Competitive landscape of the sports betting industry

Part
01
of four
Part
01

Fan Duel: Customer Acquisition Strategies

Three strategies that FanDuel uses/has used to become successful in the sports betting space are creative video advertising campaigns, strategic partnerships, and the use of automated marketing technology. Three strategies that Draftkings uses to draw people to their app and acquire new customers are flexibility and seamless app interaction, influencer marketing campaigns, and new customers rewards/incentives.

FANDUEL’S STRATEGIES FOR BECOMING SUCCESSFUL IN THE SPORTS BETTING INDUSTRY

  • CREATIVE VIDEO ADVERTISING CAMPAIGNS
    • One of the strategies employed by FanDuel in becoming successful is the development of creative video advertising campaigns. In the 2019 NFL preseason, FanDuel developed two comic video adverts. The campaign was developed with Bartle Bogle Hegarty (BBH) New York, which was named FanDuel’s lead strategy agency.
    • One of the adverts specifically promotes Sportsbook, its online betting platform. Gerrard Caputo, the chief creative officer of BBH New York explained that the advert was based on the frequent opinion of fans that they knew what was going to happen in a game. Building on that insight, the campaign featured fans and not pro athletes.
    • Mike Raffensperger, FanDuel’s chief marketing officer, noted that FanDuel was particularly interested in BBH because the company had previous experience working with sports betting companies in non-US markets, such as Bwin in Europe.
    • Raffensperger revealed that FanDuel continues to work with other roster agencies on smaller projects. One of such agencies is The Many.
    • In July 2019, FanDuel worked with The Many, a Los Angeles-based creative agency, to develop a campaign to promote the launch of its Sportsbook app in Pennsylvania.
    • Raffensperger also noted that above all else, FanDuel sees itself as a technology and entertainment company.
  • STRATEGIC PARTNERSHIPS
    • In 2018, Boyd Gaming Corporation and FanDuel entered into a strategic partnership to explore sports betting and online gaming activities across the US.
    • The partnership enabled Boyd gaming eligible to operate 29 casinos across 10 different states of the US.
    • Under the agreement terms, Boyd gaming will establish its presence in the online sports gaming and betting market by leveraging the technology and services of FanDuel to operate Boyd gaming-branded mobile and online sports betting services.
    • Similarly, the partnership will allow FanDuel to establish and operate mobile and online sports betting under the FanDuel brand, in the states where Boyd Gaming is licensed.
    • The partnership will enable FanDuel group to market Boyd Gaming properties through its existing sports betting services.
    • Also, the partnership would enable Boyd Gaming will promote FanDuel’s products to its customer base.
  • AUTOMATED MARKETING TECHNOLOGY
    • FanDuel, in partnership with Fresh8, leverages automated marketing to advertise the services of FanDuel.
    • FanDuel uses Fresh8 to machine optimise their advertising inventory across social, display, programmatic channels, and even on FanDuel’s website.
    • Fresh8 creates and delivers optimised marketing through operator's wagering and CRM data. Fresh8 provides real time creative decisioning and minimises the time and overhead of creating and distributing digital marketing assets by hand.
    • Aaron Dugan, head of online marketing at FanDuel, noted that Fresh8’s self build technology allows them to massively scale their advertising efficiencies.

