US advert agencies hope for an internet gambling bonanza

Recent moves towards legalised online poker in the United States could provide an advertising bonanza to US media, the marketing publication Advertising Age reported over the weekend.

Heralding the potential rise in marketing activity, the publication opines that it could be the next boom for the advertising industry, quoting numbers from the respected online gambling consultancy H2 Gambling Capital, whose Simon Holliday says that around $3.5 to $4 billion could be invested in marketing over the next five years – more than General Motors spent in U.S. advertising in 2011.

And by 2017 the US internet poker business could be generating more advertising than the insurance sector.

Nevada is likely to be the first to go online legally, Advertising Age notes, but at least ten other states have online ambitions.

Holliday estimates the gross value of the online-gambling market to be $1 billion in 2014, reaching over $13 billion over a decade.

“Driving players to their sites is the biggest single cost of these companies,” he told the publication. “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.”

The biggest beneficiaries will likely be digital media and agencies.

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.”

Garber said that in his experience television is the most successful medium for attracting players, although his company would not be doing away with magazine, TV and billboard advertising.

Advertising Age reveals that Caesars Entertainment recently opened a search for a creative agency to oversee digital-media planning, buying and search.

The internet sector has particular appeal for the young adult demographic, and much of the creative in new marketing will probably be targeted on that, one advertising executive said, observing that most online gamblers are in their 20s, while the average land casino gambler is north of 50.

He anticipates that major land casino operators could double their marketing budgets to succeed in a legalised online gambling environment in the United States.

However, online gambling operations are costly and time-consuming because agencies must purchase licenses in states in which they’re supporting casino advertising. Licenses for one casino client have already cost his agency around $500,000, said the agency executive.

Google’s anti-internet gambling policies will also have to change in the event of legalisation.

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,” he added. “We’re inventing a category.”