It was announced today that DraftKings has pulled its massive ad campaign from ESPN, for the time being, amidst allegations of “insider trading” by employees who used their inside knowledge of sports betting statistics to wager and play on their competitors site, FanDuel.
DraftKings Pulls Advertising from ESPN Amid Questions of Inside Trading
It should be noted that the term “inside trading” is being used in a non legal sense, as sports betting statistics are not classified as securities.
This shocking pullout from ESPN comes at a time when DraftKings and Fan Duel have been engaged in a massive ad blitz. According to iSpot.tv, these two leading Fantasy Sports gambling sites (they don’t call it gambling for legal reasons) together have poured $107 million into the television networks’ coffers since Sept. 1. $50 million of that spend was put into National Football League broadcasts alone. At one point this month Draft Kings was running an ad once every 1.5 minutes. That is what we call “frequency” in the media business.
I’m a believer in the idea that you don’t advertise until the customer knows who you are; you advertise until the customer can’t forget you. That certainly seems to be the strategy of the all out media blitz currently underway by DraftKings and FanDuel.
The strategy has worked incredibly well at generating awareness. According to YouGov BrandIndex DraftKings has more than doubled brand awareness from 11% to 25% in August-September timeframe, while FanDuel’s moved up from 4% up to 15%. Among football fans DraftKings awareness has hit an all-time high of 34%.
So the lesson learned here is that if you want to raise awareness, you should advertise. Sometimes we need to be reminded of that.
DraftKings is a very interesting case because their marketing budget is supplied by a recent round of $300 Million funding that came from entities including Fox Sports, the National Hockey League, Major League Soccer, Major League Baseball, Madison Square Garden and many more. The reasoning is fairly simple: the networks and leagues know that people who bet on games watch the games. That means ratings and dollars. That these entities have for years publicly professed an opposition to sports betting is merely inconvenient at this point.
For Fox Sports, a $150 Million 11% stake in Draft Kings includes a guaranteed ad spend from Draft Kings totaling $250 Million over the next few years. There is no word yet on whether this breaking controversy of inside trading will impact their ad buy.
ESPN had backed out of a similar equity deal but did sign an exclusive ad deal worth another $250 Million. That was put on hiatus today. Along with the ad spending windfall, these deals include deep integrations into content whether it be an ESPN pregame show or the sports break on your local Fox affiliate.
Legal challenges have already been mounting against fantasy sports betting and now Congress is stepping up the pressure Congress Wisely Puts Legal Status of Fanstasy Sports Under Review
There may come a time soon when all of these daily fantasy leagues are shuttered for good. However with the backing of multi-billion dollar sports leagues and television networks it stands to reason that they will find a way to survive in one form or another for years to come.
For now, you media buyers out there can go ahead and scoop up some remnant inventory on ESPN. I hear they have several spots now available. Just please try to advertise something more wholesome than gambling like beer or pizza.
Kevin Flint
Just Media, Inc.