WAYS FANDUEL ACQUIREs MORE CUSTOMERS AND APP USERS

  • FLEXIBILITY AND SEAMLESS APP INTERACTION
    • FanDuel customers and app users in Pennsylvania and New Jersey will be able to use the same account in either state.
    • Raffensperger noted that the ease of payment and interoperability facilitated by FanDuel is important to them and a lot of resources and time had been devoted to it.
    • Raffensperger revealed that FanDuel would prefer, and look to create a ‘national wallet’ that would not require different registrations in each of its state of operation, but conceded that each state will have slightly different priorities.
    • FanDuel was the first online sports betting company in Pennsylvania that had its app directly available in the Apple Store.
  • INFLUENCER MARKETING CAMPAIGNS
    • FanDuel, with the services of NeoReach, rolled out a strategic influencer marketing campaign two weeks before the start of a new NFL season.
    • NeoReach developed a performance-based Cost Per Action (CPA) campaign that was designed to measure the individual performance of influencers and create new user signups as well as revenue-share incentives from new player referrals who signed up on FanDuel’s platform.
    • NeoReach employed an always-on approach to revenue sharing for new users. This allowed FanDuel to collaborate with influencers on an ongoing basis, in order to drive long term brand loyalty.
    • For the campaign, FanDuel aimed to reach US based male audiences between the ages of 18 and 45 years who showed interest in sports, especially football or basketball, through YouTube.
    • As part of the campaign, influencers encouraged YouTube viewers to play along with them on a weekly basis, in a season-long fantasy football league.
    • The YouTube content created by influencers for this campaign contained affiliated back links to enable new users to create new FanDuel fantasy sports accounts.
    • The influencers involved in the campaign are Mikey Bolts Matt Stonnie, Jimmy Tatro, and Chris Smoove.
    • The campaign helped FanDuel to end the year with $1.8 billion generated from entry fees. The campaign also drove a total of over 38 million impressions, had over 115 influencer posts, and resulted in a 5:1 Return On Investment (ROI).
NEW CUSTOMERS REWARDS/INCENTIVES
  • FanDuel carries out new user/customer acquisition, to draw people to their apps by offering player incentives and perks.
  • As part of the effort to draw people to their apps, FanDuel offers a 100% welcome bonus up to $100 on customers’ very first deposit amount. Also, FanDuel gives a $20 for real-money deposits.
  • FanDuel offers a prize pool that is 233,000 times the buy-in amount, compared to 230,000 for DraftKing.

Part
02
of four
Part
02

DraftKings: Customer Acquisition Strategies

Three strategies that Draftkings uses/has used to become successful in the sports betting space are active testing before investment, marketing research, and technology and user-centered performance approach. Three strategies that Draftkings uses to draw people to their app and acquire new customers are innovative partnership and content marketing, refer-a-friend campaign and in-house marketing, and strategic out-of-home and audio marketing.

DRAFTKINGS' STRATEGIES FOR BECOMING SUCCESSFUL IN THE SPORTS BETTING INDUSTRY

  • ACTIVE TESTING BEFORE INVESTMENT
    • One way Draftkings stays successful is active testing before investment. Draftkings tracks its marketing, acquisition, fan, and player engagements across all of its platforms. They leverage A/B testing, controlled testing, and focus groups to optimise marketing and advertising.
    • The company gathers informed insights and results from its previous campaigns and subjects them to rigorous testing activities before deciding whether to scale up the campaigns or not.
  • MARKETING RESEARCH
    • According to Don Lane, Draftkings’ senior VP of brand and creative during the 2017/2018 NFL season, Draftkings relies heavily on research to conceive and develop new creative and marketing campaigns. Lane revealed to marketing daily that the company conducted a thorough quantitative and qualitative study to assess the health of their brand, identified the perceptions that needed to be addressed, and ascertained the drivers and barriers that were being faced in playing their games.
    • As a result of such research process, Draftkings was able to roll out a new multi platform campaign for the 2017/2018 season. The campaign was created to reach Draftkings’ core customers and potential future players across broadcast, digital, social, and out-of-home channels, among others.
    • The campaign centered on two messaging themes. One emphasized people that like to play and actively get involved in fantasy sports. The other emphasized the humour of fantasy sports and was designed to peak interest in Draftkings’ site.
  • TECHNOLOGY AND USER-CENTERED PERFORMANCE APPROACH
    • Other strategies that Draftkings uses to be successful are Technology-centered approach and user-centered performance metric.
    • Draftkings is a tech-driven company, said Jayne Pimentel, senior director of growth and marketing at Draftkings.
    • Pimentel noted that Draftkings invests in automation processes and ways to enable dynamic creative executions in order to handle legal regulations and include all the appropriate disclaimers.
    • Pimentel also noted that the majority of Draftkings media investment go to its API-enabled partners like Facebook, Twitter, or DSPs.
    • By adopting a user-centered performance, Pimentel cited that Draftkings was able to improve its customer quality metric by 40% year-over-year.

