General topics incl sports & media. Vice President, Media and Entertainment at DataArt.сom
The US sports betting market is booming. In 2020, Americans spent almost $35 billion wagering on sports events, so it’s no surprise that the competition to acquire customers for sportsbooks is fierce. As a growing number of states legalize sports betting, millions of new gamblers are emerging, making it imperative for companies to invest heavily in customer acquisition to secure a piece of the action.
DraftKings and FanDuel are the standout leaders in the rapidly expanding sports betting sector, responsible for approximately 80% of the US market. But a growing number of competitors are coming forward in an attempt to gain market share as the sports gambling industry reaches new heights in revenue.
While Nevada continues to hold the largest sports betting market in the US, gambling is now legal in approximately half of the states, with others soon to follow. Starting from June 2018 up to June 2021, New Jersey hit a revenue of $1,089 million from sportsbook operators with monthly handle of $447.5 million in May.
[Source: ESPN; As for May 25, 2021]
In our recent video discussion about effective customer acquisition strategies in the sports betting space, Daniel Kustelski, co-founder and CEO of games-as-a-service provider Chalkline, stated the importance of localization in the current climate.
“Obviously, what we're seeing – varying strategy and tactics by the operators depending on really the size of their balance sheets. There's a lot of national coverage for brands, but really what it comes down to is what is working on a state-by-state basis. We're seeing lots of, certainly, above the line advertising. But then down at its more regional and local level, it's really about figuring out who in each one of these states is interested in sports betting and/or maybe has bet illegally in the past and how do you acquire those customers.”
In addition to expressing the need to customize advertising on a state-by-state basis, Kustelski mentioned some methods being used to acquire customers.
“(We’re seeing) lots of deals with media companies right now between sportsbooks and major media companies, and not just on a major national scale. We're seeing those types of deals happening locally and regionally, and maybe just relevant for a couple of states.”
While the sports betting market is highly lucrative, it’s not easy to enter. Startups in this space must navigate a patchwork of complex regulations that vary from state to state. The two market leaders—DraftKings and FanDuel—are both owned by large public companies, giving them access to deep pockets for advertising spend in addition to vast legal and compliance teams to manage the regulatory complexities of the industry.
“I think the first wave that we saw was really about market access,” Kustelski explained. “Do I have access to this state or that state, or what does that look like. And I think that while we're still starting to see market access deals, I think there's certainly a push now to ‘Okay, I am in particular states - how do I now acquire customers in those particular states and what is my arsenal in order to do that.’”
[Source: Roundhill Investments]
Another challenge facing sports betting startups is how to differentiate themselves from competitors. The reality is that most betting platforms offer basically the same service. While many companies offer a range of bonuses for registration with their service, new entrants in this space can stand out from the pack by delving deeply into the analysis of what sports fans are most interested in and subsequently tailoring their special offers accordingly. Every registration bonus is not created equally, and those that can appeal directly to the largest percentage of new customers in the sports betting market can significantly raise awareness and interest in their platform.
An excellent example of effectively applying this concept comes from FanDuel. FanDuel partnered with WSC Sports to deliver in-game highlights directly to their users, in near real-time. The technology uses AI to automatically analyze live sports broadcasts, identify events that occur, and then create customized short-form video that can be published on a mobile app.
One more difficulty facing entrants in the sports betting industry is the extraordinarily long journey from an initial customer touchpoint to their eventual registration with a platform. During our discussion, Kustelski talked about some misconceptions held by startups in their first attempts to acquire customers.
“I think that there is some assumption from some of the operators and the sportsbooks that if they build it, people are going to come, and everybody's going to sign up in the first two months and then that's it,” Kustelski explained before providing us with a more realistic view of the industry, which typically includes the need for acquisition tools to achieve success. “It's really hard to sign up customers on my sportsbook. People would come to my registration page ten to eleven times before they even started the registration process. It depends (on) walking people through that process of registering and depositing and then placing that wager. There will forever be a need for acquisition tools because everybody is in a slightly different state of education.”
Sportsbook operators in the US typically employ a range of tactics in their quest to acquire customers, such as registration bonuses, ongoing promotions, odds boosts, and sponsorship deals.
#1 Media Deals and Sponsorships
Media deals and sponsorships are on the rise as the sports betting market skyrockets. With a growing number of new entrants vying for attention, combined with a rapidly increasing revenue stream as the industry expands to additional states, partnership deals provide a powerful method for raising awareness of new betting platforms.
It’s interesting to note that 90% of sports betting ad spend in 2020 went to TV broadcasters. While the lion’s share of paid advertising comes from DraftKings and FanDuel with a combined media ad spend of over $154 million from January-September 2020, as illustrated in the following chart from market research firm Kantar, new industry entrants may climb further up the spend ladder in the coming period.
Many companies have signed profitable partnership deals to further their customer acquisition reach, including:
While media partnerships and sponsorships can be excellent methods for expanding the awareness of sports betting platforms, it’s vital to ensure that the brand image being created is on point.
