Market Intelligence Report: Gaming (Exec Summary)

INTERNATIONAL ONLINE GAMBLING AND BETTING INTELLIGENCE REPORT January 2013 to December 2013

EXECUTIVE SUMMARY

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WHAT WILL YOU GET FROM THIS REPORT? •

In-depth market analysis covering period January 2013 to December 2013.

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A comprehensive “who’s who” in online gambling and betting within the UK.

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An analysis of the online gambling keyword landscape within the US covering the sub verticals casino, poker, bingo and sports betting.

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Detailed insight into the development of the online casino sector within key European international markets including Sweden, Italy and Spain.

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Over 200 individual pieces of key insights & over 100 pieces of statistical interpretation.

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Analysis of the top 300 online gambling operators across the top 200 online gambling keywords, spanning five countries.

WHAT QUESTIONS DO WE ANSWER? •

Which brands are the market leaders and which keywords are driving market visibility?

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What are online gambling operators doing to achieve maximum market share?

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What is the size of opportunity within key international markets?

INTRODUCTION Welcome to our third market intelligence report for the online gambling industry. Stickyeyes has been working with online gambling clients for more than 15 years and we believe that our unparalleled sector experience has significantly contributed to the value we have driven for our clients.

Since our last report, published in January 2013, the online gambling market has experienced significant change. A series of algorithm updates that have been designed to improve the quality of Google’s search engine results pages (SERPs), have decimated the keyword rankings for many of the most high profile brands within the UK market. The result of this has been the radical re-shaping of our click share index and we now see new leaders across many of the main sub verticals including casino, poker and bingo.

This year’s report also extends its analysis into a range of international markets. With Delaware, Nevada and New Jersey developing an online arm to their gambling markets, this report assesses the impact of the relaxation of online gambling restrictions and discuss what this means in terms of the shape and composition of the US SERPs. Our analysis draws attention to the fact that the existing level of regulation has meant that the current keyword landscape in the US is still an untapped and immature market. This means that many US gambling SERPs are occupied by a diverse range of gambling related websites that vary significantly in terms of quality of content and product offering.

The report then addresses the online gambling market within the Europe, analysing the European Union’s approach to the harmonisation of EU wide online gambling, its attempts to ensure a competitive level playing field among national governments and efforts to ensure compliance from member nations with EU competition law on the free movement of goods and services.

The report concludes with an analysis of the growth of the online casino market in several key European markets at different stages of development in terms of market liberalisation, namely Italy, Spain and Sweden.

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EXECUTIVE SUMMARY

UK MARKET: EXECUTIVE INSIGHTS •

Consumer expenditure on online gambling and betting will break through the £2.5 billion barrier in 2013, as many of the leading operators continue to record double-digit revenue growth.

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The sports betting market has grown by 79% since 2009 and remains the most dominant form of online gambling, accounting for 45% of all revenue.

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In terms of revenue, the football betting segment continues to move from strength-to-strength, growing by 35% since 2010.

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Revenue from remote sports betting (i.e. online and mobile platforms) has grown 29%, while over the counter (OTC) betting has declined by 2%.

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Search engines are becoming one of the primary battles fields for many of the top gambling brands and this is reflected in the growth of advertising expenditure within this area. Since 2009, online advertising within the area of sports betting has more than doubled from £4.6 million in 2009 to £10.8 million in 2012.

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William Hill has maintained its position as market leader within UK online gambling and betting, recording online net revenue growth of 18% during the first half of the year 2013. This is also reflected within the brand’s share of brand related search impression volume, which has increased from 19% to 23% during 2013.

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Search impression volume for sports betting has grown by 18% since 2012, while casino has increased by 15%. Of the top 10 phrases within generic online gambling, bingo continues to have the highest volume of searches. Online casino (18.11%) has overtaken poker, with the keyword casino in third place 12.13%. New entrants into the top 10 include the keywords bingo sites, blackjack online and online bingo.

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Throughout 2013 Google has continued strengthening the quality signals that underpin their algorithm with the introduction of updates and refinements, including Panda and Penguin. The result is that many of the top brands within organic search have seen dramatic drops in their rankings, with only a small number of brands being able to maintain consistent top 10 positions throughout 2013.

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Virtually all the main sub-verticals within the UK online gambling market have been impacted by Google’s updates, with casino, poker and bingo experiencing the most dramatic changes.

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One of the most high profiles casualties of Google’s algorithm update in 2013 has been 888, which saw rankings drop for many of the most important terms within online gambling including the phrases casino, online casino, poker and online poker.

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Other casualties of Google’s updates for various high profile keywords include Casino 770, Bet770, Spin Palace, Gambling.com, Tombola and Cheeky Bingo

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Paddy Power is the new leader within casino, while Bwin Party, via its flagship brand Party Poker, leads the organic poker sub vertical. Poker Stars and Full Tilt Poker (part of The Rational Group) are in second and third place respectively.

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Ladbrokes led the bingo sub vertical for much of 2013, overtaking pure-play brands like Foxy Bingo, Costa Bingo and Cheeky Bingo but this dominance has since been challenged by Gala, which let the vertical during the latter stages of the year.