WAYS DRAFTKINGS USES TO ACQUIRE MORE CUSTOMERS AND APP USERS

  • INNOVATIVE PARTNERSHIP AND CONTENT MARKETING
    • The creation of innovative content and marketing partnership is one of the ways through which Draftkings draws people to their apps and acquire more customers. [SOURCE 4]
    • In 2019, Draftkings made a deal with the PGA Tour as its first official daily fantasy game. As part of the deal, Draftkings’ daily fantasy golf contests were re-branded as ‘PGA Tour DraftKings Fantasy Golf’.
    • The deal made it possible for participants to receive real-time video highlights for players in their respective line-ups.
    • The deal also ensured brand integration into both the PGA Tour and Draftkings’ content platforms.
    • In addition, the deal created the opportunity for both companies to collaborate on different real-time digital product enhancements via ShotLink, the PGA Tour’s advanced tracking system.
    • In addition, Draftkings, in 2019, struck an official partnership deal with the NFL. The deal granted Draftkings exclusive access to NFL branding for use across its suite of Daily Fantasy Sports (DFS) products.
  • REFER-A-FRIEND CAMPAIGN AND IN-HOUSE MARKETING
    • Draftkings also carry out refer-a-friend campaigns to draw in new users/customers who are referred by current customers.
    • The company also analyses incentive amounts and incremental activity that are driven by offers versus organic referral activity.
  • STRATEGIC OUT-OF-HOME AND AUDIO MARKETING
    • Draftkings leverage audio marketing campaigns to acquire new users at the beginning of NFL seasons, while hitting CPA targets.
    • Draftkings strategically implemented an out-of-home campaign by targeting NFL stadiums as well as the most highly trafficked transit hubs and highways across 13 major cities.

RESEARCH STRATEGY

To fulfill this request, your research team consulted credible trade and marketing publications and magazines such as InsiderRadio, Sport Business, AdExhanger, etc. to identify the strategies that Draftkings uses/has used to become successful in the sports betting market. Furthermore, we also searched the LinkedIn records of some company’s employees who are involved in customer acquisition for insights and to get an inside look at what the company does to draw people to their apps and acquire new customers. We leveraged the LinkedIn account of Ethan Shibutani, the current growth and marketing manager at Draftkings.


Part
03
of four
Part
03

Sports Betting Mobile Apps: Customer Behavior

In the United States, most online sports bettors bet once per week and are likely to be young males. The feeling they get from winning and the fun in the anticipation of the results are some of the biggest drivers for online sports betting. Complete details about US consumers' use of sports betting mobile apps are presented below.

SPORTS BETTING

  • More than 25% of American men who watch sports on TV bet at least once a year. 40% of all Americans aged 25-34 bet on sports; among these US males, the proportion rises to 75%. 43% of men aged 25 – 34 and 20% of men aged 35 to 44 bet weekly, a proportion rate far higher than any other cohort.
  • A survey with 1,500 online sports bettors in the United States discovered that most bettors place their bets once a week (49%), once every two weeks (19%), 2-3 days a week (18%), and once a month (6%).
  • 72% of bets placed in December in New Jersey were on mobile devices. Online accessibility is driving New Jersey’s betting industry. 29% of sports bettors in Nevada placed bets at least once a week versus 40% in New Jersey.

WHEN AND WHERE BETTORS USE ONLINE PLATFORMS

  • As reported by the Gambling Commission in the United Kingdom, respondents gambled at home (96%), on their commutes (12%), at work (12%), in pubs (8%) and sports venues (4%). 23% of all respondents had bets in-play (during the live event) in the last four weeks, with that number being higher within the 35-44 age group.
  • In the United Kingdom, 25% of online gamblers have placed in-play bets, and Bet365 reported that 80% of all its sports betting revenue is derived from in-play bets alone. Problematic gamblers are more likely to bet in-play (27.4%) as opposed to the average online gambler (10.9%).

