Team SBC catches up with igaming industry player acquisition and marketing veteran Tom Galanis, Director of igaming marketing specialists GameOn Marketing, to discuss future impacts and potential blocks with regards to igaming’s marketing value chain. Tom gives insight into how operators will be forced to rethink operations and marketing strategy as new regulations and constraints come into play.
Tom Galanis has consulted numerous top-level igaming brands on player acquisition strategies, player development and analysis of true player value for igaming operators.
SBC: Hi Tom great to catch up, you have consulted some of the biggest names in igaming on player acquisition. How are operators preparing for future legislations and regulations that will affect their marketing and operations?
Tom: Hi team and many thanks for taking the time to interview me on what really is a critical matter that is a matter of months from becoming reality.
The first operator I’ve noticed really shift what they are doing from a marketing perspective is the oft-maligned Ladbrokes. Whilst they’ve received a big slap on the wrist for their Ladbrokes Life campaign, it’s a move towards a more experiential, lifestyle-based form of marketing. Personally, I’m a big fan of such a step as I hope it will not only broaden the appeal of iGaming, but also lead to a scramble for the revised market share.
Operationally, it will all be about cutting costs. How operators choose to do this will be interesting. We’re not just talking about the burden of the Point of Consumption tax on UK play, but also impending European VAT regulations that will see profits on either side (operator/customer) from play within numerous EU member states taxed at the local VAT rate (for instance, Irish customers could face a 23% charge on winnings).
One might fully expect to see businesses streamline as a result, with reduction in in-house customer service, automated sports trading and outsourcing all obvious steps. Full or partial relocation would be another possible development. In terms of the value proposition, I can’t really see this rolling back – we might just not see the development we’ve seen across the board.
SBC: With igaming certain to be impacted by incoming changes, what do you feel igaming operators need to prioritise in their value chain with regards to marketing and player acquisition – what should take priority?
Tom: Reducing overheads is a must, as reducing the value proposition (notably increasing margins on sports betting, bingo ticket prices and poker rake, whilst decreasing RTPs on casino and games) really won’t be stomached by the customer. This will be done, from a marketing perspective, by reducing both acquisition and retention bonusing and above the line ad budgets. Performance marketing will grow in significance, but the affiliate and media partner ought to expect to feel the burden, proportionally, of Point of Consumption Tax (PoC) as much, if not more than the operator in the shape reduced net revenue share or CPA.
SBC: Much industry comment has been deliberated on the effects that new regulations, taxes and legislation will have on igaming operations and finances. However not much attention has been paid to marketing and retention matters, is it a concern for you and the industry?
Tom: It is absolutely a concern for me and ought to be for the industry – not least those involved in marketing. Customer acquisition has, since the dawn of time, overly relied upon the presence of a strong new customer offer to the extent that both brand and product marketing has not been anywhere near as important as it is going to be. Similarly, retention teams will be under pressure to increase lifetime value to cover taxation. No easy feat when it’s highly unlikely they’ll receive additional resource.
As if an enforced change in marketing strategy isn’t bad enough, marketing teams will be required to undertake this at the same time as their competition and on smaller budgets than they’d previously known. It’s going to be a tough old gig – one which will sort out the true marketers.
SBC: Can player acquisition strategies that have been developed outside of regulated market dynamics still be applicable, or is there a need for new direction with regards to marketing, retention and player acquisition?
Tom: A lot will depend on the importance of the UK and VAT-applicable EU countries to operators. The greater the importance, the more operators will need to change the way they market to acquire and retain customers. Simply reducing bonus value and frequency, widening the gross to net revenue share calculation by which affiliate commission is calculated are the obvious steps to take to avoid wholesale change in strategy, and what I fully expect most compliant operators to undertake, at least initially, to attempt to offset tax. Others may opt to change the way they acquire customers altogether and this will likely see their competition join in the fun and try something new.
SBC: As an agency director are you worried that saturation combined with new regulations and legislations will put off new ventures from emerging in the igaming market – will the market become a closed field?
Tom: I feel that Change in regulation tends to open the door to new concepts. I would argue that savvy start-ups might actually benefit from it… it’s far easier building operations, teams and strategies to suit market conditions in a start-up business than it will inevitably be for the behemoths of iGaming to reconstruct the way they work… just look at the condition of some of the great land-based giants in the UK and their approach to iGaming since its naissance. Many are still floundering to find a place for it in their overall strategies.
SBC: Finally how do you visualise player acquisition and marketing panning out in 2015, what wholesale changes will the industry witness?
Tom: Smaller bonuses, smarter branding, aggressive customer retention, less of Ray Winstone.
We’ll likely see many white label operations fall away as a result of PoC taxation, but in their place I expect to see well run, well-funded operations – firms like Betable or Betbright – really grab a whole lot of UK market share.
Tom Galanis – Director GameOn Marketing