When a platform uses questionable promotion tactics, it may harm their image significantly, resulting in a major backlash from customers and the overall sports betting industry. For example, in what may be remembered as the most inappropriate advertising strategy of the year, Pennsylvania’s Barstool Sportsbook posted an image on Instagram of a young child holding up a sign that said “Daddy I need -3.5” with a caption reading “Do it for the children”. Although the company later deleted the content from its account, the post received a lot of negative attention and may prove to be a permanent scar on the platform’s reputation.
Promotional offers continue to be a major tool for customer acquisition in the sports betting industry. Providing the right type of promotional offers can help a platform stand out from the competition while being an overall incentive to join the world of gambling on sporting events.
In a report by PaySafe called “All the way players pay: The game plan for growth”, the company points to research commissioned in 2020 which found that 28% of US players named good promotional offers as a differentiator when evaluating different sportsbooks that they do not currently have an account with.
Another promotional offer strategy is a controversial tactic that’s sometimes called “a race to the bottom”. A new American sportsbook called Vigtory is attempting to disrupt the industry by taking a vig from wagers that’s between 50-75% lower than what traditional sportsbooks take. The company is targeting bettors who are big spenders as opposed to average sports gamblers, believing that offering a major savings on the vig will attract high rollers to its platform.
Such tactics can be difficult to manage for many operators, as Harry Lang, a UK sports and online gaming marketer, explained:
“The smaller guys will find it hard to compete because they won’t be able to ‘loss lead’ with small margins. They’ll go broke trying to keep up.”
Providing wide access to betting services is a key component of successful platforms. A strong mobile presence is imperative as online betting continues to grow in popularity for the majority of consumers. A large percentage of people are on two screens for much of their day, especially during the pandemic due to the reduction of in-person retail. Building an innovative second screen experience is an excellent way to keep sports fans entertained and engaged while increasing betting opportunities that lead to additional revenue.
“I think that New Jersey is a great example of the importance of mobile. It's probably 90% of all the wagers that come in on mobile, and certainly during the pandemic when there was no retail opportunity. Providing people the ability to entertain themselves on free-to-play or sports betting on their mobile phones where they are already – it’s not important, it's everything,” Kustelski explained.
He elaborated on this point based on his experiences with Chalkline.
“We have 20% of our game plays on desktop but 80% is on mobile and so especially when you look at these states like say Tennessee, Tennessee is mobile and online only and that's a really unique opportunity for people to kind of panel beat their processes around getting people to sign up through digital means.”
[Source: CNBC; As of March 12, 2021]
Behavioral marketing is an advanced method of targeting customers based on their activity on websites as opposed to simply analyzing the pages a customer visits. The actions being tracked and utilized may include the way a user engages with product listings, the length of time spent viewing a coupon, a user’s search history, and other measureable activities.
For platforms in the sports betting space, behavioral marketing provides powerful information that can be used to acquire customers in a highly personalized manner. In Chalkline’s case, the company analyzes the passion points of each user of its games, including which ones they engage with and how long they spend playing each game. This information is subsequently used to personalize their messaging, sending users the campaigns that are best aligned with their tracked activity. Considering the modern consumer’s expectations for personalization, behavioral marketing is an ideal tool in the quest for customers, as Kustelski illustrated during our recent conversation.
“We collect a lot of data, and all of our data is captured on behalf of our clients. But on a weekly basis that report really looks like this: how many games we created, we created 15 games for you last week, these are all the types of players that played, this is how many times player X or player Y played these games, player X only played the football games and player Y actually played the UFC and the golf games,” Kustelski explained.
The extraordinary amount of data collected can subsequently be used to understand what works best for customers and what isn’t working as well.
“The BI that we collect is really grounded in the fact that our tech team and our team has built a sportsbook,” Kustelski continued. “We understand the value of every single thing that the client does on our site, and we know that is intelligence to the operator. That is critically important for the operator but also when we start to collect information from the operator, we can also start to glean how they are engaging with our particular product - our free play as well as real money - so we know that most of the time, if there's a free play component by an operator, it's going to be played. Fifty percent of all the real money players are going to be playing that free play for various reasons. If there are ways that we can maybe entice people to deposit money if they've already signed up, what are some of those games and what are some of those passion points that we can use (to say) ‘hey, here are campaigns that work for the various personas and the various registrations down into the funnel.’”
We’ve covered a lot of material about a range of customer acquisition tactics in this article. The following comparison table summarizes the options to help you decide which methods are best for meeting your particular goals.
Although sports betting used to be relegated to very small parts of the US, this pastime has now expanded to half of the country and will continue to spread throughout additional states in the coming period. As a growing number of startups attempt to grab a piece of the lucrative action, the platforms that apply innovative marketing methodologies along with exceptional technological infrastructures are poised to climb the competitive ladder of the rapidly expanding sports betting market.
Create your free account to unlock your custom reading experience.