MOTIVATION

  • When asked what they enjoy the most about online sports betting, US respondents cited the feeling they get from winning (60%) and the fun of anticipation (55%) the most. As to what motivated them to place a bet, recommendation from friends and family came first (56% and 50%, respectively), followed by online ads (49%), quick wins (37%), ease of betting (35%), TV adverts (36%), and a sign-up offer (25%).
  • The top sports leagues to bet on were the NFL (77%), NBA (68%), MLB (67%), NHL (55%) and the MLS (52%).
  • A study conducted in Australia with young men aged 18-35 discovered that betting agency promotions were found to drive gambling uptake, with young men viewing those promotions as an appealing, low-risk, or no-loss betting option.
  • The Australian study reported that gambling was normalized among this cohort due to marketing, promotions, 24-hour online access, and informal and formal peer-betting networks. As for their motivations, the most frequently reported was the enjoyment of betting. Other reasons include interest, abundant sports knowledge, the social aspect, the adrenaline rush, financial reasons, easy access, boredom, and advertisements and promotions.
  • On average, 60% of all bets are planned in advance of an event, 30% are placed on impulse prior to an event, and 10% are placed on impulse during an event. Most bettors (81%) reported having used at least one form of betting promotion in the past 12 months, most commonly sign-up bonuses (58%), multibets (49%), stake-back offers (44%) and match your stake or deposit (29%) promotions.
  • Friends and peers had a big effect on their betting behaviors, with the social aspect playing a big part as to why they bet.

CONCERNS AND PRIORITIES

  • A survey conducted with over 1,700 US online sports bettors or those who have interest in such activity, showcased that security is a major cause of concern, with only 33% agreeing that online bets are as secure as making payments in-person. 55% of US consumers surveyed agreed with the statement: "If it was easy, I’d prefer to use a cash voucher than a credit card when placing bets online, as I don’t have to share my card details."
  • Security was the top factor online sports bettors took into consideration when choosing an online sports betting platform, with 35.34% placing security into their top three concerns; followed by ease of use (31.33%), fees/cost (28.92%), good customer experience (28.92%), good deals for new customers (23.69%), payment options (22.89%), continuous good deals (22.09%), and the range of sports available to bet on (21.69%).
  • Those that had never placed a bet online but would consider doing so in the future felt even stronger about security issues, with 45% naming security as a primary consideration. However, newcomers show a different set of priorities, with fee/costs taking the second place with 35.71%, followed by ease of use (30.19%), continuously good offers/deals (26.95%), good customer experience (25.65%), where the company is based (23.70%), range of sports available (22.40%), range of payments (22.08%), and good deals for new customers (19.16%).
  • When respondents were asked what would make them consider a different method of payment for betting, the top reasons were if it was free of charge to use (44.31%), ease of use (43.44%), high fraud protection (38.86%), loyalty program (35.40%), cashback (31.56%), and feeling more reassured about the security of online payments (27.85%).
  • Declined credit cards are a major issue for the gaming industry, with 51% of consumers saying that their credit cards were declined most or all of the time they placed a bet. As for alternative payments, 36% used a different card, 35% used a digital wallet, 31% found a different site/app that accepted their cards, 28% stopped betting, and 22% used an online cash voucher.

RESEARCH STRATEGY:

We commenced our research by looking for publicly available consumer surveys and reports relevant to consumer sentiment about sports betting apps. We were able to locate a few surveys, such as the Pay Safe survey that provided some insights about what consumers expect from sports betting apps, the Deloitte study about bettors demographics, and the Global Index Survey, with insights about motivations, but nothing about when the bettors are using the apps exactly. Next, we located sports betting industry analyses and the current state of the mobile betting industry, hoping they would describe consumer profiles. We scoured through several academic papers and insider analyses, and encounter some useful information, such as the numbers for New Jersey, and some information regarding how often consumers are betting. However, further information was either not available or unreliable.

