eGaming Review January 2014 - Page 43

COMMODITISED PRICING With B2C traders now reliant upon third-party pricing providers or the direction given from the exchanges and Asia, the industry faces the prospect of pricing becoming commoditised and offering little in the way of price differentiation. “It will be sad for the punter when it gets to the likes of the Cheltenham Festivals and World Cups when operators will be, for instance, 7/2 or 4/1 Brazil across the piece and they’ll be very little variance in price and no opinion taken by any particular company,” Boylesports' Wright says. Although, according to some, the opportunity to stick the head above the parapet will still be available but there is now greater consideration about when is the right time to implement this strategy and when this happens it will often be part of an overall marketing ploy. “Competitive pricing, to be at its most effective, must be part of a holistic strategy that includes many other “ALGORITHMS CAN’T TELL YOU WHEN IT BECOMES OVERCAST AT THE OVAL AND THE BALL STARTS TO SWING BUT TRADERS CAN DO THAT.” Simon Trim, managing director, Sporting Solutions facets such as marketing, customer communications, and technology to name a few,” a William Hill spokesperson says. “Obviously, it’s important for us to standout when the nation is looking to bet, but this is not a sustainable marketing policy so we are selective when we chose to evoke this strategy so that it holds the greatest resonance with customers,” the spokesperson adds. A new tool used by operators is that of enhanced multiples – the rolling up a number of selections into an accumulator that pays out slightly more than the accumulated odds of the respective singles. This is a clever trick as with each selection added; the greater the margin the bookmaker is working to. Even with commoditised prices, operators are able to offer such specials at what may seem like favourable odds to the punter. “For instance, take an Arsenal, Liverpool, Chelsea and Man City four-fold,” Wright says. “People will package that so if it comes to say 3/1, operators will say ‘come to us and you can have 7/2’ – that’s quite clever packaging as you know with the multiple business you have got the theoretical margin inside.” CUSTOMER LOYALTY Oddschecker managing director Toby Bentall says data from his price comparison site shows that that 45% of its users aren’t price sensitive and tend to remain loyal to a very select group of firms rather than take a bigger price on offer elsewhere. Bearing in mind this is taken from a pool of people using a website which compares odds between a large number of sportsbooks, this is appears a surprisingly large percentage and one which would be expected to grow bigger still when surveying a wider demographic. Perhaps this partly explains why the move to marketing and improving the customer experience in order to gain custom continues to gather pace. This is especially relevant to in-play betting where operators can engage customers by adding a raft of different features. “The movement of every firm’s business now is to in-play and we are 60/40 in-play,” says Wright. “It’s about how you package the business, how you sell it to the customer and improve their experience - whether you accompany it with streaming, with live statistics, with free bets – the full package. Customers aren’t necessarily price driven so they’ll soon be a standardised price across the industry.” POC IMPACT One development on the horizon which is expected to impact pricing strategy is the UK Point of Consumption (PoC) tax, which is planned to be introduced 12 months from now. With operators set to give up around 15% of their profits, talk has emerged of margins being raised or reduced to absorb the hit. “I can’t see [margins increasing],” says Proctor. “Online customers have expectations which operators will have to deliver on and it’s only going to get more competitive.” For others, however, betting margins may well have to be increased in order to keep heads above water. Wright argues that the PoC tax will only benefit the “bigger pocket” operators able to maintain margins while paying the tax, while smaller competitors will become priced out of the market. “If you are betting football matches to 3-4% and you have to pay a large percentage of PoC tax – it’s not really viable so it’s going to be difficult for the smaller firms while the bigger ones wi