Analysis: Paying the price of dual brands

The start of the Masters today marks the start of both this year’s golf majors and the silly season in UK sports betting. After what appeared to be an unsustainable escalation twelve months ago, Sky Bet and Coral have turned things up to 10 in the bunfight for the recreational market. But not everyone is following their lead.

Sky Bet were the first to show they were making a big play at the weekend’s big golf tournament with an offer of 10 places on each-way bets. Bearing in mind the “standard” offer is five places, it’s the type of move that would make an old-school bookmaker’s head spin. But this is a world driven by acquisition offers and loss-leader promotions that lure customer back to redeposit, with trading often a secondary consideration on headline events.

So it was no surprise to see Coral swiftly follow suit, albeit in a move that was likely long-planned with the battle for new players, and retaining old ones, fiercer than ever. What is perhaps more interesting is that nobody else tried to match them. Paddy Power, the other big brand playing in the solidly recreational market, has stuck with the once outlandish 8 places, along with bet365, betway, 10bet and betfair. This can be seen as variously a sign of declining margins, a maturing market or a pause for breath, but it feels like a turning point.

Battle lines being drawn

The long held truism of sports betting as a commoditised product is not holding up to scrutiny quite as well anymore. It seems there has been something of a breaking in ranks during this latest round of the pricing wars. William Hill is ploughing its own furrow with seven places and Ladbrokes and BetStars are holding firm with five places, albeit on much better place terms of a quarter the odds. The rest are on six places.

We’re beginning to see some clear lines being drawn, and curiously both Betfair and Paddy Power appear to have found themselves on the same side of it in this one. With the parent company Paddy Power Betfair (PPB) reporting muted end of year results and a need to grow the brands by appealing to differing consumer cohorts, it’s a curious decision to have an almost identical-looking offering for such a big sporting event. Conversely the other dual-brand firm, Ladbrokes Coral (LCL), occupies either end of the spectrum here.

The brands performed distinctly differently in their most recent Q3 results, the last prior to acquisition by GVC Holdings, with Ladbrokes revenues down 9% and Coral up 13%, and the firm suggested this was in part a response to a repositioning of Ladbrokes in the period. Certainly there has been a clear attempt in recent months to make the two brands offerings distinct in the UK market. Coral is long on Sky Bet-style enhanced prices and user-generated multiples, while Ladbrokes seems to be moving to individual bet boosts and more traditional bet presentation.

These layers on top of the standard pricing are becoming increasingly important, because the underlying odds are often very similar across the industry.

If everybody looked the same

In the modern sportsbook world, site scraping, XML odds feeds and the widespread use of outsourced pricing and trading gives a degree of uniformity to the consumer offering, with only a couple of firms, notably bet365, standing out from the pack. BetBright took the decision to outsource trading on certain of its sports, including golf, recently and the rise of the casino-led sportsbook can be seen as another nail in the coffin in the importance of in-house trading.

The current wisdom is competition for new and old customers has come to be fought on brand, on customer experience and product or on bonusing and CRM rather than trading. And while some of the major brands are looking to innovate here with more automation and algorithm-driven trading this is more an operational than a marketing tool. But in some ways this new world actually opens up the market to this type of differentiation.

With the increasing sophistication of the sportsbook platforms available to operators this doesn’t require a huge trading team. It can be as simple as taking a loss-leading position to get players through the door. Oddschecker claimed the UK’s big 7 sportsbooks lost 8% market share of clicks during the recent Cheltenham Festival, with Unibet and Marathon feeling the benefit the most, and while most of the Unibet gains were due to the Stan James migration the nature of Oddschecker means this is generally differentiation on price.

We’d get tired of looking at each other

Differentiation can also mean a narrow focus on particular sports or particular markets layered over the top of a bought-in solution. The flexibility of the pricing, trading and risk management offerings now in the market mean the smaller firms can, in theory, compete with the big players here should they wish. But the extra layer on top of this is the really big boys are increasingly trying to get some clear blue water between their brands.

Betfair and Paddy Power don’t want to be competing for the same customers and neither do Ladbrokes and Coral. At the latter we’re seeing price being a factor in this with Ladbrokes proposition for the Masters looking very different to that at Coral. As one wise industry head noted, this does leave a lot of room in the middle and it’s interesting to note both the PPB brands looking to occupy this space.

It’s not yet proven that a dual brand strategy is the right one for the UK and it could be the case that the brands are damaging each other by jockeying for position at opposing ends of the market. The odds and promotions offered to new and existing customers will be just one part of the dual brand play being attempted by both PPB and LCL, and it will be fascinating to watch it play out during 2018. The Masters is just a trial run and the real action will be around the World Cup and the new Premier League season and you sense that the price wars of old are about to enter into a new era, and this could create opportunities for rivals smart enough to spot them.