The research team then looked for some of the key players and their numbers. We examined information about companies such as theScore, Fanduel, Betstars, and ESPN Chalk, hoping they would provide insights into what time of day and what days they had more traffic and online users. Although we were able to uncover analyses about their marketing strategies, values, handles, and investments, hard data, and insights about consumer behavior were not available, even after going through their websites, news articles, and studies. We also ran some app analytics for theScore bets (the only data available was for the last 30 days). The highest use rank was on October 9, 2019, and the lowest September 26, 2019. The ranking is very inconsistent, which could mean the average user is only accessing the app when there is some event of interest. For instance, October 9th was the day of the Chicago Bulls vs. New Orleans Pelicans, and other high ranking days in the last 30 days were associated with NBA games. This is an assumption since the spike in interest could also be related to advertising or promotions, which is why this analysis was excluded from the main report. We also checked Fanduel Sportbrooks, which peaked on September 26th, the day of the Eagles vs. Green Bay game.

Our next approach was to look for academic research about problematic bettors, expecting these articles would provide some hard data on their findings that might be of value, such as "problematic bettors place X bets, Y times of day versus normal bettors." Most of what we could find by searching through databases such as Scholar, Research Gate, and others, was not useful for the purposes of this report, but we located an interesting article about in-play sports betting that was included. The lack of resources forced us to expand our geographic scope, including the United Kingdom and Australia in our research; these markets were chosen due to their maturity level and possible similarities with the US demographics, but assumptions should be made cautiously. With this approach, we located the Gambling Commission's report, however, it's important to notice the report referenced all types of online gambling, not only sports betting.

We believe the reason for the shortage of resources is related to the recency of the Supreme Court ruling and the fact that online sports betting is still unregulated in many states. The American Gaming Association (AGA) reported that most bettors are still unsure of what is legal or not, and where they can legally place their bets. ESPN reported that the majority of US bettors still have the same habits, and the offshore and local sportsbook industry remains strong. Another reason could be how valuable this information is in the current market. It is possible that more detailed information can be found behind paywall sites such as Eilers&Krejcik, and for members of the AGA.

With all our efforts, we were unable to determine when exactly these apps are being used. Information about US consumers’ behavior and motivations was also sparse, which is why it was complemented with Australia and UK insights. We included some insights about the concerns and priorities of online bettors, as it could indicate what they expect to get from these platforms.
Part
04
of four
Part
04

Customer Pain Points: Sports Betting Mobile Apps

From our research we were able to identify five pain points that US customers face when using sports betting apps which include lack of smooth interface, technical issues and glitches as well as disputes with technology providers resulting in crashes. Full details have been recorded below in our findings.

INTERFACE

  • Sportsbettingdime.com states that due to the inability of mobile apps being able to display large amounts of information on a single page, users are having to switch back and forth between pages. If placing an in-game bet, users are most likely signed out from the app if they navigate to other apps, which creates delays getting up-to-date information and potentially results in losing out on the best odds.


TECHNICAL ISSUES AND DISPUTES WITH TECHNOLOGY SUPPLIERS

  • An article by Medium.com highlights system crashes and computer glitches during sports events as technical issues that affect mobile betting apps which leave users unable to place bets.
  • The issue of disputes with third-party technology suppliers is highlighted by playwv.com as an issue which can result in apps suspending betting at short notice.


UNRELIABILITY OF ODDS GIVEN

  • Medium.com also reports that computer glitches and technical issues can result in apps providing incorrect betting odds which can lead to inaccurate wins and/or losses. Regulations permit the casinos to cancel wins that stem from electronic faults.


DIFFICULTIES IN GETTING STARTED

  • Onlinegamblingsites.com reports that both Apple and Google Play Store do not permit gambling apps. This means that the users will have to download the app from a desktop and/or directly from the sportsbook.
  • Pennsportsbooks.com's article highlights the somewhat complex process that may be required to download a betting app. Android users would have to locate the .apk file of their chosen casino and download the file onto their phone first in order to do this.
  • The limitations of apps with regard to handling large amounts of information and how it affects the ease of user experience is pointed out by Onlinegamblingsites.com. Users would need to practice navigation in order to get the correct bets placed quickly.


LAWS AND REGULATIONS: GEOGRAPHY

  • Sportbettingdime.com states that due to regulations, users must be physically inside the state lines because apps use geolocations to determine the exact location of their users. If a user crosses the legal jurisdiction of the sportsbook, they will not have access to the app.
  • An article by cnbc.com highlights the issue of users not being able to cash out if they are in the wrong location.
Sources
Sources