"Big risk" beginning to pay-off, says Ladbrokes CEO

Ladbrokes’ decision to cut dividends and invest in a new turnaround strategy underpinned by increased marketing spend was a “big risk” but one that is beginning to pay off, according to its chief executive Jim Mullen (pictured).

Speaking to eGaming Review after the firm posted a 13% increase in full-year online net gaming revenues, which included a 28% increase in Q4 revenues, Mullen said he was satisfied his organic growth plan, which was in part funded by a cut in dividends, was having a positive impact.

“Bear in mind we took some of our shareholders’ profits to invest in the business, so I’m satisfied that they [growth numbers] are coming through,” Mullen said.

“It was a big risk for me and the management team but I feel that is working but I want to qualify that by saying we don’t want to get too far ahead of ourselves – we have to get back to work to keep this going.

“But our Q4 exit rate was 28% and that is the best ever for Ladbrokes.com which says a lot, while our full-year NGR growth of 13% we are also delighted with,” he added.

Marketing spend

A key plank of the growth plan was to increase marketing spend, which it did to a level of 33% of NGR in H2, in order to rapidly grow its recreational customer base.

And this appears to have had the desired effect with H2 active customers up 10% and staking up 29%, two metrics which Mullen said indicated Ladbrokes had been effective in attracting the right type of customer.

“So those active players are spending more and that shows we are bringing in the right players and we are absolutely delighted with that,” Mullen said.

Although a large bulk of its marketing budget has been spent online through affiliates and pay-per-click, Mullen said the firm had also been successful in signing-up new online customers through its vast retail estate.

Last year the operator incentivised retail staff to sign customers up to its digital services and Mullen said that as of last night, the firm had added 60,000 new active customers to its online ranks, with actual customer sign-ups way in excess of that figure.

“That front door to our shops, with our variety of products inside, enables us to acquire really high yielding online players – they deliver two times the yield of an online only customer,” Mullen said.

“That [the retail estate] is the biggest affiliate network we have for our business and all at much lower CPAs,” he added.

Racing stalemate

Mullen also said he was “baffled” by the current stand-off between UK retail bookmakers and British Racing. The bookies are currently barred from striking sponsorship deals with a large proportion of British racetracks due to their refusal to become and Authorised Betting Partner.

Ladbrokes yesterday signed a sponsorship deal with World Snooker and while Mullen said he had money ready and waiting to invest in racing, those funds could be reduced should other sponsorship opportunities arise.

“I have a cheque book and I want to sponsor racing so if anyone wants me to sponsor their races then I’d be happy to do so, but at the moment they won’t let me,” Mullen said.

“We are fully supportive of horseracing, it’s part of our heritage, but at the end of the day I have a business to run so if any other sponsorship opportunities come up then we will look at those and that might reduce the budget,” he added.