Paddy Power Betfair reviews customer acquisition strategy in “increasingly competitive” market
Operator’s execs debate how to combat the increasing number of loss-leading offers being run by rivals
Paddy Power Betfair CEO Breon Corcoran has admitted the company is reconsidering its acquisition strategy in the face of an increasingly ferocious sports betting market.
Corcoran told analysts today that European customer acquisition was “behind expectations” in Q1, with the chief exec blaming loss-leading offers from big rivals.
The CEO pointed to the US Masters as an example, where Sky Bet, William Hill and bet365 all paid eight places on the each-way market, alongside Paddy Power – although Sky Bet were alone in paying quarter the odds.
“The competitive nature of the industry is extreme,” Corcoran explained. “We thought [Paddy Power] would be unique with eight places, perhaps along with Sky Bet. But bet365 and Hills competed in the same way which they haven’t in the past. This makes us cautious. There’s some state of flux in the market.”
Corcoran suggested there was still some “internal debate” about how best to respond to testing market conditions, with consideration being given to remaining “rational”, or competing more aggressively.
“We feel we’re doing the basics right, but we do see very aggressive pricing and behaviour from some competitors and we think that’s possibly distorting the market and customer behaviour,” said Corcoran.
“I’ll use the example of Italy, because the Exchange is small and easier to understand what’s going on there. When we faced aggressive competition there we saw people backing out of the Exchange. And that makes us wonder if we should be ferociously competing. Because if we don’t do that we worry about losing relevance, so we’re working our way through that.”
Corcoran added: “Are we being rational or not competing hard enough? We see operators doing stuff with negative expected returns. Undoubtedly it’s tougher but we are refining what we’re offering and not offering and we’ll see how it goes.”
The problem is not a new one for bookmakers in the rush for new customers, with Ladbrokes CEO Jim Mullen saying last year that rivals had “abandoned bookmaking principles” with their Cheltenham offers.