Q&A: Jim Mullen, chief executive, Ladbrokes

Ladbrokes delivered an encouraging set of Q3 numbers last week as digital revenue increased by a little more than 6% and sportsbook stakes rose by a third.

However, margin fell by 2.1ppts to 6.8%, a dip chief executive Jim Mullen said was due to the combination of poor sports results, which included the “worst racing week Ladbrokes has had in 10 years”, and a strategy of investing margin to support its bid to build a much larger recreational customer base.

eGaming Review caught up with Mullen to discuss the Q3 numbers and how investing margin will help the operator achieve greater scale.

eGaming Review (eGR): Sportsbook staking was up 34% in Q3 – what do you put this growth down to?

Jim Mullen (JM): I think there are a number of reasons. We increased our marketing spend to 30% of NGR, so that’s one. I think the other thing is that our product is first class – we have got innovation that is not blue sky but is practical and implemented. An example of that being our Bet Slip Tracker in retail, which has recorded over 320,000 instances of usage.

And what that has done is encourage the sign-up of 20,000 online customers, which are active. Why is that important? It’s important because retail customers are already pre-qualified sports bettors with a higher yield, which is pushing up that sportsbook staking overall.

eGR: Sportsbook margin was down 2.1ppts to 6.8% which you’ve said is partly due to investing some margin back into your pricing and bonusing. What’s the thinking behind this?

JM: It’s about scale and it’s about keeping customers with you so you just can’t take all the time. So if you have recreational customers who have joined us we will invest in them with promotions and offers if they are loyal to Ladbrokes. That’s why we’ll make the decision, maybe around big events, to invest some of the margin and give that back to customers and encourage them to stay for the long term – and that’s how we’ll build scale.

eGR: Is there a danger this strategy could see you attract the more shrewd and price sensitive customer and drive margin further south?

JM: The gross win margin of the digital sportsbook is within our range and we make sensible decisions about where we want to invest that. And looking at customers who are either informed or unprofitable, we manage them accordingly.

Most of our recreational customers come to have a bet, we are happy to take that business and we will invest in them regarding promotions and offers. Some of that will come from margin so we will pay back and invest in those that want to bet recreationally with us and that is the reason why you see sportsbook staking growth so high.

eGR: Ladbrokes’ new desktop site went live a few months’ ago. How has the site been received by customers?

JM: It’s performed very well indeed. The growth rates have improved since we released it and it really fits in with our mobile strategy with the commonality of design. What we are not trying to do at Ladbrokes is overcomplicate things so we release things that work first time, we release things that we think are sticky and we take numerous feedback from our control groups to improve that.

eGR: Ladbrokes Australia continues to grow at a rapid rate – can you maintain its trajectory in the longer term?

JM: Actives were up nearly 90% in Australia and staking up 64% – and that’s in a hugely competitive market so for us to maintain those run rates we’ll have to think differently. And what we’ve done is a reverse of the multi-channel strategy in the UK where we are pushing from retail to digital.

In Australia we are pushing digital to retail and we recently struck a deal with the National Newsagents Society so Ladbrokes Australia now has a presence in the retail estate of over 1,000 newsagents where customers can cash in and sign-up and that’s the sort of innovation that takes us to the next stage.