The start of the American football season is like ringing in the new year for the sports betting industry. And this latest season seems to mark a new austerity era for dealings between sportsbooks and publishers.
“[Two years ago] was like the silly season of investing in massive marketing budgets that return [bettors acquired through paid marketing] at really gigantic levels, and all of that was in search of scale,” said Liam Roecklein, svp of content at sportsbook PointsBet. Now, “there’s much more of a search for fiscal responsibility [so] we need to take this approach [of prioritizing organic customer acquisition]. As a disruptor brand, we have less money to invest in traditional marketing.”
Unlike the past few years, 2022 is not seeing a growth economy. Therefore, the marketing budgets that some sportsbooks are working with are a lot leaner than before. Caesars, for example, announced during its first quarter earnings call in May that it was cutting marketing spend on Caesars Sportsbook by $250 million. And The Washington Post reported that U.S. sportsbooks are trying to get savvier about the use of high-yield promo offers that promise first-time bettors deposit matches of thousands of dollars or no-risk first bets up to $5,000.
As a result, the relationships between sportsbooks and publishers are changing as well, particularly with deals moving away from the traditional cost-per-acquisition model. That model was a win for publishers with audiences that had a high propensity for sports betting, as it paid anywhere from $250 to $500 for each first-time depositor they referred to sportsbooks. But it is also a risk for those media companies whose audiences did not fall in that category.
The CPA model is no longer as affordable, and sportsbooks like PointsBet and FanDuel are reconsidering how content fits into their content acquisition strategies altogether, including looking for ways to bring content production in-house and signing deals that rely on different payment models like revenue shares or flat fees. Meanwhile, publishers are looking for deals that offer them more guarantees.
Taking the content strategy in-house
The content team within PointsBet, which Roecklein oversees, is working to build a media brand that “delights” the platforms’ users. The hope is they become evangelists for the content and the platform, and get their friends to sign up for the sportsbook and make a deposit by word of mouth or sharing the content his team produces.
One content product Roecklein is working on is a thrice-per-week newsletter called PointsBet Hustle that was created through a white-labeled content and technology partnership with Front Office Sports, which was a flat-fee payment deal. The newsletter is produced by PointsBet’s senior editor Teddy Greenstein, but uses FOS’s expertise to craft the subject lines, body and other elements.
The origin of this partnership came from PointsBet’s desire to find ways to decrease its customer acquisition costs, according to Adam White, CEO of Front Office Sports, who spoke on stage last month about this deal during the Digiday Publishing Summit in Key Biscayne, Fla.
By creating and operating this newsletter, PointsBet can, in theory, organically grow that readership and convert those subscribers into bettors without paying anything for the acquisition. What’s more, White said once that subscriber base is established, PointsBet has the opportunity to make money from the newsletter with advertising, which will be the next stage of this partnership.
PointsBet still uses affiliate marketing in its overall growth strategy. But from a content perspective, Roecklein said he is solely focused on organic growth that doesn’t use a CPA or revenue share model in the content deals he oversees.
So far, Roecklein said his team is seeing a positive correlation between growing the audience for PointsBet content and the number of deposits into the sportsbook’s betting platform. However, “one of the challenges for attribution of organic content is that it’s not direct linking to [the sportsbook],” he said, adding that conversion rates are not clearly measurable.
FanDuel’s chief commercial officer Mike Raffensperger said that while a lot of the other sports betting companies in the industry have pulled back CPA spending, FanDuel has leaned into this area, given it had 51% of the market share in Q2 of this year. He added that this enables the sportsbook to get away with lower CPAs than its competitors. This lets the company to earn back what it spent on acquiring the customer within 12-18 months, versus the industry average of 24 months, according to Patrick Keane, CEO of sports betting publication Action Network.
Despite that, FanDuel TV is a new initiative Raffensperger’s team is launching, which will feature programming on sports betting odds, in addition to airing live sports, with the goal of growing an organic viewership.
FanDuel still uses a CPA-based payment model or traditional media buying model (such as a flat fee) in the majority of its publisher-focused content deals though, Raffensperger added. For example, one of the ongoing, flat fee-based deals is with The Gist, a sports newsletter aimed at female and underrepresented audiences.
CPAs are not always in the publishers’ best interest
From the publisher perspective, CPAs or revenue shares might sound like the best deal, given sportsbooks have historically paid top dollar for their audiences to convert to bettors. But this model is risky when it comes to audiences that aren’t typically considered to have a high propensity for betting.
This year is the second in which The Gist has worked with FanDuel in a large-scale content sponsorship, which The Gist’s co-founder Jacie deHoop said has been the publisher’s largest sponsorship to date from a revenue perspective. Though she declined to provide hard revenue figures, she said the terms of the deal are initially based on a flat-fee model, with the opportunity to build in a CPA or revenue share model at a later date depending on the campaign’s performance.
Year one was focused on FanDuel’s fantasy sports business. The Gist created a branded weekly fantasy football contest for its readers, who paid a $2 entry fee and were eligible to win $500 each week or a grand prize worth $5,000.
However, this year’s deal with FanDuel is primarily focused on sports betting. DeHoop said this was a natural progression, as about 30% of the almost 4,000 readers who participated in the contest ended up registering for a FanDuel account or depositing money to bet on the sportsbook’s platform following the fantasy contest.
“We see fantasy as a really interesting first step in somebody’s journey to sports betting,” deHoop said. However, “our audience [is] still very early in their sports betting journey and still getting their feet wet and understanding the space and if there’s really interest there.” Because of this, there is a lot of risk for The Gist in working off of a CPA-based or revenue share-based model.
If The Gist’s audience isn’t interested or ready to start betting, a CPA or revenue-share model will not have the payouts needed to justify how much time and effort goes into creating the custom content for the FanDuel campaign.
In theory, a CPA-based partnership using the number of first-time depositors driven by last year’s FanDuel partnership (which included about 500, according to deHoop) would only yield about $150,000, based on an average rate of $300 per new acquisition. It’s unclear how that figure compares to the amount that FanDuel is paying The Gist.
While this is not a miniscule amount, and there is a possibility that a sports betting-focused campaign will increase that 500 first-time depositor figure, the flat-fee promise of a media campaign spanning the entire NFL football season, as well as the start of the NBA Playoffs and the Women’s World Cup, was a lot more appealing.
That’s not to say, however, that if the audience is really embracing sports betting in the next few weeks that deHoop’s team won’t negotiate for a CPA or revenue share add-on, she said.
This post has been updated to reflect Mike Raffensperger’s correct title.
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