Strike up the brand: Who’s winning the marketing war so far?

It is no secret sports betting operators are spending almost unfathomable amounts of capital on marketing their brands in an increasingly competitive US market. This year, DraftKings, FanDuel-parent Flutter, Roar Digital, and PointsBet all turned to investors to support their growing advertising ambitions.

Although the year started strongly with some states reporting record handle ahead of February’s Super Bowl, Covid-19 hit the industry quite hard in March and toppled all professional sports for a number of months. To mitigate losses from the lack of action, most operators slashed their marketing budgets in Q2 and for part of Q3.

“We didn’t feel confident that we could continue spending and that what was left in terms of the sporting calendar would allow us to monetize clients to get that payback,” PointsBet US CEO Johnny Aitken told EGR North America recently.

“We basically turned off the taps in relation to marketing investment from the heart of March to part of July,” he said. But as soon as sports returned, PointsBet turned the taps on full blast as it signed a multi-million- dollar marketing deal with NBC Sports and snapped up a handful of sports sponsorships.

Others in the sector are telling a similar story. Bet365 is a privately-owned Stoke-on-Trent-based operator that has made waves in Europe and emerging markets as a self-sufficient, tech heavy and sports-first firm, however the brand is much lesser known in the US, having launched in New Jersey in August 2019 but not yet having expanded into additional states.

But the business is showing some signs of stirring, having this year stepped up its offline advertising spend by approximately 1,209% year on year, across TV, radio, and outdoor channels, estimates by media agency The Specialist Works have shown.

The data, collected using online marketing tool Kantar, reveals bet365 spent around $63,300 across TV, radio, and outdoor advertising in 2019, and then increased it to $828,600 in 2020. Boutique research firm Eilers and Krejcik Gaming also reported in June bet365’s market share in New Jersey had hit an all-time high of 2.6%.

Eilers and Krejcik Gaming attributed the rise to new televised adverts starring Breaking Bad star Aaron Paul and the debut of signage at Yankee Stadium in New York. “It doesn’t surprise me that they’re picking up steam because they’ve been around, and people know who they are,” Robert Davidman, partner at industry ad agency Fearless, explains to EGR North America.

“Aaron Paul definitely reaches the right demographic and resonates with them. It’s a bold move to use him and it probably would have been more effective if Breaking Bad was still on, but he’s a relatively well-known guy among the people they would like to reach.”

BetMGM has turned to Hollywood star Jamie Foxx as its betting brand ambassador

Who’s spent what?

Roar Digital is another operator with great European influence that has endeavoured to appeal to its key demographic by leveraging Hollywood’s finest. Its latest BetMGM campaign, launched in September, has actor Jamie Foxx at the helm to bring “style, swagger, and sophistication to the BetMGM brand,” Roar’s director of digital media and brand, Ray Doyle, explains.

Roar has been beefing up its marketing war chest after parent companies GVC and MGM pledged in July to invest an additional $250m in the joint venture. According to The Specialist Works’ estimates, Roar’s offline media spend alone has rocketed 680% to $5m so far in 2020 compared with 2019.

“BetMGM has increased its ad spend almost 10-fold with the vast majority of that increased budget going into TV,” Richard Downey, SVP of global new business at The Specialist Works comments. “One would assume that this trend continues into Q4.”

In its recent Q3 results call with investors and analysts, GVC CFO Rob Wood said the US business’ marketing spend had been higher than anticipated in July as sports had returned earlier than expected after the Covid-19 lockdown. “Losses will be higher in 2020 as a result as we’ll spend around $150m on marketing in 2020,” Wood told analysts.

Ever since the DFS boom and its own subsequent marketing war, DraftKings and FanDuel have seemingly stopped at nothing to one-up the other in terms of ad spend. While both parties have been reasonably secretive about these amounts in the past, they are now obliged to publicly report their expenditure in their quarterly results.

Most recently, DraftKings’ preliminary Q3 figures reported a total marketing spend of $200m-$210m covering the quarter. “We spent more because customer engagement was off-the-charts and we were live in many more states year on year, including Illinois, a major revenue market. With people staying at home, we’ve seen increased response rates for ads,” the Boston-headquartered operator revealed in a prospectus to investors in September, as it sought to raise additional funds through offloading millions of shares.

