Curious about how sportsbooks allocate their marketing budget? Wondering how much they invest in advertising and promotion? Get ready to dive into the world of sportsbook marketing expenses and discover the fascinating insights behind their budget allocation.
When it comes to acquiring users, sportsbooks spare no expense. They invest heavily in various marketing channels, including TV, digital, and radio advertising. TV advertising is dominated by a few key players, monopolizing at least 82% of market share in every state. Their catchy commercials and enticing promotions make it hard to resist placing a bet.
But it doesn’t stop there!
Sportsbooks also focus on digital advertising, using targeted campaigns and retargeting ads to engage and convert potential customers. They leave no stone unturned in their quest to capture your attention and make you a loyal bettor.
But as the industry evolves, sportsbooks are also realizing the need to be more cost-conscious. They are now seeking innovative strategies to lower marketing costs while remaining competitive. It’s a balancing act that requires strategic thinking and a touch of wit to stay ahead in the game.
How Much Do Sportsbooks Spend on Marketing?
Here’s a general breakdown of some of the big names in the industry:
| Sportsbook/Betting Company | Estimated Annual Marketing Spend | Breakdown |
|---|---|---|
| Bet365 | $450M – $550M | TV & Radio (50%), Online Advertising (25%), Sponsorships (15%), Promotions & Bonuses (10%) |
| DraftKings | $500M – $600M | Online Advertising (40%), TV (30%), Partnerships (15%), Bonuses & Incentives (15%) |
| FanDuel | $400M – $500M | TV (35%), Online (30%), Sponsorships & Partnerships (20%), Bonuses (15%) |
| William Hill | $200M – $300M | TV & Radio (45%), Online (25%), Sponsorships (20%), Bonuses (10%) |
| Betfair | $100M – $200M | Online (40%), TV & Radio (30%), Sponsorships & Events (20%), Bonuses (10%) |
| 888Sport | $50M – $100M | Online (50%), TV & Radio (25%), Events & Sponsorships (15%), Promotions (10%) |
| Unibet | $60M – $120M | Online (35%), TV (30%), Sponsorships (20%), Promotions & Bonuses (15%) |
| Paddy Power | $90M – $180M | TV & Radio (40%), Online (30%), Sponsorships (20%), Bonuses (10%) |
| BetMGM | $150M – $250M | Online (35%), TV (30%), Partnerships (20%), Promotions & Bonuses (15%) |
| Barstool Sportsbook | $70M – $140M | Online Content (40%), Promotions & Bonuses (30%), TV & Radio (20%), Events (10%) |
| Criteria | Details/Statistics |
|---|---|
| Average Marketing Spend | Some top sportsbooks spend between $50 to $200 million annually on marketing alone. |
| Cost Per Acquisition (CPA) | The average CPA for online sportsbooks ranges from $250 to $750, depending on competition and region. |
| Lifetime Value (LTV) of a Player | Estimated LTV for an average online sportsbook user ranges from $1,200 to $1,800 over a period of 2-3 years. |
| Profit Margin | Profit margins for online sportsbooks are estimated between 5% to 7%. |
| Rise in Online Betting | Online sports betting has seen a 40-50% growth YOY in some regions, leading to increased marketing budgets. |
| Role of Bonuses & Promotions | Around 20-30% of marketing spend can be attributed to promotional offers, bonuses, and incentives. |
| Effectiveness of Advertising | Approximately 70% of new players join due to advertising. Roughly 25% of these players will become long-term users. |
| Projected Profit after Marketing Expenditure | For every $1 million spent on marketing, the expected return is approximately $4 to $7 million over 2-3 years. |
| Market Saturation & Competition | In highly competitive markets, marketing spend can increase by 10-20% annually. |
| Impact of Regulatory Changes | In regions introducing new regulations, marketing budgets can spike by 50% or more as sportsbooks vie for market share. |
Trends in Sportsbooks’ Marketing Spending
Sportsbooks are investing significant amounts of money in their marketing efforts, with spending on the rise in recent years. This is especially true during the fall and winter seasons when major sports events like the NFL, NBA, and college football are in full swing. According to BIA Advisory Services, up to $1.8 billion is projected to be spent in 2022 to promote gambling products online, with a substantial portion allocated to sports betting.
TV advertising continues to be a dominant channel for sportsbooks, but digital ad spending is rapidly catching up. Operators such as FanDuel, DraftKings, Wynn, MGM, and Caesars have made significant investments in streaming, display, and social media advertising. These platforms allow sportsbooks to engage with their target audience in a more targeted and interactive manner.
Radio advertising has also seen an increase in spending by sportsbook companies, with some operators ranking among the top advertisers in the medium.
This multi-channel approach allows sportsbooks to reach a wider audience and maximize their marketing efforts.
