Opinion: The media arms race
Henry Daglish, deputy managing director, Arena Media, explains why Sky's new policy on selling sports airtime will create opportunities for online sportsbooks
At the end of 2012 Channel 4 changed the rules in the bookies media arms race. It was clear media owners would quickly follow Channel 4’s example, and they certainly have. Sky has now found itself in the midst of the perfect storm.
Amidst an extremely tough economic environment, the gambling sector has appeared as the shining knight on the horizon. While consumer expenditure is at best depressed, bookies are witnessing a 20%+ growth in digital gambling and new technology is allowing them to acquire over 30% of their new accounts via mobile. Amidst all of this, expenditure in TV advertising by the sector has increased by 34% since 2010.
The truth is that the sector is on fire and Sky is perfectly placed to reap additional income off the back of its increased investment in English Premier League. By packaging sports airtime for the next football season, meaning that bookies cannot make specific purchase deals, Sky’s new process for selling airtime around sport to bookies is already having profound implications for the market. Yes, it’s not an auction. But it’s still making waves in the media industry.
In light of Sky’s new process, Bet365 is likely to lose its strangle-hold on the live odds breaks (the Ray Winstone ads) that it runs in the first break in every live football match. This will leave the door wide open for the second tier of Sky sports bookies to take up some premium inventory around live events, and trample on Bet365’s traditional territory. And while Sky claims that it is trying to do this as a means of operating a more level playing field for the category, the reality is that it might have opened up a rather tasty can of worms.
The aggressive players within the market are trying to take as much as they can – we know that Sky already has offers on the table that were far in advance of its expectations, and this will mean that the market will become massively over-subscribed “ with one winner: Sky. Given the apparent hunger around this process, it’s clear the market can sustain more opportunistic behaviour by media owners. But the question is how much further this can go. There must surely be a point at which continued media expenditure stops paying back?
Some might ask if this is really just about sport. Perhaps the bookies are fighting over the wrong territories, and could build a brand outside the world of live sport. Yes, they can. But in my opinion, they could not expect that brand to be strong enough to stop the other bookies from stealing their slice of the pie closest to the point of betting “ live sport. And that is exactly why live sport is so critical to these companies.
Consumers in this market are fickle. They want offers – think of Paddy Power’s ‘We hear you’ “ and will happily flit between their accounts at the last moment. And mobile has made this even easier to do. Traditionally media agencies are there to advise on securing the best market value for clients, but in this instance demand massively outstrips supply. It’s a sellers’ market, and driving pure value for bookies on TV will be very hard to achieve.
As the wheel spins, it’s clear that brands that recklessly put all their money on red, with more inflated investments, will lose. The real winners will be those that can demonstrate the effects on the bottom line and make those investments work as hard as possible.