Following the recent public listing of XL Media, Dennis Dyhr-Hansen met with Ory Weihs to discuss the company’s humble beginnings and its astonishing growth today.
You recently took XL Media public. What made you choose to go public, how was the process and what advice do you have to people thinking about doing the same?
We have been successful growing our business over the last few years – generating both sales and profit growth year on year. The online marketing space has been highly fragmented for a number of years and our ability to grow market share and expand our product offering and been central to our success.
In order to capitalize on some of these opportunities secured additional funding through two rounds of private equity investments (2012 & 2013). This was closely followed by our oversubscribed IPO in 2014 which provides the business with a strong financial base from which to expand. By being quoted on AIM, we believe the Group can therefore accelerate our growth aspirations, funding new organic revenue streams as well as targeting selective acquisitions. .
In terms of going public, the main piece of advice would be to ensure you have an experienced management team in place and appoint advisors that can guide you through the process. Shareholders demand value and growth and being able to articulate this in a concise manner is crucial to successfully listing any business.
How has the affiliate industry changed over the last years and what do you think the future holds for gaming affiliates?
The main difference is becoming much more ROI driven and competitive, compared toa sense of “tranquility” back in the early days. As the markets become more advanced and competitive, there is much more need for technology and expertise these days than before.
For example in the content and search world back in 2005 any simple site with limited features and content could create a large amount of players and revenue. These days you really need to publish quality content and offer serious engagement to users to compete as well as take a data driven approach as opposed to intuition.
In media the change is even more noticeable as the amount of channels, formats, publishers and products has grown significantly. We are very pleased with the progress we have made with our backend optimization and financial control systems as well as with the expertise our team has developed, allowing us to be a strong force in field, from mobile and social advertising, to display and paid search.
XL Media has been doing some company acquisitions lately. Is it a clear strategy for XL Media to grow through acquisitions?
Indeed, acquisitions are an important part of our strategy to enhance growth while diversifying the markets we work in. In some markets we believe the best way to enter is organically through our own resources, but in some cases we prefer to buy an existing business which complements us. This was also the rationale behind the fund raising earlier this year. Good examples of executing this strategy are the EDM acquisition announced in September which provides us an entry into the social gaming field while the UK sports betting acquisition announced in August adds a stronger presence in the UK market and in sports betting.
We are in constant search for additional acquisitions. Additional potential targets for us are technology focused companies such as companies which develop campaign optimization technology (which we invest in heavily) among others.
Our overarching strategy is to complement our organic growth with acquisitions. As you can see in our H1 results for this year, the strong growth across all departments was purely organic, we had only one smaller (Danish focused) acquisition the contributed minor revenue from June. Clearly we will have a stronger impact of EDM at the full year but 2014 would have seen strong level of investment in our core business which positions us for the future.
Which geographical regions do you see as the most interesting from an affiliate point of view for the near future?
From our perspective regulated environments and ones that are in the process of going towards regulation are the most interesting ones. In the near future I would mention markets such as the UK, Denmark and Greece, as well as a few others. The Nordic region as a whole is going towards regulation in the medium – long term and represents a good opportunity at present.
A large part of XL Medias business is media buying. Any tips for affiliates who is considering buying traffic to boost their projects?
The main tip is to try and eliminate intuition as much as possible and to develop / buy / lease strong tools and systems allowing you to make the best of your spend. (We develop proprietary tools for this). Financial control would be another tip, make sure to control ROI on every $ spent as campaigns can become costly very fast.
Once you access the proper tools and start, I recommend to carefully asses performance and not to shut down too early, you need to make sure to reach large enough numbers to really be able to assess a new campaign method, platform, publisher etc’.
Last but not least, TWEAK! Tweaking and experimenting are keys to success inany kind of online media campaign
Which branch of the gaming industry (sports betting, casino, bingo, poker, skill games, social gaming etc.) are you most excited about the next couple of years?
We are seeing very good growth in sports betting and social gaming (which are rather new verticals for us) as well as our historical focus vertical casino. I believe poker will become a much more important part of the business onceUS regulation progresses.
If you had to give only 1 tip to a new aspiring gaming affiliate, what would it be?
Persistence and planning! It’s not an easy business to enter but a potentially very rewarding one. Planning goes a long way, have a roadmap and multiyear plan of where you want to get to product wise or expertise wise and financial milestones to keep you motivated.