It appears that hefty price tag has reaped dividends as the firm also reported: “We expect our B2C monthly unique players (MUPs) for the three months ended September 30, 2020, to be approximately 1,020,000, representing growth of approximately 64% compared to the same period last year.”

FanDuel CEO Matt King said back in February that its sports betting CPA in 2019 had dropped below $250 on average. In May, parent company Flutter raised $1bn to fund customer acquisition and it expects to spend $185m on marketing in H2 2020.

According to Eilers and Krejcik Gaming, Pennsylvania’s July data showed a big month over month increase in promotional spending at FanDuel. Getting it right This NFL season has brought about entirely new challenges and expectations for marketing teams across the sector.

Firstly, the return of professional football coincided with the return of the NBA, MLB, and NHL as all sports resumed their seasons after the Covid-19 shutdown between March and July.

Second is the addition of new states to the betting space, which means new customers and new localized marketing strategies. With New Jersey now in its third football season since the launch of legal betting, one might expect that operators’ marketing strategies may have evolved to suit a more mature bettor, but 888 US marketing lead Eitan Rosenberg doesn’t believe that is the case.

“I don’t think the New Jersey market has become more sophisticated yet, I think it’s going to take some time,” Rosenberg says. “What’s happened is a lot of other players have done the same strategy, which is going after the lowest- funnel user and that audience is starting to saturate more in the state, because that represents far less than 10% of your total sports betting audience. What we’re trying to do more is getting that more novice user because that’s still not been tapped into.”

DraftKings has secured a sponsorship deal with the NFL’s New York Giants

According to Rosenberg, there is another demographic being targeted by operators in the wrong way: “A few books have attempted to talk to your middle of the funnel user, but they’re not using promotions in the right way. We’re still saying things like ‘We’re number one’ or ‘World’s best,’ things that really don’t have any meaning to the average New Jersey bettor or the average American,” he notes.

Meanwhile, three operators (Draft- Kings, FanDuel and Roar Digital) have a slate of professional sports team sponsorship deals in their war chests. On a national scale, DraftKings and FanDuel have content agreements with Turner Sports’ Bleacher Report brand and Roar Digital works with Yahoo Sports to tap into its fantasy platform userbase.

Roar’s Doyle says the partnerships have offered up a fantastic opportunity to reach fans and tailor messaging and promotions directly to them. However, Rosenberg believes that operatorsare missing a trick by not localizing their marketing efforts further. “What you’re seeing right now is companies trying to [tap into novice bettors] on a national scale, but no-one’s cracked it on a local scale.”

He adds: “You should look at local influencers, you have to do promotions very specific to local teams, and you have to think outside the box with sponsorships. It’s obvious everyone in the space is going to be uber-aggressive in going after the state team, but it’s also really important to look at a lot of the tier-two or tier-three-type sponsorship deals. Look at local MLS, at a triple-A, or Double-A baseball team.”

The Barstool model

The one exception to Rosenberg’s point is of course Penn National Gaming’s (PNG) deal with Barstool Sports. Barstool boasts an immense national reach across multiple digital channels, and PNG’s efforts to allow sportsbook users to bet against Barstool personalities proved hugely successful on its first weekend of going live in Pennsylvania.

In 48 hours, the product received 12,000 FTDs and scored an average Apple App Store rating of 4.9. Across the US, the app was downloaded 180,000 times during its launch weekend. By comparison, FanDuel said it had acquired 350,000 sportsbook customers between its launch in 2018 to December 2019.

“I think the Penn/Barstool deal is really helping to shape the future of what a lot of these companies are going to do, not just from a customer acquisition standpoint but especially from a brand loyalty and retention standpoint,” says Jason Shapiro, former sports and entertainment account manager at ad agency Horizon Media.

