William Hill backs product investment to win UK battle
Operator says it does not need to enter marketing war in order to cement its UK market-leading position
For all the talk of international diversification it is William Hill’s UK online business which continues to shine brightest. Yet, as the sector enters choppy post-Point of Consumption (PoC) waters, the firm looks set to shun a battle of marketing budgets and concentrate on refining its formidable product range instead.
During an analyst presentation after announcing a 20% year-on-year hike in online profits, CEO James Henderson revealed figures which demonstrated its enviable position in the UK.
Online net revenues soared 29% in H2 2014, while unique actives and revenue per active were also in double-figures, up 17% and 10% respectively.
These numbers show impressive underlying growth in the world’s most competitive online gambling market, particularly at a time when many of its rivals are planning to scale back on marketing as the industry gets to grips with operating in a PoC environment.
Yesterday, for example, Ladbrokes said marketing costs for 2015 would represent a lower percentage of NGR when compared to the 27% invested last year, as it looks to mitigate some of the impact of PoC, which came into force on 1 December.
William Hill is by no means the only gaming firm to take a long-term view on the PoC impact. The all-out marketing war, predicted by many to send marketing costs through the roof, looks like becoming strategic game of chess rather a battle of budgets.
“It’s very early days [for Point of Consumption] because we expect to take 12 to 18 months for the market to settle down, but in marketing terms very little has changed,” William Hill CEO, James Henderson, said.
That’s not to write off the impact of those companies spending more. Betway, for example, is emerging as a big spender in the sports and racing sponsorship stakes, while Betfair continues to ramp up its ‘This Is Play’ TV campaign.
Yet despite no rise in marketing spend – one must not forget Hills’ marketing budget is still huge at around £130m – analysts are backing the company’s bullish outlook that they will continue to grow UK market share as a result of the new UK taxation regime.
The company will of course be aided by the fact that some smaller players have already dropped out of the market, but there is a widely held view that larger operators will take a greater share from those left behind.
Innovating in the right areas
Involvement in the M&A market would also likely boost its UK presence, although that is far harder to quantify.
What is far more concrete, and what Henderson and co believe will drive growth in the short to medium-term, is investment in product and user experience.
Marketing spend, the company’s management argue, historically does not correlate directly with market share. Product scope and quality, it says, does. The success of its proprietary Vegas app and its impact on casino revenues is testament to that.
Football – representing 43% of turnover and 54% of gross win – is at heart of William Hill’s UK sportsbook growth strategy.
AccaInsurance and Cash In My Bet in particular have proved popular features for William Hill’s online customers and the operator plans to extend the latter to new markets including basketball, snooker, boxing and golf, in addition to political bets which will be available from next month.
It is also preparing to launch a priority access card in the near future, which Henderson described as “the first of its kind in the UK sector”, giving customers instant access to online account funds and can be used in exactly the same way as a debit card.
The launch coincides with William Hill’s view to prioritising its ‘omni-channel’ experience for its UK customer base, providing a seamless experience between its 2,300 betting shops and online arm. This includes content from its shops, such as live streams and ‘Yes/No’ betting coupons, being adapted for online and app usage for the first time.
“The message is you absolutely need to get your football experience right which we’ve done for a long time in retail, which is why we’ve got 38% market share of football by gross win versus 26% of shops,” Henderson said.
William Hill’s product focus strategy is, of course, no guarantee of success but few would bet against it coming out on top in what looks set to be a transformative few years for the UK online gambling industry.