The Shift Towards Customer Retention and Engagement
While sportsbooks have been investing heavily in marketing and customer acquisition, there is a growing shift towards focusing on customer retention and profitability. As operators face pressure to turn a profit, they are becoming more cost-conscious and strategic in their marketing efforts.
Some operators are offering sure-thing promotions instead of lucrative “risk-free” bets, aimed at reducing customer acquisition costs while maximizing long-term profits. The use of predictive modeling and targeted advertising is also becoming more prevalent, allowing sportsbooks to attract the right mix of customers and avoid bonus hunters.
Partnerships with media companies and referral programs are additional strategies employed by sportsbooks to drive customer acquisition and engagement. These tactics reflect the industry’s evolution, as operators aim to strike a balance between profitability and market share.
| Year | TV Advertising | Digital Advertising | Radio Advertising |
|---|---|---|---|
| 2018 | $500 million | $200 million | $50 million |
| 2019 | $600 million | $300 million | $70 million |
| 2020 | $700 million | $400 million | $90 million |
With NFL, NBA, college football and basketball, NHL and MLB postseason action, fall and winter are tremendously hot seasons for sports betting. As a result, it’s not surprising that the final three months of the year have become the most expensive in terms of advertising.
According to BIA Advisory Services, up to $1.8 billion will be spent in 2022 to promote gambling goods online, with a sizable portion going toward sports betting. The four largest bookmakers spent $24 million on advertising in the first week of the year alone.
But how does this enormous marketing spending affect the sports betting industry? Is there a return on investment for sportsbooks?
What happens to the money?
Sportsbooks pay extensively in marketing in order to recruit as many users as feasible as soon as possible. A higher proportion of voice, along with appealing promos, connects to more first-time deposits. According to studies, once a customer joins a sportsbook, they tend to stick with them.
Betting companies seek increased publicity by entering sponsorship agreements with sports teams to having their logo shown in arenas, stadiums, and on scoreboards. Unsurprisingly, television, digital, and radio receive the highest marketing dollars.
Flooding television screens
The more states that legalize sports betting, the more money is spent on national television. However, several players dominate the television industry. According to the data, five players control at least 82% of the market in each state. In Michigan, where 14 operators compete for market share, the top five control 90% of the market.
When you consider the limits that sportsbooks face, the struggle for TV exposure becomes even more heated. For example, the NFL allows just six sportsbooks to run advertisements for each game on television and Amazon Prime, with one ad airing before kickoff, another at halftime, and one during each quarter.
The NFL has currently approved five advertisers: FanDuel, DraftKings, Caesars, BetMGM, and FOX Bet. You can do the math; competition for these positions is severe.
According to iSpot, US sports betting companies spent an estimated $282 million on TV commercials between September 2021 and May 2022.In June 2022, a television report will be released.
The combined advertising generated more than 18 billion impressions, with local ads accounting for more than one-third of all sportsbook advertising impressions, according to iSpot. This reinforces our previous assertion that a state-by-state marketing strategy is required due to the benefits of localization.
Controlling online channels
Digital advertising is the second-largest media for gaming companies, after television. According to Pathmatics, FanDuel, DraftKings, Wynn, MGM, and Caesars spent $25.6 million on streaming, display, and social advertising in January 2022.
Digital is an appealing channel since user tracking and simple campaign execution allow for clearly measurable ROI, and most platforms allow advertisers to target their ideal demographic precisely.
But there’s more to it. Retargeting advertising enable sportsbooks to engage prospective clients gradually, entice them into their own media ecosystem, and convert them into paying customers.
Online advertising’s ability to reach specific, focused audiences is a crucial strength. It not only statistically improves conversion, but it also allows sportsbooks to exhibit responsible marketing and adhere to each state’s requirements in order to remain compliant.
Concerns regarding problem and underage gambling have developed as sports betting has become allowed in more jurisdictions and the number of users has increased rapidly. In reality, the American Gaming Association (AGA) created a set of optional standards this year, the Responsible Marketing Code for Sports Wagering, to extend “its compliance commitments” in response to these concerns.
Do massive marketing investments result in profit?
Rather than making blanket statements, let’s look at a few specific operators to answer this topic.
FanDuel spent more than $1 billion on marketing and advertising last year and has a 40% market share in the United States, according to parent firm Flutter Entertainment’s most recent financial report. Flutter also reported a one-year return on investment of 1.2 times the cost of user acquisition.
According to these sources, FanDuel is the first US sportsbook to show profitability in a single quarter. The company earned $22 million in earnings before interest, taxes, depreciation, and amortisation from its sports betting and igaming operations in the second quarter of 2022. Finally, Flutter Entertainment anticipates that FanDuel will be profitable throughout 2023.
Other operators, on the other hand, have not been as profitable – as of yet.
