BetMGM targets “optimal balance” in marketing as part of profitability push

BetMGM CEO Adam Greenblatt has cited the operator’s drive to achieve an “optimal balance” in its marketing as the firm looks to become EBITDA positive in the second half of 2023.

Speaking as part of the operator’s business update last week, Greenblatt cited the difference in marketing approach between retail and online, as well as the impact of the BetMGM loyalty scheme.

“What we see, for example, in the retail environment is that there is there is virtually no player incentive. If the player is sitting in your sportsbook and their option to put a bet on is at the counter in front of them, then that’s their option. No need to give him $250 to sign up,” Greenblatt said.

“The deeper the loyalty connection, the more engaged your player, the lower the required retention, investment if you like, but it’s also a combination of retention and stimulus.

“Part of the promotional investment is also a reminder that there are games on this weekend, and if that is something that you want to do, you can bet.

“There is an optimal balance of promotional investment, certainly in the digital space, which as an absolute value is lower than where we are today,” the BetMGM CEO added.

In its business update, BetMGM revealed full-year 2022 net gaming revenue of £1.44bn, driven by higher gross gaming margins resulting from improved customer experience.

The firm also revealed EBITDA losses of $440m, albeit with a management expectation to be EBITDA positive by H2 2024.

As well as higher gross gaming margins, the sports betting and igaming operator revealed same-state CPAs (cost per acquisition) tumbled 21% year on year (YoY) due to data-focused marketing and increased scale.

Discussing these improvements, BetMGM CFO Gary Deutsch paid tribute to the firm’s approach to player recruitment, lauding the firm’s data science as “excellent.”

“We’ve talked about this in the past, that there’s a journey that each state goes through with sample players that are coming in, and we want to give them some stimulus and let them try and then we watch the evolution,” the CFO said.

“Our model has gotten a lot sharper in understanding how these players are going to evolve, some of it is understanding to some degree – when to cut back and if there are players that are not evolving at the rate, we want them to evolve.

“Our predictive models helps us identify those [players] much sooner, and that’s a big benefit to our bonus proposition as well,” Deutsch added.

Outside of data science, one area of potential marketing efficiencies alluded to by Greenblatt was the flexibility in marketing arising from a wider scope of marketing media, such as more national advertising, and fresh marketing opportunities opening up.

“We’re pretty excited about the fact that the early exuberance in this industry, particularly in the area of media inventory, is abating somewhat and we’re approaching the end of the first cycle of the early deals,” Greenblatt said.

“Coming to the end of that cycle means that there is new and fresh inventory coming back to market, and oftentimes at interesting prices,” he added.

“Going back to the philosophical position, the greater our flexibility, the extent to which we are able to allocate capital to the best ROI opportunities at any point in time is important to us,” Greenblatt continued.

“We try to as much as we can stay flexible to make the most of these kinds of opportunistic situations and of course, in relation to our performance marketing which is very short term.

“We measure everything and we optimize on a daily basis, and so that’s how we’re going about it but we were pretty excited about wave two,” he added.