UK Bookmakers To Invest Heavily In TV Ads Before Proposed Crackdown Begins
Gambling companies are in for difficult times as major changes are coming. As previously reported the two main headaches for the UK’s gambling powerhouses are the proposed offshore taxes or point of consumption tax and the imminent crackdown on FOBTs.
Marketing and advertising have always been a major component in the strategy of gambling companies. It is estimated that anywhere between 20-30 percent of online revenues are invested back into marketing and advertising campaigns. A report in the Financial Times points out the increased spenditure that the big five gambling companies are planning in an effort to minimize the effects of the proposed changes.
The Soccer World Cup is coming up in the summer and millions of pounds are being spent in an effort not only to attract punters for the tournament but to engage them as much as possible before the changes start kicking in at the end of the year.
On Wednesday Chancellor George Osborne is expected to announce a 15% new tax on gross profits. Bookmakers like William Hill and Ladbrokes are already warning that the proposed changed will cost them tens of millions of pounds which need to be generated in other markets. We reported that the biggest bookmaker William Hill has shown their competitors the way in succeeding to expand to other global markets and with cost cutting measures.
TV advertising stands to gain the most as the gambling companies go all out to increase their market share before the new regulations come into play. To get an idea of just how much money will be ploughed into TV advertising one only has to look at the overall marketing budget for 2013 which was £690. Of that about £150m was spent on TV advertising. With online gambling growth this figure is conservative and is expected to reach up to £200m. Another headache for Gambling companies is the possible crackdown on the amount of gambling related ads allowed as complaints from the public have led to Culture Secretary Maria Miller ordering a review.
It remains to be seen if the smaller bookmakers succeed in competing with the powerhouses like William Hill and Ladbrokes who have a better chance to weather the coming storms.