32Red CEO hints at M&A activity as marketing ramps up

32Red chief executive Ed Ware (pictured) insists his company will continue to ramp-up its marketing efforts during the second half of the year after being buoyed by this week’s H1 results and hinted at future M&A activity and further international launches.

The operator, which has seen five years of consecutive growth take its annual GGR from £12.8m in 2009 to £38.8m in 2013, continued its upward trajectory on Wednesday after posting record half-year revenues of £22.6m.

And speaking to eGaming Review this morning, Ware attributed the recent improvement to the adoption of a more statistical approach to both its external marketing and CRM.

“I would say in H1 we have definitely enhanced the effectiveness of our media spend and optimised our campaigns, which in turn has produced some good results with the number of players and quality of players rising,” Ware said.

Growing customer base

It’s a claim backed-up by the operator’s H1 results, which saw new casino grow by 35% during the first six months of the year while at the same time maintaining an average casino yield of around £400.

32Red has been assisted in this area by advertising strategists M.i. Media, which it appointed at the top of the year in order to help it maximise a planned £6m UK marketing push.

The operator said it expected to invest a total of around £10m in marketing throughout the course of the year ““ a third of the company’s predicted £30m in annual net gaming revenues.

The operator now boasts a competitive sportsbook offer after it soft-launched its Kambi-powered product just before the World Cup. However, despite “encouraging” signs, its contribution thus far has been minimal, although the operator plans to market 32Red Sport more aggressively in H2 in addition to its shirt sponsorship deal with Scottish football club Rangers.

The Gibraltar-based operator, one of a group of firms supporting the Gibraltar Betting and Gaming Association’s attempts to overthrow the UK’s forthcoming Point of Consumption licensing regime, is often mentioned as a likely player in widely predicted market consolidation and Ware refused to rule out future M&A activity.

Consolidation

“There are always interesting opportunities in the market ““ we are fairly risk averse but we are not disinterested in some of those opportunities,” Ware admitted.

Consolidation is likely to be prompted by the UK’s somewhat controversial implementation of a 15% Point of Consumption tax in December, which will potentially see 32Red place greater emphasis on its burgeoning Italy business and alternative market entries.

“There’s a great danger that companies like us will be looking to take additional investment to [enter] countries other than the UK,” Ware said. One country on 32Red’s radar is the Netherlands, which this week published its draft bill for a newly regulated market.

However, Ware said 32Red’s participation in the Dutch licensing process was no longer guaranteed after taking issue with the country’s proposed tax regime and “unworkable” responsible gambling measures.

“We are beginning to go a bit lukewarm on the Dutch market bearing in mind the ideas they have from a regulatory respective,” Ware said.

“The tax is the wrong rate at 20% with add-ons so we just don’t see how the model works. And that’s before you start adding in well-intentioned but totally impractical ideas like a central self-exclusion database which will end up with the Dutch consumer, who may or may not have a gambling problem, in the black market,” he added.

However Spain, which is expected to add slots to its casino for the start of 2015, now appears to be a much more likely destination for the operator. “Slots would be definitely make Spain far more palatable,” Ware said.

“It isn’t high on our list of priorities at the moment as we have plenty on our plate with the UK and a flourishing business in Italy, which needs as much care and attention we can give it, but given the right market and licensing conditions I think Spain would be a market we would want to get involved in,” he added.

Short-term focus

For the immediate future, however, it’s more of the same as the operator looks to build on a strong half-year ahead of what is set to be a transformative 2015 for 32Red and the whole of the remote gaming industry.

“We’ve also got an ongoing project internally to improve our marketing to existing players which is still a work in progress,” Ware said.

“Matt [Booth, commercial director] has some very strong ideas about how we can improve in this area and we have been encouraged by what we have seen so far and that gives us plenty of encouragement for the rest of the year,” he added.

And it was this internal marketing which helped the company avoid the potential banana skin of the World Cup, a historically tough few weeks for casino focused operators.

“The World Cup was a good test for us to see how we could navigate through that and continue to stimulate our database ““ and our existing database in particular ““ during such a big event,” Ware said.

“It’s about connecting yourself to that event and producing offers and promotions that are appetising to consumers ““ for instance, we had red card promotions whereby we offered particular rewards if certain players were red carded ““ those type of topical relevant promotions,” he said.