England's exit in the quarter finals of Euro 2012 not only dashed the hopes of the nation but also exposed weaknesses at Ladbrokes, the second-biggest bookie in the UK after William Hill.
The bookmaker failed to relaunch its website in time for the start of the tournament. Since then, it has announced that its digital division has performed poorly, with first-half earnings slumping by about 50% in the first half of 2012, compared with the past year. Digital revenues grew 5.9% in the first quarter of 2012.
Ladbrokes has blamed this decrease in profits on increased technology development, marketing spend and a poor sportsbook margin in the second quarter of 2012. It also said that fewer people backed England in Euro 2012 than would normally be the case, while the progress of fancied teams such as Germany and Spain also hurt margins within its online sportsbook.
Ladbrokes invested £50m in its digital business, and last year, it accounted for almost 29% of its operating profits. While the slump in digital has been offset by its 2000-site retail business, which is said to have outperformed the market, online gambling is expected to be an increasingly big part of the sector, with in-play betting via mobile phones a major growth area.
What measures can Ladbrokes take, therefore, to ensure it can compete on the digital front with its competitors? We asked Josh Darby, founder of digital marketing agency Deepstack Media, which specialises in online gambling, and who was previously held senior marketing roles at Betfred, Totesport and Betfair, and Sarah Stratford, managing partner, strategy, at Archibald Ingall Stretton London, which previously worked on the Ladbrokes digital account.
Digital profits have slumped by about 50% in the first half of 2012, to £15.5m
Digital accounted for 29% of operating profits last year
JOSH DARBY, FOUNDER, DEEPSTACK MEDIA (previously held senior marketing positions at Betfred, Totesport and Betfair)
Gambling giant Ladbrokes has continued to invest heavily in technology, successfully creating an industry-leading mobile product and in-play betting console. This is coupled with the fact that the gambling industry remains largely unaffected by the recession; therefore it is surprising that Ladbrokes is not performing as well as some of its rivals.
Legislation and licensing in European countries where Ladbrokes operates have certainly hit revenues. This affects competitors, too, though, and cannot be an excuse.
Betting companies need to encourage customer loyalty. Promotions around free bets in order to recruit custom, and 'best odds guaranteed' claims in an effort to retain custom, focus far too much on price-related offers that encourage brand promiscuity. As well as defeating the object of keeping a loyal customer base, such strategies are dangerous when there is always a competitor ready to undercut you, make a bolder pricing claim, or, in the case of rival Betfair, have a pricing model that will usually undercut traditional bookies.
- Social media is a superb way to engage customers. Competitors are already integrating Facebook into mainstream TV ads and Ladbrokes cannot afford to get left behind.
- Develop bespoke recommendations based on customer gaming history.
- Run a campaign aiming to cross-sell to customers who play lucrative fixed-odds betting terminals in shops, encouraging trial of Ladbrokes' mobile casino product.
SARAH STRATFORD, MANAGING PARTNER, STRATEGY, ARCHIBALD INGALL STRETTON, LONDON
The market is saturated and online propositions mean punters have more choice and are increasingly fickle, with most having several betting accounts. Brand and product differentiation and a clear strategy to drive loyalty, are key to ongoing success.
Gambling is one of the most profitable industries on the internet. Ladbrokes can't rely on its high-street heritage. To be seen as innovative, it can't just match its competitors - it needs to be ahead of the game. To do that, Ladbrokes needs to understand its audience, how it's changed and what these people really value.
It's not just about old men sitting in the bookies any more. You can bet on almost anything, at anytime, anywhere. Increasing numbers of younger, affluent professionals are engaging in betting for entertainment and financial rewards. They invest time refining their strategies, and shop around for the best odds - it's easily done online.
- Focus on differentiating the experience to appeal to younger, more monied professionals.
- In-depth analysis of the target group is essential - you have to understand your audience properly if you are to deliver a truly attractive service and enjoy a long-term relationship.
- Appeal to the younger, tech-savvy demographic with a strong, smart mobile offering.
- Innovation is key - the experience needs to be lively. Make new formats such as 'in-play betting' a priority.