday as we work closer with the operators and invest in business intelligence in general.

EGR Marketing: Finally, how different will RakeTech look by the time of next year’s Power Affiliates?
MH: We want to continue our exceptional growth into 2018 and have very ambitious growth targets. And we are constantly on the search for new talent; we are hiring more specialist employees who can help us continue growing and look-out for suitable affiliate companies to partner with. Exciting times are ahead.