Amongst the information presented by William Hill in its annual results was some data on the cost of acquiring (CPA) online customers and the average revenue per user (ARPU).
Between 2017 and 2018 both the cost of acquisition and revenue per user had fallen for UK and International customers. The explanation was that a strategy of volume acquisition of mass market customers meant lower CPA but also lower revenues from those users.
But what has also fallen more substantially is the “profit margin” per customer – the difference between the ARPU and the CPA.
As the graphs below show, for UK customers the margin fell by 38% to GB£ 69 in 2018 and for international customers the fall was 22% to GB£ 123.
This data does not allow a full analysis of average customer profitability because ARPU in a calendar year does not necessarily equate to an average customer’s lifetime value (LTV) and there may be further retention costs after the initial acquisition.
Nevertheless, a narrowing of the gap between CPA and ARPU is not a healthy trend to pursue.