Ladbrokes insists marketing investments will pay off after profit hit
Ladbrokes insists investments in its marketing and digital expertise have paid off in lifting revenues despite the outlay hitting profit in the first half of the year.
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Group revenue climbed 4 per cent to £589.3m in the six months to 30 June. However, profit fell 28.9 per cent to £54.7m versus £55.1m a year ago.
Bottom line was hit by Ladbrokes increasing the percentage of marketing spend from revenue by 31 per cent in the period to accelerate demand around the World Cup. It expects the marketing drive to continue in the second half of the year between 25 and 30 per cent of revenue after claiming it the activty has left it “well positioned for growth”.
The gambling firm revealed the investment helped deliver updates to its ecommerce and digital division Playtech, which it has struggled to launch since last year, in time for the tournament alongside updates to its mobile and single wallet offerings.
It is hoped the outlay will stand it in good stead as it looks to recoup losses from earlier in the year when it had to make big payouts after an unusually high number of favourites in matches won.
Ladbrokes said it would maintain a “disciplined marketing approach” for the upcoming football season, focusing on “enhanced CRM” and user experience to build a stronger brand. Up to £4m in cost savings have been made across the business to help support the charge, which will be phased into the fourth quarter.
“We will continue to focus on growing mobile amounts staked through increasing sign ups and conversions”, says Richard Glynn, chief executive of Ladbrokes. “We are also targeting our active customers, encouraging enhanced play through better targeted offers and a constantly improving product, all led by customer feedback and delivered through the Ladbrokes innovation lab. Whilst our emphasis on innovation will necessarily focus on the mobile growth opportunity, we will continue to build on the improvements in our desktop product.
Elsewhere, Ladbrokes is turning its “Odds On” loyalty scheme as a key platform in its response to calls for tougher regulation from campaign groups and some MPs on marketing in the sector. It is testing algorithms that identify those players exhibiting signs of problem gambling based on their behavior. These include frequency of play, patterns of wins and losses and betting and gaming habits.While trials are still ongoing, Ladbrokes plans to test customer communications based on the findings as well as make available to the wider industry in the coming months.
Glynn adds: “We are also progressing our work to link responsible gambling to executive remuneration for 2015 and beyond. Initially it is likely that we will target operational areas for improvement such as increasing card play, delivering an effective algorithm and rolling out new initiatives ahead of having a more sustainable KPI linked to relevant and meaningful business data.”
