Case study: Ladbrokes
Case study: Ladbrokes
How has one of the early market leaders fared in recent times?
InsidePoker Business looks at the UK’s retail betting giant to find out if its lost its way with poker.
Ladbrokes Poker launched in 2002 and quickly became the third largest online poker room in the world and the biggest without US customers. In 2003, the site grew its customer base by 300%, attracting 25,000 customers and offering satellite qualification to its Poker Million live tournament. The success story continued in 2004 as the customer base more than doubled to 60,000 active players and by 2005 Ladbroke’s annual report proudly boasted that its poker site generated a weekly rake of almost Â£800,000 and a total revenue of Â£41 million. Active player numbers swelled to 128,000 thanks in part to a strong online community brought together by offline events – such as the Ladbrokes Poker Million and the Ladbrokes Caribbean Poker Cruise.
By 2006, Ladbrokes Poker was attracting around 158,000 active players but despite a 30% rise in player numbers revenue actually declined by almost 3%. Ladbrokes attributed this to increased competition and the reduced margins due to rakeback and other promotional offers. The competition continued to squeeze Ladbrokes and for the first time ever, player numbers fell slightly in 2007 with revenue falling by a further 11.4%. By 2008, player numbers were reduced to 145,000 with total revenue at Â£29m, more than Â£11m down on 2005. In Q1 of this year, Ladbrokes took the decision to join the Microgaming network to increase liquidity and this appears to have arrested the decline in player numbers, but the H1 report for 2009 shows that despite a small increase in player numbers, yield per player and active player days are both down around 16%.
For a few years, Ladbrokes looked poised to be one of the biggest players in the UK poker industry but its slow decline has been similar to that of other poker sites that failed to capitalise as the market matured. Other early poker sites or sportsbook-related sites show a similar pattern of rise and fall from a peak of activity and optimism around 2005-7. Ladbrokes strengths – its brand and offline infrastructure – remain as key selling points. Regular players cite Ladbrokes and Unibet as the two ‘safest’ skins of the Microgaming network and its ability to handle real money deposition and withdrawals in its betting shops and via its own banking platform separate it from the slew of similar poker sites offering identikit games and similar promotions.
Having essentially given up on competing with the marketing budgets of the big poker-only, US-facing poker sites, Ladbrokes has ended its support for the Poker Million and scaled back its pro team to a handful of UK and Nordic Pros. Like many other smaller poker operators, Ladbrokes main focus is now on fostering existing players in the ‘community’ and helping new players, especially those transferring from its sportsbook, to reach a basic standard of poker knowledge to allow them to at least lose their bankrolls at a reasonable rate.
With a brand that is safe and trustworthy for sportsbook customers, Ladbrokes had previously gone for tabloid-style promotions and its customer base now reflects that approach. While the big global players have created TV shows, sponsored domestic and international sports teams, created huge poker tours across multiple continents and attracted hundreds of thousands of players to record breaking online tournaments and prizepools, Ladbrokes has been unable to keep up and now has to rely on the ninth biggest poker network for liquidity as player numbers flatline and revenues decline.
All the current initiatives make sense; the company is unwilling to match the marketing spend of the US-facing sites in poker and so needs to concentrate on increasing yield from existing players and trying to school sportsbook crossover customers in the fundamentals of the game. Indeed, the sportsbook’s ability to bring in new players remains a huge part of the site’s appeal. Product developments, such as the ability to enter the poker site via a one-click browser based game, show that Ladbrokes is still focused on growing its poker player base from existing e-gaming members from its other offerings. But there is nothing that provides the wow factor, or anything different to a multitude of other poker network skins.
The poker landscape has gone through some huge changes over the last few years and Ladbrokes may have caught the first wave, but it appears to have lost ground after an explosive start. Does the company still have the drive to make poker, with its small margins and competitive market, a priority? We caught up with Kate McLennan, Ladbrokes’ head of poker to find out…
IPB: Tell me a little of the history of Ladbrokes Poker
Kate McLennan: Ladbrokes launched in 2002 and, like a lot of companies, we enjoyed phenomenal growth. We had a good heritage with a large community of tournament players as well as the very important cash games and we had a strong marketing partnership in the Nordics with a company called Sponsio, which we later purchased to become solely Ladbrokes. We still have a healthy UK and Nordic business and our own product line with Microgaming. In February of this year, we took the strategic decision to merge with the Microgaming network for a combination of reasons.
IPB: So why particularly did you decide to join a network? Player numbers were pretty consistent for Ladbrokes, what prompted the need for liquidity?
KM: We needed liquidity at the higher-stakes and also at that time in the marketplace we needed a bigger network to ensure our players could have the variety of games, the minimum waiting time, guaranteed tournament and prize pools. which all relied on the network. I’m pleased that the integration went so well, but I think that players still like to play with Ladbrokes – they recognise that alongside the software we have our own banking and a reliable trustworthy brand. Considering the shake ups that have happened in poker it’s important that we can still offer that reliable, trustworthy service for people parting with their cash.
IPB: From 2005-7 you were dominant in the UK but sites that are active in the US are outspending you. Has the UIGEA contributed to Ladbrokes becoming less dominant?
KM: Undoubtedly, we never took bets from the States so we didn’t have an overnight shock in leaving that market but in terms of competing in marketing spend in Europe then of course the competitive framework has changed. From Ladbrokes’ point of view it’s about remaining confident and having a strategy that sets us aside from those operators. We may not offer the same scale of tournaments but we can offer different things. The US sites may not have it all their own way next year. UIGEA payments blocking should be enforced by June and this will hinder the liquidity and marketing spend of the US-facing sites. We hope this will facilitate European players moving back.