The high cost of advertising and client acquisition reduces margins and makes it difficult for operators to generate a profit in the first few years of business. Sportsbooks typically feel that being profitable takes two to three years. We anticipate higher ROI across the board as markets develop.
There is a sense of haste and pressure to turn a profit.
DraftKings has a total debt of around $1.2 billion, according to its most recent financial statement.
Following the company’s most recent quarterly report, which forecasted ongoing losses into late 2023 before turning positive on EBITDA near the end of 2023, shares plunged roughly 27%.
DraftKings’ Q2 ad spend grew 16% to $197.5 million, following a strong launch into new regions and big investment on marketing activity targeted to gain new customers.
While still a considerable amount, it was a significant decrease from the previous year’s 270% surge. However, there is still tremendous investor anxiety about their timeframe to profitability, as evidenced by their plunging stock price.
In this context, digital advertising, with its audience targeting features, provides some security to sportsbook operators.
Challenges and Concerns in Sportsbook Marketing
As sportsbooks ramp up their marketing efforts to attract new customers, they face a myriad of challenges and concerns. One major concern is the high promotional costs associated with advertising campaigns.
With intense competition for market share, sportsbooks invest significant amounts of money in promotional strategies to stand out from the crowd and capture the attention of potential bettors.
However, with this increased spending comes the scrutiny of regulatory bodies and the public. Some advertising campaigns have been criticized for potentially misleading claims and fostering addiction risks. As a result, operators have had to adjust their language and comply with regulations to maintain transparency and protect consumers.
Another concern in sportsbook marketing is the responsible and ethical practices surrounding gambling. The industry has taken steps towards self-regulation by implementing responsible marketing codes and adhering to guidelines that address concerns about problem and underage gambling.
State legislation has even been passed to regulate advertising language around “risk-free” betting, ensuring that operators are more accountable and transparent in their marketing strategies.
The Impact of Oversaturation
One of the challenges that sportsbook marketing faces is the oversaturation of advertisements. With numerous operators vying for attention, consumers are bombarded with messages enticing them to bet. This oversaturation can lead to decreased effectiveness of advertising campaigns and can even harm the reputation of the industry as a whole.
To combat this, sportsbooks need to find innovative and strategic ways to reach their target audience without overwhelming them with excessive marketing.
Striking the Balance
While sportsbooks want to attract new customers through their marketing efforts, it is equally important for them to strike a balance between acquisition and responsible advertising. Maintaining a positive public perception and ensuring that marketing practices are compliant with regulations is essential for long-term success.
By listening to what bettors want and implementing targeted advertising, sportsbooks can build trust, engage their audience, and drive sustainable growth.
Shifting Focus and Strategies for Profitability
Hey, sportsbooks! It’s time to shift gears and revamp your marketing strategy for maximum profitability. We get it, and you’ve been investing big bucks in advertising to reel in those users. But now, it’s time to work smarter, not harder. Let’s dive into some clever tactics that will help you optimize your advertising investment and boost your bottom line.
First things first, it’s all about the budget allocation. Instead of splurging on massive acquisition campaigns, consider reallocating some of those funds towards customer retention. Think of it like nurturing a relationship – it’s more cost-effective to keep an existing customer happy than to chase new ones constantly. Engage with your audience, build loyalty, and watch the profits roll in.
Next up, let’s talk about those irresistible “risk-free” bets.
The Rise of “Risk-Free” Bets
Sure, they may attract new customers like bees to honey, but they come at a hefty cost. Swap them out for sure-thing promotions that still offer value without breaking the bank. This way, you can save some serious cash on customer acquisition while still raking in those long-term profits.
Now, it’s time to get strategic. Say goodbye to the spray-and-pray approach and hello to targeted advertising. Utilize predictive modeling to identify the right mix of customers who are most likely to stick around. After all, you don’t want a bunch of bonus hunters who will run off after snagging their freebies. Find your perfect match and make it a win-win for everyone involved.
Conclusion
Sportsbooks initially spent a lot of money on customer acquisition campaigns in 2023 due to the projected growth of the betting industry. However, as the economy worsened and profitability projections were adjusted, marketing spends have been reduced. The focus has shifted towards customer retention, which is expected to lead to exciting innovations and drive profitability in the future.
Key takeaways:
- Sportsbooks spent heavily on customer acquisition campaigns in 2023.
- Economic downturn and adjusted profitability projections have led to reduced marketing spends.
- The focus has shifted to customer retention for driving profitability.
- Customer engagement and an amazing customer experience are expected to be key in the future.
While the industry stats provide valuable insights, the real game-changer is optimizing your marketing spend.
Consider integrating an affiliate program, a proven strategy for cost-effective client acquisition.
See how Scaleo can be your ace in the hole, ensuring your sportsbook business stays ahead of the curve.
Last Updated on April 3, 2024
