The party’s over for online gambling

The chips are down for online gambling company PartyGaming, which saw its share value cut by almost a third in one day last week, amid fears about its optimistic growth forecasts and heated debate about the industry’s marketing strategy.

PartyGaming, which recently stunned the market in one of the biggest flotations the City for years, owns the world’s biggest poker website, PartyPoker. But its collapse has betrayed a lack of confidence in the future of the online gambling sector. During the third quarter of 2004, the industry grew by 24 per cent, leading to predictions that the market would double in size during 2005 and follow that boom with increases of 50 per cent in 2006 and 30 per cent in 2007.

However, PartyGaming has triggered panic by revealing that during the first two months of the third quarter its rate of growth was just four per cent. PartyGaming has also revealed that the average yield – or spend – per player was decreasing faster than expected as new customers proved to be more cautious gamblers. Fresh gamers are also using different sites and playing less regularly.

With the growth of the industry stalling, the latest events could herald a change in online casinos’ marketing operations, with a shift in emphasis to retention of gamers as much as acquisition. Industry observers agree that the “land grab” among online poker sites may be slowing, with the marketing mix changing and efforts being refocused on retaining customers, and encouraging them to play more often.

Richard Segal, chief executive of PartyGaming, which already spends about 30 per cent of its revenue on marketing, said the company will adopt a “rifle, not shotgun” approach to its future marketing.

Guy Norwell, account director at Mustoe Merriman Levy, the UK agency for online poker company PokerStars, says the advertising blitz earlier this year is over. He describes PartyPoker’s spend as “totally disproportionate” to the number of customers it would have attracted during the campaign.

Norwell, along with other observers, also believes that much of PartyGaming’s marketing efforts may have been aimed as much at creating a buzz in the City prior to the flotation as it was about attracting new customers. “It spent megabucks, but it wasn’t about building the consumer base – it was mainly done for the City,” says one commentator. Norwell also believes that another high-profile name in the process of preparing to float,, may also have aimed its advertising at the financial companies.

Whatever the benefits of, and reasons behind, this year’s high-profile campaigns, it seems that retention is now the priority of the casino operators.

PartyGaming group marketing director Vikrant Bhargava says that three years ago the focus was on acquisition of players, but now the company has to strike a balance and acquisitions must be cost-effective. Despite PartyGaming’s share value shock, there is plenty of room for the market to grow. In the US last year, 40 million people played poker, but only 5 million of these took part online. Bhargava adds that the expected relaxation of UK laws governing advertising regulations for casino operators could further cloud marketing activity, with companies potentially given the opportunity to build their brands using different media, such as television, for the first time.


Ding dong merrily?

Marketing Week

One established way for companies to reward staff is to throw an end-of-year party. But is this a valued motivational event, or has the traditional Christmas do had its day? asks Martin Croft The ancient Romans had a festival in the darkest days of winter, which they called Saturnalia. During Saturnalia, which took place at […]

Centura appoints marketing chief

Marketing Week

Centura Foods, the RHM Foods-owned company, has appointed former Allied Domecq marketer Mark Doorbar as its marketing director. He replaces Katherine Rose, who quit in May after less than a year in the role (MW May 12). Doorbar has been working with Centura since May on an interim basis, but has now been appointed as […]


    Leave a comment