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Don't Bet Against Daily Fantasy Sports Despite Recent Ad-Spend Time Out

With heaviest customer-acquisition costs behind them, both players quietly plot re-emergence 2/01/2016 12:01:00 AM Eastern

Allen Kee / ESPN Images

After spending more than a quarter of a billion dollars on national advertising between August and November, daily fantasy sports sites DraftKings and FanDuel have virtually disappeared from the network TV scene. They have spent only a combined $4.2 million since then, with a small chunk of that in NBA telecasts, according to data from iSpot.tv.

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Some have speculated that the ad slowdown is because of the pending litigation taking place in several states where attorneys general are trying to stop those sites from doing business, contending they are not games of skill but illegal gambling. Another blow came over the weekend when Vantiv Entertainment Solutions, a payment processing company that handles a significant number of transactions notified the operators this week that it would stop handling their payments as of Feb. 29.

However, one TV network executive says the plans of both DraftKings and FanDuel when they began their ad spending spree prior to the start of the NFL season last year was to begin with a heavy barrage of ads and then pull back as the season progressed.

“They focused on customer acquisition during the first half of the season, front loading their spending to improve market awareness and build up their customer base,” says the exec, who did not want to speak for attribution.

However that doesn’t answer why the two companies as the NFL season wound down have not more heavily promoted their NBA offerings, which unlike the NFL, has national telecasts virtually every night. The networks who reaped the benefit of the massive ad campaigns—CBS, NBC, ESPN, Fox and Turner—all declined to comment on their ongoing discussions with DraftKings and FanDuel regarding their ad plans going forward. And attempts to reach the two advertisers were unsuccessful.

“The legal stuff has everyone nervous,” said the one network exec who did not want to be identified. “Everyone wants to lay low. It’s a thorny situation. There’s no reason to talk publicly about advertising plans right now.”

But both DraftKings and FanDuel are not exactly lying low, however. While they may not be advertising much right now, both seem to be laying out plans for more ad spending in the upcoming months. DraftKings earlier this month hired Janet Holian as its new global chief marketing officer, while FanDuel last week signed a multi-year licensing agreement to feature NFL players in its future marketing campaigns. It doesn’t seem like they would be making those moves if more ad spending wasn’t on the horizon.

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Meanwhile, while it lasted, the spending spree in the second half of last year was one of the most concentrated periods of advertising by two advertisers in TV history.

For example, data from iSpot.tv shows DraftKings and FanDuel outspent the entire beer industry in the month-long period of Aug. 16 to Sept. 15 that covers the lead-up to and start of the NFL season. They also outspent the entire retail pizza category during that same period, spending more than the $45.7 million invested on national ads by the pizza chains.

And iSpot data also shows that between Aug. 24 and Sept. 13, the two fantasy games brands together aired an ad on national television every 90 seconds. On Aug. 31, they combined to air 1,285 commercials, nearly as many ads as minutes in the day (1440).

Between August and November, DraftKings spent $123.4 million on national TV ads, according to iSpot.tv. FanDuel spent $136.5 million. Since then, DraftKings has spent just $3.1 million, while FanDuel has spent $1.1 million.

Where were the dollars spent? DraftKings spent 44.6% of its budget or $56.3 million during NFL game telecasts, while FanDuel spent 63% of its budget or $87.2 million during NFL games, iSpot.tv data shows. NBA games since the start of the season have gotten just $3.2 million from the two combined.

Data from iSpot.tv also shows that in addition to spending on NFL telecasts, DraftKings also advertised in the 2015 PGA Championship on Fox and on college football. It spent most of its ad dollars on ESPN, Fox and CBS.

In addition to the NFL, FanDuel spent its ad dollars on college football and on ESPN’s SportsCenter, with most of its dollars spent on CBS, NBC and Fox.

And iSpot data finds that DraftKings and FanDuel more than likely accomplished their mission of increasing consumer awareness. Between August and January, DraftKings generated 8.4 billion impressions on their ads, with an average view rate of 84%. FanDuel generated 7.9 billion impressions with an average view rate of 81%. And of all those impressions for both, 75% were viewed live.

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Television Academy's Saban Media Center, North Hollywood, CA