Playing the long game in Nigeria

Amongst the 16 countries that make up the West African region, Nigeria stands out as the area’s burgeoning economy. More recently, this African nation’s growth has also been boosted by the expansion of its native sports betting industry, with dozens of licensed sportsbook operators and arguably the largest online segment when compared to its nearest neighbours.

Despite the country being in the grips of an economic downturn, a population of over 192 million means Nigeria remains a hugely attractive destination for direct foreign investment. Other West African economies, including the likes of Ivory Coast, Ghana and Senegal, are also enjoying increased prosperity, with annual GDP growth figures expected to tip 6-8% through 2020 and beyond.

However the short term economic outlook for Nigeria is not quite so promising and having entered a recession in 2016, economists predict a slowdown in growth to just 2% until 2020, reducing disposable incomes among what is a shrinking middle class.

These falling consumer spending figures might suggest that the sports betting industry faces an increasingly challenging environment in the next few years ahead.

Time to invest

However, this may not be the case. While retail remains the largest outlet for the majority of bookmakers, Nigeria’s online betting sector has become a hotbed of innovation. As competition for share of customers’ wallet has intensified, operators and suppliers alike are investing in improved products, faster payments and targeted marketing campaigns to increase customer satisfaction and build brand loyalty.

The most urgent and obvious enhancements required across the board lie in innovative UX solutions and enhanced mobile optimisation. Time-consuming sign-up and deposit processes hinder customer acquisition for many bookmakers, with some complaining that just 10% of registered customers convert to depositing players.

However, it is investment in product differentiation that is set to determine the winners and losers in this highly competitive market.

Established giants such as Nairabet and Bet9ja are already reaping the benefits of investing in new technology thanks to a series of new features being added to their product offering. The popularity of accumulator betting has naturally led to major interest in same-game accumulators, giving punters their preferred betting style of winning big with very small stakes.

Other products that have made their mark in Europe are also appearing on Nigerian bookmakers’ sites. These include Colossus Bet’s football jackpot product, selected price boosts and acca insurance-style products, which allow winning accumulators to be paid out even if one leg fails to come in.

Building a unique proposition

As the market evolves and player acquisitions costs rise, running a differentiated trading strategy and incentivising customers’ loyalty has become increasingly important. With the average punter holding around five online accounts, it is no longer enough to simply offer markets on a smattering of sports and expect brand power to do the rest.

Following the trend in other mature markets, leading bookmakers are investing in software which allows them to tailor their trading specifically for the local region and price-up events accordingly. Without this control over such a core part of sportsbook management, differentiation becomes almost impossible.

Meanwhile local content, including markets on Nigerian domestic football, is set to become a must have for the country’s sportsbooks in the coming years, having seen a spike in popularity of late. Despite the challenges posed by alleged match-fixing and subsequent predictability of results, sharp pricing and tightly controlled liability management mean bookmakers can offer these markets safely – and profitably.

Long-game

Nigeria has always presented business challenges. The complete misalignment of state and federal regulatory bodies has led to double taxation for many operators, while costs of market entry for new and ambitious entrants are perceived to be prohibitively high.

Well-financed operators including BetKing – which recently landed a coup with the signing of local football legend Jay Jay Okocha as brand ambassador – are entering the market with relative regularity, driving up competition and customer acquisition costs.

But despite the economic backdrop, the opportunity remains huge for those up and running in the country. While creating a pan-West Africa business to offset potential decline in overall Nigeria market is a strategy several bookmakers are contemplating, generating brand loyalty in Nigeria itself should be the main long-term priority. And that is only possible by getting the product right and standing out from the crowd.

Tom Washington, head of communications at Genius Sports