Africa: Dig for opportunities and strike gold
Published 9th May 2018
When it comes to Africa there is a whole continent of potential for those looking to boost their profit margins. Hannah Gannagé-Stewart reports on the findings of an expert panel at this year’s London Affiliate Conference and discovers how affiliates could benefit from an emerging market
The rise of mobile technology has sparked rapid growth in Africa, making the sports-mad continent a compelling prospect for igaming businesses.
For affiliates (unlike bookmakers) the cost of entry is low, particularly if their sites are already attracting African traffic, so there is a real prospect of high-margin returns.
Where affiliates in the UK and Europe might generate profit margins of about 3-5%, in Africa it’s not unusual to make 30%, according to an expert panel at the London Affiliate Conference (LAC).
Income Access’ VP of strategy Sarafina Wolde Gabriel chaired the discussion aimed at affiliates wanting to enter these emerging markets.
Joined by Nairabet.com chief executive officer Akin Alabi, chief marketing officer for Betolimp.co.za Mark McGuinness, and Web Analysis Solutions founder Mathew Symmonds, she began by asking what had triggered such rapid growth in the past couple of years.
Alabi’s Nairabet has been operating in Nigeria for about nine years, and has recently started seeing decent traffic flowing from affiliate partners in the region.
He said increased mobile penetration was seeing online businesses go from strength to strength in Africa. “Ninety per cent of those accessing the internet are now doing so through their mobile phones,” he added.
Marry that with increasing internet speeds, more competitive data pricing and the fact Africa is a continent obsessed with football, and it’s easy to see the extent of the potential for affiliates.
Likewise, Betolimp.co.za has witnessed rapid growth in South Africa. “We also have a retail presence, but in our business online has overtaken retail for the first time in six years,” McGuinness said.
Symmonds is behind affiliate brands WinDrawWin.com and PredictZ.com, entering the African market about four years ago. He now attributes 40% of his business’ revenue to the continent.
He told delegates that when he first started targeting African countries, 50% of the traffic was still from desktop. He was informed at the time that this came down to people not having good enough internet connections outside their offices to bet online.
But “within one year, that went to 85% mobile. Mobile penetration in such a short time in Africa is just crazy,” he explained. Despite the obvious opportunities, all the LAC panellists highlighted the importance of understanding the market and recognising that each country comes with a unique set of requirements.
In general, players are lower value in Africa than in Europe, but this is counterbalanced by their sheer volume. Similarly, the region requires a more simplistic approach.
For affiliates this simplicity may be viewed positively, as banner advertising, SMS and TV campaigns will reap rewards in Africa. Europeans, meanwhile, require more sophisticated marketing tactics. Symmonds explained that local brand awareness is critical to success, so partnering with operators that use local brand ambassadors and are well recognised in each market is important. “One of our operators started giving away prizes. You had to place a certain type of bet and you went into a prize draw. But when the prize came over to us on the banner ad it was a diesel generator. “We thought ‘that’s not attractive at all’. But in Africa it’s a really premium prize, so you have to understand how the local market works, and what incentivises people,” he said.
Equally, prediction sites reap rewards as African punters look for tips on where to place their bets. Nairabet issues betting codes to bettors, so that they can share their tip with others.
“People are getting wiser by the day, but if we can be that authority and they respect your knowledge of sports betting that is definitely the way to go,” Alabi explained.
It’s fair to say that the bulk of the opportunity is in sports betting in Africa, with casino still a little-understood vertical. According to iGaming Business and H2 Gambling Capital’s recent Africa dashboard, betting makes up 36% of the market compared with just 21% for casino, while state lotteries deliver 33% of total revenue.
However, as the market matures the opportunities to leverage other verticals off the strength of sports betting are growing. Alabi said casino now accounts for 20% of Nairabet’s business and the proportion is growing, while Symmonds pointed to the opportunities in virtual products, as bettors look for opportunities to keep placing bets after the football has finished.
Plotting the opportunities in Africa is made easier if you see its countries as following a similar growth curve as that of Europe over the past 15 years.
“Trust online is going to get a lot better,” said Symmonds. “The way I look at it, Africa is perhaps how we were in the early 2000s when it seemed a bit alien to log in online with your credit-card details and deposit money. You were just not sure about things,” he explained. “Now it’s second nature to us, and I think that’s where Africa was a year or two ago and that trust is continuing to grow.”