The problem with online gaming companies is that when money flowed free and easy operators were concentrating on electronic marketing to their most valuable group of players - call it the US market - and left the grind action to fend for itself. Also, lacking land based gaming marketing skills for the most part, they had little chance of unearthing the small gems that make the difference to profitable operations, taking them from ordinary ROI properties to star performers.

News comes from the City of London that shares in Party Gaming, the erstwhile online casino operator high-flier, plunged this morning after the company warned that profits this year will fall far below expectations as it struggles to come to terms with losing its US market. We all say: “Aaaaahhhhh”, because it should not have come to this. After all, this is the company that nearly 2 years ago had a US $8.5 billion value after its IPO made FTSE 100 with shares valued at around 126p, or some US $2.50 each.

It was always on the cards that the Bush administration would seek to outlaw online gambling from the USA. When eventually it did, in the thrall of a midnight underhanded piece of legislation last November, online operators were caught napping and left screaming blue murder. However, public companies like PartyGaming with a multi billion dollar tag should have taken serious contingency measures to take into account the Bush online gaming weapon of mass destruction.

PartyGaming CEO Mitch Garber has been quoted as saying that higher marketing spend will "affect our profit performance in the short-term." What Garber does not say, is the way in which the marketing spend will be made. If it follows current online casino marketing trends, the short term performance is likely to become medium term to say the least. Just about every online casino is doing exactly the same: going for the same markets, with the same hackneyed marketing tools.

Shares in PartyGaming fell by almost 70% in the past year on fears the company would struggle following the ban in the US, reducing company's revenues by about three quarters. News from Garber to an already jumpy stocks sector in London saw shares take a dip down to 42p (US $0.21), less than 10% of its value in the halcyon IPO days. Further news from the company that over 230,000 new players signed up in the first three months of the year, up from 156,200 in the last three months of 2006, seems good but not good enough, as new players generally do not have a significant daily spend initially. The marketing effort from PartyGaming must be directed at attracting the broader gaming enthusiast, who plays games for a laugh or a higher game stage achieving thrill.

A few weeks ago an offer from gaming marketing outfit GGM landed on our desk, with one of the most incredible gambling marketing tools - combining the appeal of the console interactive game with real gambling as it happens in land based casinos - called “Maximum Game”. We considered that the GGM project was just right for marketing online casinos, which the execs from the marketing company confirmed. Maybe they are talking to PartyGaming or others. However, time will tell who does benefit from this online gaming maximum marketing tool. (E-05.02.07)

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