Is a Bulging Advertising Budget Going to Keep Spain Gaming on the Plane?Published March 2, 2019 by Lee R
Spain's market hiccuped in Q4 with wild advertising expenditures ahead of growth rates.
According to the latest performance figures, the Q4 2018 rise in Spain's market was relatively gradual in comparison to the bulging marketing expenditure.
The Q4 Figures
According to Dirección General de Ordenación del Juego (DGOJ), Gross Gaming Revenue increased 4.21% on a quarterly basis to €189.5m (£166.3m/$216.4m), representing a Q4 year-on-year rise of 10.74%. This stands in sharp contrast to the 29.9% increase DGOJ reported for the Q3 2018's year-on-year GGR through the end of September.
Over half (52.7%) of that GGR was generated by sports betting, whose €99.9m total came out to marginal quarterly growth of 2.33%.
The figures dented by a precipitous 26.79% quarterly fall in horse racing GGR.
Another significant decrease came in pre-match betting, whose 5.31% quarter-on-quarter decrease in was thankfully for Spain offset by in-play betting's 13.13% increase.
Casino was the second leading vertical contributor, accounting for €64.77m of the quarter’s online GGR, with slots the key driver of a 6.38% quarterly increase and a 32.59% year-on-year rise.
As for other verticals, both poker (€21.08m) and bingo (€3.51m) enjoyed healthy respective quarterly increases of 6.4% and 11.67%.
The Ad Elephant
These robust figures suddenly pale in comparison when marketing costs are revealed to have sky-rocketed to €95.11m in the final three months of 2018 for a quarterly increase of 25.11% and a year-on-year rise of 46.58%.
Not surprisingly, advertising accounted for more that half of the expenditure (€49.81m) with promotions second (€32.15m), followed by affiliate costs (€9.67m) and sponsorships (€3.48m).
Despite the increased advertising in Spain, active users dropped from 900,000 in October to 828,000 in December 2018 while new users registered fell from 290,000 to 235,000 for Q4 2018, with the number of licensed operators in the Spanish market remaining unchanged at 52 on the heels of last summer's tax slash offered by the Spanish government to licenced operators in the jurisdiction.
It looks like that tax slash hedged the market, so that on the ledger the losses in the Spanish market don't look so bad to the operators who to a man have stayed in the game in Spain. Now Spain just needs the drop in usership to level off and follow suite.