Marketing Spend Delivers If....

Hey, have you seen the Draft Kings commercials?

Unless you are stranded on a desert island, with a neatly pressed red sweater and cap, you probably have.

These DFS companies have turned it up to 11 - Draft Kings most of the summer, FanDuel only a couple of weeks ago (likely in response to Draft Kings' number one spend).  Right now, it's working.

FanDuel won the word of mouth battle last year. Draft Kings has taken over this season, with this aggressive marketing push.

Just last week, the $21.8 million spent by Draft Kings to advertise to new players (and to remind old ones) resulted in 1 million new signups.  Overall marketing spend is signalling a cost per acquisition of below $30.

Why did this convert so well; this old-school TV marketing, that isn't supposed to work any longer? The ads deliver on their promise. They tell you it's easy to sign up, easy to fund, and easy to play. In fact, you can be playing in minutes. Contrast this with racing and ADW's and you see the clear difference.

Now comes the hard part, earning back that revenue through lifetime value of those 1 million new customers. According to my timeline research, it will be a challenge, but there is a lot of hope.

DFS has low minimums and low takeout, where up to 95% of the money is given back to punters to rebet.

And no, what ITP alludes to won't happen anytime soon.

Spending all that money to build a gambling business and breaking your customers as quickly as possible is a no-no (outside horse racing, anyway).

Where does the future of this gambling game game lie? There's legal risk, there's a risk of top-heavy winners, there's an initial buzz and the resulting lull that is sure to happen. No one probably knows. What no one can deny is that right now they are clearly doing a lot right.

Marketing spend delivers if you deliver on a promise. DFS's marketing is resulting in people entering a funnel with expectations of a seamless signup mechanism, a solid UI, a decent rake structure where winning is not impossible, and having some fun. So far this no hoodwink message has resonated.