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William Hill is the new leader of the organic click share index for sports betting, closely followed by Paddy Power. However this lead, coupled with an aggressive PPC strategy, makes William Hill the dominant force with this market.

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Both Bwin and Ladbrokes have significantly strengthened their positions within the online sports betting sub vertical and they now sit firmly within the top ten.

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The sports betting sub vertical football remains highly competitive, while online betting comparison sites like OLBG are dominating the organic click share index. Meanwhile betting operators like Paddy Power and William Hill are developing an aggressive PPC strategy in order to maximise exposure.

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With an aggregated click share of 20.59%, William Hill has maintained its lead within the sports betting sub vertical for horse racing. However, its lead within the organic index has been eroded by Racing Post, which now sits in second place, just 0.17% behind William Hill. Any shift in organic rankings or for either of these two brands could result in reshaping of the landscape.

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US EXECUTIVE INSIGHTS •

The US online market for gambling remains heavily regulated, resulting in an immature market in the US online gambling keyword landscape. This means that many of US keyword SERPs are occupied by a diverse range of gambling related websites that vary significantly in terms of quality of content as well as product offering. Despite this regulation, a number of states have started to develop online arms to their gambling operations. The most notable examples are Delaware and Nevada, with New Jersey following suit in November 2013.

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The US online gambling market comprises of four key sub-verticals; casino, poker, bingo and betting. The most complex subvertical is betting, which also comprises generic sports betting as well as football, basketball, baseball and horse racing.

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The casino vertical has the largest search impression volume and is potentially the most lucrative keyword market for the fledgling US market. Of these, the keywords for casino, slots, poker and roulette are primary power houses potentially driving significant volume to those in high ranking positions.

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The US casino sub vertical is representative of this market immaturity and is subsequently dominated by affiliates, as well as free or low quality flash casino games. Foxwoods and River Casino, which are land based operations, are the only US commercial operation that are visible within the organic click share index. The Poker market is dominated by international brands Poker Stars, Full Tilt Poker and Party Poker. The bingo index exhibits similarities as with the casino market. The most striking feature of the generic betting sub vertical is that it is devoid of any indigenous US land based commercial gambling brands.

EUROPEAN MARKETS (ITALY, SPAIN AND SWEDEN): EXECUTIVE INSIGHTS •

Like the US, online gambling within the EU is left to individual member states to regulate, leading to a disjoined market within Europe. However, over the past several years, the European Commission has made notable attempts to harmonise the online gambling sector between member states, which could ultimately lead to a genuinely European online gambling market.

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Italy, which started market liberalisation in 2006, has a search marketing click share index that is made up of a blend of the local Italian operators as well as international brands like 888, William Hill and Paddy Power. Interestingly, a significant amount of the click share with the index is taken up by affiliate style sites that are directing traffic to paid, online realmoney brands.

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Although the Spanish index consists of a mixture of international and local brands, click share is heavily weighted towards international operators, with 888 being the leading brand. The Swedish online casino market is led by Betsson, which has a click share of 24.20%. In contrast to both Spain and Italy, international brands do have the same level of presence within the click share index

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ABOUT STICKYEYES Stickyeyes is an international digital marketing agency with a pedigree in search.

Our services include: SEO, PPC and display, social, PR and content provision, consulting and insight and design and development.

We work with many of the largest gaming companies on an international basis and many of our team have gaming operator experience. We’re proud of our abilities and believe no other agency has our strength and depth of experience. Our work with gaming companies ranges from one off market reports to ascertain opportunity levels for new brands or products through to full service digital marketing to maximise ROI. Our pedigree in the gaming industry was recently recognised at the UK Search Awards where we won four awards including ‘Best Use of Search in Gaming’ and the coveted ‘Best Agency’ award.

If you would like to discuss how we can help you please contact us, we’ll start with a deep dive into your performance, how that compares to your competitors and where we see gaps and opportunities.

www.stickyeyes.com

ABOUT THE AUTHORS Philip McGuin, Head of Insight and Market Research at Stickyeyes has 15 years’ experience in the areas of online marketing, performance based lead generation as well as, data analysis techniques including web metrics, portfolio score carding, attribution, econometrics and statistical modelling. He has worked both client and agency side for a range of sectors including public bodies such as European Parliament, European Commission promoting the EU’s policy on Information and Communication Technology (ICT ) as well as the Department of Trade and Industry (DTI), marketing policy on e-Government. He also has extensive experience in the private sector as Head of Marketing for an enterprise software provider as well as the Head of Online Marketing for one of the UK’s first private online higher education training providers. Prior to his career in the private sector Philip worked as a doctoral research fellow in Economics, Politics, Public Policy and Administration.

WANT TO KNOW MORE? If you have any questions on the findings or would like to speak to one of the team about maximising the ROI of your search and social strategies please contact:

Paul Hill Sales Director 0113 391 2929 paul.hill@stickyeyes.com

DISCLAIMER The information contained in this report is for reference purposes only. Although every effort has been made to ensure accuracy of data, the analysis is Stickyeyes own interpretation and the company cannot be held liable for any subsequent business decisions implemented.

The content of this market intelligence report remains the copyright of Stickyeyes. Permission is given for the report to be circulated within your own business for information but its content should not be reproduced without prior agreement.

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