The evolving igaming opportunity in Africa

Sportsbooks in Africa are diversifying their marketing strategies to reach audiences who are increasingly online and mobile, says Income Access Group's Sarah Robertson.

“There is always something new out of Africa,” wrote Pliny the Elder. For igaming, the Roman philosopher’s words are as relevant today as when he wrote them almost two thousand years ago.

Economic and technology trends are driving unprecedented growth in online gambling in Africa. Nigeria, the continent’s most populous country with 174 million people, boasts a sports betting market worth $4.1 billion, according to the News Agency of Nigeria (NAN). 

A new market
Until recently, Africa’s economy lagged behind other continents. In 2001, when Goldman Sachs coined the term BRIC to refer to the key emerging economies to watch, not one African country was included in an acronym that referenced Brazil, Russia, India and China.

However, tellingly, by late 2010 South Africa had been added to the group, acknowledging its significant growth over the previous decade.

Africa’s most southern nation isn’t even the largest economy in the region. That honour goes to oil-rich Nigeria, which has a nominal GDP totalling $490.2 billion and whose economy is expected to grow by 4.2% next year, according to the IMF.

The organisation is even more optimistic about the future growth of Sub-Saharan Africa as a whole. The IMF forecast that the region’s GDP in 2017 will expand by 4.7%, a far more rapid rate than Latin America.

Africa’s increasing wealth and expanding middle class has no doubt supported the igaming sector’s growth, given that leisure activities such as gambling require disposable income.

NAN reports that Nigerians spend $5.7 million a day on sports betting, while the South African vertical’s revenue reached $2.1 billion last year, according to PricewaterhouseCoopers (PwC). “Sports betting is also flourishing in Kenya,” writes PwC, citing the success of online sportsbook SportPesa.

Importantly, SportPesa was launched in 2014 as an online and mobile-only business without betting shops. That the Kenyan brand today boasts tens of thousands of unique monthly users is testament to rising internet usage in the East African nation. Pew Research Center reports that an unprecedented 40% of Kenyans used the internet in 2015.

Nigeria isn’t far behind, with 39% of adults surfing the web, according to Pew. The country’s online growth has meant that it too has seen the development of web-only sportsbooks.

“It is possible to launch an online sportsbook without physical shops, and this is what NairaBet did before we moved to retail,” says company CEO Akin Alabi, emphasising that there is nonetheless value in having a retail presence. “It is necessary to have both because of trust issues – people usually like the idea that a sport betting company is in a physical location.”

If operating betting shops remains important, then acknowledging the mobile reality of Nigerian bettors is equally vital. Dubbed the region that skipped desktop, Sub-Saharan Africa has seen smart phone and conventional mobile phone ownership explode over the last decade.

Pew Research Center reports that 89% of Nigerian adults own a mobile phone, and 27% are smart phone users.

“If you are going to succeed online in Nigeria, your website must be compatible with mobile phones or must have a mobile phone version,” says Alabi. He adds that around 70% of online bets at the brand are placed via a mobile device, an even higher rate than the typical European average of around 50-60%.

Rising smart phone penetration, internet usage and economic development aren’t the only factors driving online sports betting’s growth in Africa: the sporting culture is also key. “Nigerians love their football,” says Alabi, adding that around 70% of NairaBet’s bets are on international soccer matches, with approximately half of that on UK Premier League games.

Despite the recent growth of igaming in Africa, regulatory challenges remain. Nigerian operators are required to obtain a licence for the state in which they’re based as well as from the National Lottery Regulatory Commission. “It becomes a problem because of double taxation and the need to get both state and federal licences in order to begin,” says Alabi.

However, Nigerian and Kenyan operators can at least offer players online casino games, unlike their South African counterparts. Cape Town lawmakers’ latest attempt to regulate the vertical faltered in May.

New tactics   
Regulatory and fiscal challenges are leading African operators to diversify their marketing strategies. With consumers increasing their use of the internet and smart phones, brands are making a strategic play to invest significant efforts in digital channels in order to quickly grow their player databases.

Nonetheless, operators’ offline channels continue to remain important in a region where a majority of the adult population is not web-savvy. Betting shops are fundamental to the strategies of Nigerian operators such as NairaBet, which operates multiple shops, and 1960Bet, which has more than 5,000 outlets.

In-shop advertising encourages players to continue betting on their phone or home computer once they’ve left the building.

The agent system is also a key offline element in operators’ acquisition strategies for their shops and, by extension, their websites. A brand’s agent will enter a village or a city neighbourhood to market the brand directly to residents. If a local betting shop doesn’t exist, the agent will act as an intermediary to place bets.    

Operators’ offline strategies also focus heavily on print media. Nigerian sportsbooks advertise in the sporting pages of high-circulation local newspapers such as Vanguard, The Sun and the Nigerian Tribune.

TV is also an important offline channel for Nigerian brands, which develop ad campaigns featuring celebrities – NairaBet is partnered with local rapper Phyno and comedian Craze Clown – and also sponsor programmes with large, relevant audiences.

However, operators are increasingly placing a greater emphasis on digital and mobile marketing. Most African operators have yet to launch their own native apps (SportPesa’s Android app is a notable exception), so their current focus is on marketing their mobile-optimised sites.

In the wake of Google’s 2015 Mobilegeddon algorithm update, SEO remains fundamental. Organic search is especially important for Nigerian and Kenyan operators, as Google doesn’t permit them to develop PPC ads. In contrast, sports betting AdWords campaigns targeting the South African market are allowed.

With paid search restricted, Nigerian and Kenyan operators are strongly focused on other digital channels such as media buys. Given that brands are already advertising in the print editions of local newspapers, placing banner ads on these publications’ websites is a complementary approach. Results can be erratic, especially as operators are commonly charged fixed monthly rates regardless of page impressions, let alone click-through rates.

In light of these challenges, African sportsbooks are considering affiliate marketing’s performance-based approach. Although the channel is still in its infancy, its potential is significant, given the plethora of African sports blogs.

Most are written purely as a hobby by enthusiastic fans of soccer and specific teams like Arsenal. However, when educated by operators, these bloggers will discover the financial benefits of an affiliate partnership. Brands can adopt the same educational approach with their offline agents, who will soon understand the advantages of launching a website to promote brands.

As well as affiliate marketing’s performance-based benefits, the channel also provides trusted third-party endorsements for African operators’ brands. As NairaBet’s Alabi says, “The sports betting industry is powered by word of mouth, and that is what affiliate marketing is all about: people believe what others say about you more than what you say about yourself.”

The potential third-party endorsement of African affiliates extends into the social media sphere. Many Nigerian football blogs have tens and sometimes hundreds of thousands of Twitter followers and Facebook likes.

These sizable followings can be encouraged to engage with sportsbooks’ own social content. Given that Pew Research Center estimates that 76% of African internet users are active on social media, the channel has become a major channel for operators in its own right.

Social media marketing will only become a more powerful ingredient in African operators’ marketing mixes going forward, though their strategies are likely to be increasingly diversified by affiliate marketing and, as they develop apps, app store optimisation.

These newer acquisition channels will be a perfect fit for an industry that is all about originality and innovation – just like Africa itself.

Sarah Robertson is manager of business development at Income Access Group, which partners with NairaBet in Africa.