Shapiro had FanDuel as a client back in the DFS advertising blitz of 2015 and 2016. “I personally feel that the social element of betting is very real and when I look at the way Barstool is leveraging personalities that people relate to and want to be involved with, that industry trend is something a lot of people will have to follow to compete.

“Barstool is going to be able to acquire and keep customers at a much cheaper cost than everyone else because they have this well-oiled marketing machine,” he continues.

It seems competing operators have taken note and are making similar moves in the wake of Barstool’s partnership with PNG. In July, FanDuel extended its contract on former NFL star and sports analyst Pat McAfee and brought him on as a content partner, agreeing to distribute McAfee’s content across its platforms. McAfee’s daily show, broadcast by betting broadcaster Sports- Grid, is also shown on Flutter’s national racing channel, TVG.

Shapiro says: “I think we are really starting to see operators look at this [approach] and not just pay people to promote the app with a standard marketing feel, but instead start to bring people in house and have them be content machines that people want to interact with. I think this trend will continue to develop very quickly and Barstool really set the tone.”

But Fearless’ Davidman is quick to remind us that Barstool Sports isn’t entirely exempt from marketing duties and must invest significantly in expanding but that goes well beyond its $163m deal with PNG. “They create a lot of content, and that’s a model that absolutely has merit,” Davidman states.

“It’s a unique way of doing things that is less about the commoditized product and more about the engagement and using the commoditized product as a means to an end. “When you go to the likes of bet365 or any of these other guys, they’re not sitting there creating all content for people to engage with all day, [the bettor] just comes in, places their bet, and then comes back when the game’s on,” he maintains.

Taking responsibility

However, Barstool’s approach has not been without criticism, with founder David Portnoy’s somewhat brash humor facing backlash from some industry followers. There are concerns that perhaps the Barstool influencer team may not be as responsible gambling-aware as perhaps they should be, and as Barstool is not considered the direct operator (as PNG is), the line is blurred between what is appropriate for the team to promote and discuss in relation to betting and the Barstool Sportsbook.

Responsible gambling in betting and gaming content is still extremely nascent in the States, but the American Gaming Association (AGA) is making strides to determine what is acceptable via its advertising code of conduct. SVP of strategic communications at the AGA Casey Clark admits there will be many instances in future that require the code to be reviewed and restructured.

In Barstool’s case, Clark notes: “I think that there is an aligned interest on entertainment that comes along with those kinds of situations. [Barstool] provides a really interesting insight into marketing and entertainment versus promoting actual betting lines and betting activity.

Right now, the code is really focused on activity that promotes betting, so it is not meant to restrict a brand’s marketing activity.”

He adds: “I think it’s attractive for Penn to have that audience aligned with their sportsbook, but I certainly think that responsibility has got to continue to be central to that activity, and ultimately promoting irresponsible betting activities is a real problem and a real liability for licensed gaming operators all across the country.

“I don’t know how regulators are going to respond to that, but I also don’t know that anyone [at Barstool] is a license holder.”

More broadly, the code of conduct is a starting point for the industry to begin paying closer attention to the content it is promoting and allowing others to promote on its behalf. “From the AGA’s standpoint and our members’ standpoint, this is central to everything they’re doing, from the customer experience, to employee training, to marketing and advertising. It’s really a critical component,” Clark says of the code.

The AGA has pledged to ensure marketing and advertising will not feature celebrity or influencer endorsements or language designed to appeal to minors, and will also not feature anyone below the legal age seemingly participating in betting activity.

Betting content provider The Action Network appeared to break the rules, though, with a recent online ad that featured a mother and her two young children discussing which picks to make for an upcoming game.

The ad was removed from all online channels but served as a reminder to the industry to have greater awareness over the content being produced. At this critical stage in the evolution of betting and gaming in the States, marketing and brand awareness is a key component to appealing to new and seasoned bettors as they become more comfortable with the process and look to try new products.

Any operator will admit how challenging it is to calculate an accurate ROI for many of the channels that firms are marketing through, and what strategy is best is still to be determined. But what is certain at this point is that big investments and calculated approaches to targeting young bettors are paying off.

And that is without even considering the more major media partnerships within the sector that will likely take years to generate returns.