Newly-listed online gaming affiliate marketing agency Catena Media has endured a rough start to its life as a public entity after it was forced to respond to claims in the Swedish press that it advertised its wares via illegal porn sites.
The Malta-based Catena Media listed on the Nasdaq First North Premier exchange in Stockholm in February this year and raised a total of SEK240m (€25.5m). But in March the company was forced to issue a press release responding to allegations in Swedish daily newspaper Dagens Industri that it advertised via pornographic websites.
The statement said the company “never has and never will use dubious or illegal websites to market its own websites”. It added that the success of its over 3,000 sites – which include popular Scandinavian-focused sites such as JohnSlots, Freespins and Slottimania and well as the recent acquired UK and Netherlands-facing RightCasino.com – is due to their high rankings on Google. That is achieved, Catena pointed out, by being rewarded by the Google algorithm for having links from reputable websites with high credibility.
However, Catena did admit to having suffered a “negative SEO” campaign early in 2014 when it said an unknown attacked attempted to “denigrate (the company’s) reputation” by linking its websites to adult content sites. Catena duly informed Google and it says it had no effect on Google rankings.
Better news for Catena came earlier in March when the company announced a pair of acquisitions. First the company said it had bought an unnamed Italian and Belgium-focused affiliate network for €3m with a further earnout of €3m due should it hit earnings targets over the next two years. Next Catena bought out fellow Swedish-focused affiliate network Wonko Media for SEK32m (€3.4m) in cash. Explaining the attraction of the deal, Catena said that Wonko achieved a pre-tax margin of 85% on its fourth-quarter revenues of circa €400,000.
Catena chief executive Robert Anderson said his company was hoping to be a consolidator in the “extremely fragmented” affiliate marketing landscape. During the course of 2015 Catena embarked on a series of acquisitions in the space, including snapping up the assets of Staymedia, Arctic Marketing, Slottymania and Good Game and culminating in the RightCasino acquisition in November of that year. RightCasino was bought for up to US$9m, depending on the business hitting earnout targets. That business added a PPC capability to Catena to add to its mainly SEO operations.
In the prospectus accompanying the February float, the company said it expected the online casino affiliate market to grow revenues at a compound annual growth rate of 7% a year. The company says it has 200-plus online gaming clients including market leaders such as 888, William Hill, Betsson and LeoVegas, however, the prospectus points out that it was reliant on just three companies for 27% of its revenues in the nine months to September while the top 10 customers were worth 55% of total revenues.
Over the period, the company referred over 44,000 new depositing customers (NDCs) to its clients while total NDCs since 2012 stands at over 180,000. Catena’s core markets include the UK, Sweden, Norway, Finland and the Netherlands.
Catena Media’s year-end results published at the end of February saw revenues more than treble to €14.9m while operating profits more than quadrupled to €9.98m, with operating margins hitting 60%. The fourth quarter showed accelerating growth with revenues rising over 300% to €5.9m from just over €4m in the third quarter with adjusted operating profit after IPO expenses rising to €3.6m. The prospectus said that in the nine-months to September, 71% of total revenues came from revenue share deals with 19% coming from CPA deals. Fixed upfront payments account for the remaining 9%.
The company said in its prospectus it would be upgrading its content management platform this year. At the centre of the company’s technology is a data mining and analysis platform. It provides management with custom reports and predictive analytics. As part of its business intelligence efforts, Catena has compiled a proprietary database of email addresses which now number 80,000.
Catena Media was formed in 2012 by entrepreneurs Erik Bergman and Emil Thidell and has grown substantially via acquisition. At the end of that year the company gained investment from VC Optimizer Invest, another Swedish-focused but Malta-based company launched by former Betsafe founders Henrik Ekdahl, Andre Lavold and Mikael Riese Harstad, which bought a 50% stake in Catena. Following the float, Optimizer retains a 16% stake in the business. Bergman retains a 9.9% stake.
Optimizer also has stakes in a handful of other Scandinavia-focused gaming entities, including the Betit Group which is now part-owned by GVC, Hero Gaming, the site behind the gamification-led casino offering Casino Heroes, and services provider iGaming Cloud.