Marketing efficiencies drive MRG growth

MRG CEO Per Norman has praised the operator’s digital campaigns after the company posted its strongest year-on-year growth in five years despite marketing spend dropping below 30% of revenue for the first time in the third quarter.

MRG, which operates the Mr Green brand, recorded a 50.9% year-on-year increase in revenue to SEK445.2m (£38m/€43m/$49m) in the three months through to the end of September.

Organic growth of 36.4% was partly driven by a whopping 72.3% rise in customer deposits, with earnings before interest and deductions rocketing by 49.4% to SEK75.5m.

Marketing spend as a percentage of sales reduced to 29% from 32.2% year-on-year and from 35.8% in comparison with the second quarter of 2018, which included a major push by the operator in relation to the start of the Fifa World Cup.

In its trading update for the second quarter, MRG said that there would be a greater focus on cost control in the second half of 2018 after having taken advantage of “marketing efficiencies” in the three months through to the end of June.

Norman said in an earnings call today that the marketing efficiencies witnessed in the third quarter resulted from a “strong focus on digital marketing, customer communications, a strong brand and efficient processes”.

He added: “The deposits growth is a great achievement considering the decreased marketing cost ratio in the quarter. This is the first quarter ever that we have reported marketing spend of below 30% of revenue.”

Norman (pictured) also said that the results had vindicated the company’s adoption of its ‘Strategy 2020’ roadmap in May.

“Six months on we can conclude that the strategy is robust,” he added. “Building scale gives us a solid foundation… to innovate and invest in unique products and services.

“Growth is also a prerequisite for further economies of scale, which will help to offset the increased betting duties and compliance costs we can see happening.”

MRG maintained its guidance of turnover growth of 40% for this year and 25% for 2020.

In the short term, Norman added that MRG’s Green Jade studio will offer its first game in the final quarter of 2018, with a pipeline of games lined up for 2019.

The new esports joint venture with Gamingzone Entertainment is also expected to launch before the end of this year after Niklas Grawé was appointed as the chief executive of the business unit last month.

Additionally, MRG confirmed that it expects to be “licensed and up and running” in Sweden when the re-regulated market opens on New Year’s Day.