Broadband? The real action is in gambling

When one door closes, another opens. While the marketing community frets over the increasingly heavy restrictions hedging big-spending categories such as food and cars, it can also look forward to a 2007 with two major new opportunities.

The first is the broadband land-grab created by prising BT’s grip from the “last loop” in UK telephone exchanges. Talk Talk has already triggered a price war, but the arrival of Sky and others in the market seems certain to create some high intensity marketing activity as competitors go for each other’s jugular. This will, however, be of relatively short duration: a spendfest, but financially a suicidal one.

Arguably more interesting, because more long-term in its potential, is the second. From September 2007, when the Gambling Act is implemented, a new market for advertisers will come into play.

The frenetic growth in online gambling over the past few years suggests that this is a market to reckon with. But just how big will its spend be? And what of the problems, ethical and otherwise, lurking in the undergrowth?

First, market size. While no precise figures are available, a study by Nottingham Trent University suggests the UK punts an incredible &£50bn a year (only a part of which, of course, ends in the pockets of the gambling companies after deducting winnings). If we were to apply the same template to the market as the National Lottery – under 1% of revenue spent on advertising – that still suggests an annual figure of over &£400m expended on ads alone.

There are, however, good reasons for caution in assessing this figure. To be sure, there will be some need to advertise the physical presence of newly owned casinos, and other gambling opportunities. But just how many extra players would respond to an expensive general awareness campaign advertised on television? Despite the high overall figure staked, regular gambling is practised by only a small proportion – about 5% – of the population. In targeting these, the gambling industry may well feel precision and online marketing offer a far better return on investment (though that is not to say the spend will be inconsiderable). True, a few years ago a number of online gambling companies injected large sums into (legally controversial) national poster campaigns. But this seems to have been focused on investors prior to flotation, not on punters.

A second problem area is the advertising environment. No one should doubt that gambling addiction is a serious social and psychological disorder, yet there is a fear within the industry that excessive political correctness will prevail in drawing up the rule book. On this, we shall have to wait on events, as the Committee of Advertising Practice has only just launched a consultation on the guidelines which will be implemented by the Advertising Standards Authority.

Thirdly, as we have seen with the plummeting share price of Partygaming, and even more graphically with the arrest of David Carruthers, chief executive of BetOnSports, gambling is a spectacularly volatile sector. Its vulnerability to changing interpretations of the law, or indeed to media-inspired frenzy, will make it a roller-coaster of an account to handle.