Football season drives the sports betting business, so it’s notable that because the 2022 NFL slate gets able to kick off, operators are dialing back on the four-figure bonuses and celebrity-focused marketing campaigns prominently featured during the last two seasons.
“[The industry is] definitely seeing an expenditure reallocation away from outsized promos and celebrity spokespeople and towards performance marketing and content-based approaches,” Lloyd Danzig (managing partner, Sharp Alpha Advisors) said.
Throughout the last month, FanDuel announced plans to turn into the primary sports betting operator with its own linear television network and OTT streaming service, and Penn National Gaming announced it will exercise an option to accumulate the balance of Barstool Sports.
JWS’ Take: The general public markets have rotated away from cash-burning growth equities during the last 12 months, pushing publicly traded sports betting operators to rethink their approach to customer acquisition. “Two years ago, because the market began to open in all of those states, it was about getting as many purchasers as you probably [could],” Patrick Keane (CEO, Motion Network) said.
Today those self same operators are focused on profitably acquiring customers through content. “You saw that within the Q2 [earnings] results,” Jed Kelly (managing director, equity research, Oppenheimer & Co.) said. “DraftKings had a lot better EBITDA. FanDuel had a positive Q2. And also you heard Caesars and MGM say of their earnings calls that they’re taking a more measured approach towards promoting into football.”
The pullback appears to be impacting celebrity ambassador deals and risk-free promotional offerings, not overall marketing expenditures. The capital is being reallocated to performance marketing and content-based strategies. “The spend is similar,” said one legacy sportsbook executive who was not authorized to talk on behalf of the corporate. “It’s just how operators are spending that has modified.”
To be clear, efforts to lower CACs with a content-based approach just isn’t recent within the industry. Penn National Gaming initially bought into Barstool Sports back in January 2020, and since then, there have been a number of other notable content-related deals announced.
While operators are optimistic content can assist reduce the CACs, which range from $200-$500, there is restricted evidence to this point to support the notion that large-scale investments in content lead to more efficient CAC metrics or greater market share than other means of selling.
Keane explained how search engine optimisation is crucial for one of these content, because much of the audience for these articles, videos or podcasts find the content—and the embedded promo—through search. But much of that traffic belongs to affiliate networks, not the operators themselves.
That doesn’t mean corporations making investments in content are necessarily burning money. “If revenue from sports betting doesn’t need to be your primary KPI, then you definately may be pretty dangerous within the space,” the sportsbook executive said. In theory, an operator may have the option to leverage the programming to drive one other meaningful revenue stream.
Many operators consider content may be used to retain customers too. “The fact is, in the event you’re a moderately sophisticated bettor, you’re going to bet with one of the best price and odds. You’re probably not brand loyal in any respect,” Keane said.
Logic suggests a differentiated experience could help address that issue. An operator no less than has a likelihood “to have a little bit of potential brand loyalty if [it has] some content assets that individuals enjoy and use,” Keane said.
While which may be true, even an operator with brand affinity must deliver competitive pricing and odds together with a positive user experience if it desires to earn and re-earn a bettor’s business. “What you’re beginning to see in our space is that the product is crucial thing,” the sportsbook exec said.
That helps explain why Penn National—despite Barstool’s large, rabid following—has lower than 10% of the market share in states where it has gotten an equal start.
It’s also helpful for an operator to diversify user-acquisition funnels. “Essentially the most efficient, scalable, and sustainable marketing approach appears to be a finely tuned mixture of strategies across several channels and styles. This includes original content, live events, traditional promoting, and personalized messaging,” Danzig said.
The sportsbook exec noted his company is moving away from content focused on lines and picks and towards media with broader entertainment value. “If you make good content, the paid social media variation and companion pieces are nearly countless,” he said.
Celebrity endorsements deals are coming to a halt because marketing folks have come to understand they’re largely ineffective in getting users to join or use a sports betting product. As a substitute, operators should hunt down authentic influencers who’ve proven able to engaging an audience within the sports betting space to advertise the product.
A fast sampling of varied sportsbook’s promos in the times leading as much as the NFL season would suggest there may be going to be quite a bit less above-the-line spending this fall. But Keane isn’t convinced it’s going to remain that way. “The fact is [sports betting] is a big market, it’s an enormous opportunity and it’s the primary full NFL season for Latest York State.”
Despite the state’s high tax rate, Keane believes operators are still going to be “pretty big” spenders out there over the following 4 months. “It is simply too necessary of a time to accumulate customers,” he said. MGM, Wynn and Caesars all invested heavily within the state coming out of the gate.
While Latest York is the most important live fish this football season “by a large margin,” Keane anticipates an aggressive promotional environment unfolding in some more mature markets too. “It’s still such a gold rush to accumulate these customers,” he said. “The smart [operators] are going to proceed to take a position” in offers and promos that drive first time deposits.
Kelly just isn’t convinced. “The legacy land-based operators are more likely to pull back on promoting, and DraftKings and FanDuel are currently acting more rational.”
He did note that the present CPC environment, which is lower than it has been attributable to the present macro and latest crypto winter, may very well be a catalyst for among the more aggressive online sportsbook operators to ramp up their acquisition spend. If either DraftKings or FanDuel did so, Kelly believes the opposite would likely follow.