IPB: So what new initiatives are you offering players?
KM: We have adopted a strapline which is ‘poker to the people’. Poker is still growing but we also have to recognise there’s a whole bunch of people out there who want to play poker but don’t really know how. They are anxious about parting with their cash, so we want to convince them that poker is very important to Ladbrokes and it’s a safe place to deposit money. We also have a whole range of product initiatives to try and help newer players choose to play at the right level, so they don’t get completely stung by the sharks. We want them to be protected while they learn to play, so that they have a more positive experience.
IPB: Do you think players are more concerned with having fun than winning money?
KM: We have done a lot of research that shows that of course people want to win money, but actually they also want to have fun. This is often an opportunity missed, so we’re trying to say ‘come and have a little go with Ladbrokes and we’ll help you improve’. We’re bringing in products to help people learn poker, including a new poker school in Q2 next year, which will teach the basics of how to play and offer more advanced advice for those people wanting to progress.
IPB: Is the poker school similar to the Full Tilt Academy or CardRunner videos?
KM: It’s probably going to be video-based, on our website and accessible to all, we’re putting together the information right now including tutorials, sections on playing poker and how to navigate through Ladbrokes poker and the features in the software. We’re trying to coach the newer players step-by-step with our new player communications strategy. We have done a lot of segmentation so we can understand what our players’ knowledge levels are. It’s also important to recognise and nurture losing players, to support them and keep them coming back. Finally, another feature we’re calling Poker Mate offers private tables. Poker Mates is a big initiative for the spring, although private tables already exist in our lobby.
IPB: Ladbrokes was the original sponsor of the Poker Million and was known for its Poker cruises, have you consciously moved away from supporting live tournaments and is live poker less of a focus for Ladbrokes?
KM: There is as much focus on poker as there’s ever been, but what we have had to do is look at what is important to us as a business and also what generates a good return for us. With the Poker Million we had to review what was commercially viable and needed to make sure we were getting the right return for the sponsorship and backing. Offline events definitely have a place but they’re largely related to MTT players, which isn’t the largest part of our business. However, we are organising another Ladbrokes Poker Cruise with qualification launching in the new year and running throughout 2010 for an eight night cruise in the Caribbean in Jan 2011. The cruise will accommodate 350 players plus their partners and really fits with our ‘poker to the people’ strategy. We are offering lower level tournaments and focusing on just having a good time. That’s what our players feedback tell us they want. We’re also likely to support the WSOP too and have the Irish Poker Festival in October, so we do very much value our offline events and support our MTT community.
IPB: Speaking of the World Series, you had a major presence there in 2008 but were less visible last year, do you think the Series is still important to a European-focused site?
KM: I would say that the WSOP is more about creating a fun experience, with smaller, hosted teams. That’s where we can excel rather than sending thousands of people and just giving them a t-shirt and a buy in. Our customer service team have a personal touch, right down to Skalie [2007 WSOP finalist and English pro, Jon Kalmar] hosting our MTT leader board winners. We have found a way of making smaller more beautiful.
IPB: Do you have a separate programme for your higher-raking customers?
KM: We’ll be doing a VIP programme as well as the Vegas experience. If our top VIP customers want to go to Vegas we’ll lay on the whole shooting match for them. We have a VIP club and next year we’ll offer a tailored reward scheme to strengthen our relationships with our customers. We need to have a mix of customers.
IPB: You mentioned Skalie, alongside him and Steve Davis, is your strategy to stick with the tried and tested mix of poker professionals and sports stars that seems a mainstay of the poker industry?
KM: We’ve had good relationships with good professional players historically and continue to have relations with a few, but it’s tough. Lots of other poker sites spend huge amounts of money on professionals, some of whom are so inaccessible. We want to be more human; we like Skalie because he’s real and he looks after our MTT package winners, has a beer with them and gives them personal chats. Last time Steve Davis was on our site he was chatting for ages, so much so that Microgaming had to investigate what was going on! We could spend a lot of our marketing budget on professionals and have really glossy adverts, but would that really mean anything to our customers? My view is no. We’d rather spend our money on helping develop our players and reward them accordingly.
IPB: So you have spoken about your strategy focusing on improving your lower level players for the UK, is this strategy going to work in your other key market, the Nordics?
KM: Definitely. ‘Poker to the people’ works across the Nordics. Our Nordic players aren’t all high-level players so the strategy is relevant there and we’re building on that. We have country managers in each country who have played a big part in our growth and really believe this is the right strategy. Even in the countries where we do have the high raking players they are happy because we’re bringing in the fish anyway. It’s also a strategy that will help us in the new markets as those players are learning players too.
IPB: What are your main focuses in terms of new markets?
KM: Eastern Europe is a major focus for us. We’re looking at Poland, Bulgaria, Croatia and Romania and we’re definitely seeing good growth out there.
IPB: So Ladbrokes is still focused on growing poker and you have a clear vision on how to achieve this?
KM: Definitely and 2010 is the year we’ll be pulling it all together. We have a young fresh team divided into customer development and acquisition, product development and acquisition, based across London and Gibraltar. We believe 2010 is the year we can really make a big difference in poker. It’s been a successful part of the business but it is competitive out there. I won’t pretend that we haven’t felt things the same as the other operators have, in that obviously we are fighting the sites who continue to take bets from the States, whereas we’re always going to be compliant. We value our licenses but that has brought with it the challenges of competing with sites that are US-facing. So we’re confident in the vision and our team to try and push all this through.