FIRST RULE OF ANY BUSINESS
The first rule of any business is product market fit. If their is no customer call it won’t work. And, if the market has a lot of competition, a company needs to perform better than the rest.
As a starting point, we should recognise online Sports-betting is different to high street betting shops. The latter is about having the right location, while online has a world audience. In the betting shop business, good staff (employees), a nice set up, good betting program, and cheap drinks should suffice.
Building an online business is clearly more challenging, and many big retail companies have failed. With that in mind, it’s fair to suggest new incumbents have a difficult starting point. With that said, they are less set in their ways and have a free hand.
Power tip - Governments are aiming for a cashless society, retail shops could suffer has a consequence. From our experience, most shop users want cash-in and out. This lower socio grade of punter are unlikely to bet the same when transactions are digital!
IT WILL TAKE MONEY TO BUILD
Let me share a secret, growing an online business will take money. While it’s fair to say many betting companies where formed (found) with very little initial investment (100K), further funds where needed to scale. Well known sports-betting companies such has Betsson, Tipico, Unibet, bwin and Bet-at-home all needed institutional money before the big push forwards.
Owners and directors of Sports-betting companies who don’t understand this have no chance. Online stores are not retail, where you can simply use cash-flow to build a chain. Needs and costs of operating online are much higher. Typically 15-30 Million will be needed to gain the big traction, and that brings us on to the next point of timing.
It will take anything between 2-5 years before bigger finance is required. Reasons include:
Proof of concept - Investors are not particularly risk averse.
Cashflow positive - Proof that the business can make money - investment is just to scale!
Software - Must be developed well beyond the MVP (Minimum viable product)
Structure in place - Legal elements, tax efficiency and ready for expansion.
Brand - People know who you are!
Customer database - Bragging rights and testament that the platform can convert!
By getting business in order, finance will be easier to raise without handing over large percents of equity!
PS - Taking outside investment will also give a natural ‘’exit strategy’’ - figure that one out for yourselves!
LANDING PAGE - WEBSITE
One of the most important aspects for customer acquisition is a websites landing page. If a first time visitor arrived at a sports-betting site through a banner add or search engine query - first impression will dictate interest!
Bare in mind a website is not a betting terminal, and nor is it a betting shop where their is an active customer. It takes a site visitor just a few seconds to hit the back bar, or tap in the next website address!
A look at top performing websites such has Bet365 will show what’s needed. what is most common and works, any incentive to join should be the first thing seen. What else should the first time visitor see:
In-play (active) odds
Big event/day odds
Other gaming options - Casino etc
Latest scores and stats
A good company profile will encourage rather than deter!
A Sports-betting website should be SEO friendly, and represent what clients want to see. In marketing terms, the latter should be done by ‘’rapid experimenting’’ (look at click through rates - time on site etc).
NICHE OR NOT (UNIQUE SELLING POINT)
Deciding whether a Sports-betting platform should have a Super-market (sell everything) approach, or a niche is the owners to decision. Both can be successful, albeit to varying degree’s. What we can tell you is:
Highly competitive Asian football bookmakers have massive turnover. However, they work with low margins, and have a network of trustable agents who pick up many of the costs (banking - dealing with clients - marketing etc).
Specialised bookmakers such has Racebets (Horse-racing) don’t have big data costs. They where quickly profitable, and able to find the right audience. In 2016 they where acquired by Betsson for €35 million, a fantastic return on limited investment.
CONTENT CAN BE KING
Nearly all online sports-betting companies ‘’buy-in’’ data. Suffice to say, this creates a similar look across competing platforms. However, individual operators do have the option to set margins based on competition, and they can also make it interesting by creating own bet types!
If a site is taking the full program route, they will want as many betting opportunities as possible. The object of any online selling platform is engagement, and not having choice means users will go elsewhere
When i’m speaking to an audience, cross platform exploitation is one of my favourite topics. In this instance, casino is a fantastic vertical to exploiting a gambling database.
Cash-out and high win limits are other factors that encourage leisure players!
Some people just want to bet!
We mentioned statistics and live-scores already. Having stats could keep a user on site, while livescore suggests the site is complete.
Online chat is another option. It makes the operator appear professional, and it gives the customer a good feeling. That sense of security removes the burden of trust, and it increases the likelihood of customer deposits.
Bigger portals offer ‘’live-streaming’’ to customers who have deposits. While it comes at a cost, it does at least keep the customer on site and engaged.
PS - goes without saying all should be visible on mobile!
BACK OFFICE SUPPORT
A big mistake many young Sports-betting companies make is building a big back office in Malta or Gibraltar. The reason, it’s financially unviable and the quality of candidates is generally low. Most forward thinking companies look to places such has Bulgaria or Latvia for back office support. The costs are considerably less, and bigger worker pools ensure competition for places.
For the record, William Hill, Bet365, Ladbrokes, Playtech and Bwin all have support offices in Sofia (Bulgaria), and they are not there for the nice weather or the scenery. These companies are in Bulgaria for efficiency, such include low taxes, cheap office space, excellent internet, low cost technical specialists, a few hundred Euro per communication staff. For the record, the minimum salary is €320 and the average €600!
Power tip - A motivated team driven by results is essential.
As a betting company grows it will need to improve quality of staff. Compare a growing business to a football team gaining promotion. In that, the next division is going to be tougher, so stronger players will be needed.
