Q&A: Matt Booth, 32Red chief commercial officer

32Red last week reported a 22% rise in revenues during H1 off the back of an increased marketing push.

But despite the growth, profits were hit by a £2m PoC tax bill and continued investment in its nascent Italy operation.

However, the firm remains confident of building scale in the post-PoC environment, as evidenced by July’s £8.4m acquisition of Roxy Palace and a rapidly increased marketing spend. The acquistion and sharp revenue rise has seen 32Red’s profit expectations increase to £6m this year and £10m for 2016.

eGaming Review caught up with 32Red chief commercial officer Matt Booth to discuss the M&A scene, the challenges of the Italian market and the importance of a data-driven approach to marketing.

eGaming Review (eGR): How has the Roxy Palace integration been going?

Matt Booth (MB): There are still things left to do but it is not a complicated integration. It was a good acquisition for us because Roxy Palace is also on the Microgaming platform, so it is a seamless migration. It should add about £500,000 of EBITDA this year and it has been predicted to add £2.5m next year. There are synergies that will be put into play across staff, tech and suppliers, where I feel we can get a greater economy of scale. And the other thing is they have some skill sets, particularly from an acquisition, PPC and affiliates perspective, which can really complement our team.

eGR: Are you looking at further acquisitions to build scale?

MB: There are lots of businesses in the sector coming together at the moment. We are confident in our natural organic growth but we are also looking at potential opportunities. There is nothing on the table being talked about immediately but there are conversations going on. Of course it is important to grow either through M&A or organically. Since PoC we’ve doubled our marketing spend. We spent something in the region of £6.8m last year and we’re probably going to spend around £13m this year. While other operators are trying to reduce or maintain spend, we are trying to increase it.

eGR: What has brought on the increase in marketing spend?

MB: We’ve put into play behavioural and predictive driven marketing models. As a player comes into 32Red from day one, we are creating a prediction score as to the future value of that player. We set new journeys and new milestones in the first 30 days of a player’s life. Then we have algorithms and models which look to drive predictive behavioural marketing to the players. It means we are getting more actives and our attrition rates are a lot lower, which in turn means we’re getting longer value out of our players. We are still seeing a 60 to 90 day return on investment from our marketing despite doubling spend. It means we can continue to invest more.

eGR: How do you view your Italy operation?

MB: We are encouraged by the growth in Italy but it is a difficult market to crack. There are a lot of processes to go through to get your games licensed. You have to create a bespoke testing environment for games so the regulator can test them and there’s a lot of red tape, so I don’t think our product out there is as good as our dot.com product. But 67% growth in NGR is very encouraging. We just have to approach the market with caution and know there are still two or three stepping stones before we can push again.