Online Gambling to Bring Lucrative Returns to US Advertising Agencies?

October 29th, 2012
Back Online Gambling to Bring Lucrative Returns to US Advertising Agencies?

It seems that the US media have reason to look forward to the legalization of online poker in the country, as in that event they’d be looking at some massive advertising returns.

At this point, online gambling is observed as the potential next boom for the advertising industry, as according to the numbers published by the respected online gambling consultancy H2 Gambling Capital, around $3.5 to $4 billion could be invested in marketing over the next five years.

This is more than General Motors spent on US advertising in 2011, said H2 Gambling Capital’s Simon Holliday, adding that by 2017 the US online poker business could be a bigger advertising booster than the insurance sector.

Furthermore, Holliday estimated that the gross value of the online-gambling market will reach $1 billion in 2014, exceeding $13 billion over a decade.

He asserted: "Driving players to their sites is the biggest single cost of these companies. It is probable that 25 to 30 percent of company net revenues will be spent on advertising and marketing budgets in the initial years, as there is a land grab," opining that online gambling advertising will be mostly beneficial for digital media and agencies.

Giving his own opinion on the matter, Mitch Garber, an experienced online gambling executive who heads up Caesars Entertainment's interactive division, said: "Five years ago, the combined spend of all onsite-based gaming companies in online advertising was very small, limited to SEO for attracting visitors to book hotel rooms online and to come to the website. It's changing dramatically. ... There's no question that as an industry we'll be spending more time and money on interactive advertising."

He also opined that television is the most successful medium for attracting players, but that his company will also do magazine, TV and billboard advertising.

Young adults are the demographics most attracted to the internet sector, as most online gamblers are in their 20s, while the average land casino gambler is over 50, said one ad agency executive, predicting that major land casino operators could double their marketing budgets in order to achieve success in a legalized online gambling market in the States.

Still, he pointed to the fact that since agencies must purchase licenses in states in which they're supporting casino advertising, online gambling activities will be very time-consuming and expensive - licenses for one casino client have already cost his agency around $500,000, he said.

Predicting the outcome in the event of online gambling legalization, John Schadler, founder and managing partner at Las Vegas-based agency SK&G said: "There will be a rush at the inception of the online sites to gain market share and notoriety. ... That requires initial branding efforts and initial media spend at a pretty strong level.

"It becomes an exercise in brand awareness. We're inventing a category," he concluded.

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