Employee performance should always be a factor, and managers who can motivate and make decisions are important.
Sports-betting companies should work like a well oiled machine.
Google translate might be fine in helping to read a blog, but it’s not ok for a sales website. Sports-betting platforms are selling bets, it’s important that customers can read text like they would on a local site. Contract good translators who give the site a local feel!
Any sports-betting company wanting to reach out should have all major languages covered!
Using native speakers for support is best!
Betting companies don’t need to look for professional gamblers, if the odds are wrong they will find you! However, they win money, so it’s fair to assume leisure facing bookmakers are not seeking this type of customer!
Finding the right audience is a different type of challenge, and it comes at a price. In fact, acquisition costs can be extremely high, and many digital marketers don’t have a clue.
Once upon a time, Sports-betting companies would simply strike an affiliate deal with relevant websites. They in turn would add an incentivising (bonus) banner, and clicks on the affiliate link would be rewarded by way of revenue share. Some affiliates where making over €1 million per month in revenue share!
Nowadays, affiliate programs are not succeeding in the same way, and one of the reasons for that is lack of trust. A long story made short, betting companies reneged on agreements with Affiliates and saved themselves millions per month in the process. The likes of William Hill, Skybet, Paddy Power, Ladbrokes, Bwin, Tipico VC, etc found ways to stop paying affiliates revenue share. Suffice to say, website owners are now distrustful of gaming operators,and they are looking for different types of agreement!
For long term success, think of SEO (search engine optimisation) when marketing. It helps create sustainability while branding at the same time.
We don’t want to go into great detail, because marketing depends on many factors. However, take in to consideration territory, legality, and offer before deciding on customer acquisition tactics!.
What we will say, get everything in place before going all-in with marketing. It’s easier to market a well organised site, and it will create more seriousness.
PS - find a way of encouraging others to spread the word?
VARIOUS WORLD MARKETS
Ever heard the saying, ‘’don’t put all your eggs in one basket’’?. That certainly applies to sports-betting companies, especially since countries are continually changing regulation. What can be a viable business one day could disappear overnight - don’t leave your business in that situation!
We have to point out, the increased costs of regulation is killing off a lot of gaming companies. And, those countries who are unwilling to regulate are finding ways to stop betting companies from profiting.
Germany is such an example, they don’t have a license regime in place. However, they still ask for 5% tax on every bet from people residing in Germany. And, while on the high street it’s being passed to the end user, franchise partners are being badly affected.
Italy changed regulations thirteen times over the past four years, and most companies in that market have suffered big losses. Are gaming operators willing to work in such an environment?
It’s a fact, Bookmakers make bigger returns from unregulated markets. That’s the reason why many set up a second license and skin offshore. You name it, Betsson, Unibet, Bet365, 10bet, Tipico have different websites for grey markets. Makes sense considering no betting tax, no regulation and low costs of operating!
There are still opportunities around the globe, but gaming companies need to understand what they are getting into!
Many gaming companies offer partner skins, call it a glorified franchise system. In fact, the only difference is skin partners do their own marketing and find their own customers. However, they are unlikely to take betting risk, and it’s low cost entry for opportunists who have an active audience.
An example of such:
Israeli owned 10bet has all these skins, and possibly more : 377bet, baymavi, betfinal, betfirst, betfoot, bethard, betive, betolay, betrally, betsat, betstars, betvision, comeon, fun88, ganabet, jbet, jenningsbet, jojobet, justinbet, knockout, luckia.es, matrixbet, mobilbet, netbet, norgesspil, odeonbet, ole777, paradisewin, propawin, realdealbet (closed after ripping-off clients), redbet, redzonesports, royrichie, rubet, sekabet, setanta, spilleautomater, suomivegas, superbetin, sverigekronan, tlcbet, winmasters.
Strike deals where possible, if of course it makes economic sense. By that we mean cost of delivering product is lower than income, not always a given!!
What payment providers a sports-betting company can offer will be dictated by situation. Determining factors include legal structure, countries being targeted and licenses held.
For those setting up offshore in places such has Curacao, it’s possible to offer Skrill, Neteller, Eco and Paysafe through a legal EU entity (sister company). Another option would be to use crypto currency Bitcoin, it’s legal to accept this tenure from anywhere in the world. Even US citizens can fund betting accounts using this method, and we have had people pay make payments from the likes of Syria, Egypt, Iraq and Iran.
An EU licensed company should have every option possible. Even Paypal have stepped back into the arena, while maestro, Switch, Visa and master card are cheaper to process.
PS - Understand banking options!
Being able to bet in local currency makes the customer feel at ease. Take this into consideration before targeting any particular country.
Build trust through reputation management. By doing things right the message will get out that the sports book pays, their is nothing more affective than viral marketing!
Think trust = retention!
It’s certainly possible to build a successful sports-betting company from scratch, that is if the people know what they are doing!
It goes without saying the software needs to be good, and it’s best bootstrapping (paying out of own pocket) the business upto the point of positive cash-flow.
Teams with great energy are needed to create a positive atmosphere, and the marketing department needs to be ultra creative and extremely energetic.
It’s safe to say lazy companies won’t exist long, and those believing business just comes without effort are deluded.
Have a plan, have a strategy!