When does the volume of a company’s advertising risk being bad for business? As daily fantasy football brands have experienced, it might be when consumers are openly revolting against it. There’s a lesson there for retail businesses of all kinds.
Been watching any professional football this season?
If so, the mere mention of “DraftKings” or “FanDuel” is likely to instigate mild nausea, as advertisements for the two daily fantasy football leagues have been absolutely blanketing the airwaves during National Football League game broadcasts.
While the consumer group being targeted more than likely enjoys the sport of football (after all, they’re watching the games) and perhaps was, at one time, at worst apathetic about the participatory product derived from it, the never-before-seen level of promotions for daily fantasy football has created a backlash.
Though the industry is not yet in danger of losing money, the companies involved are nearing a fork in the road where they may be compelled to decide — for a number of reasons — how much advertising is too much, as continuing with the current push may turn off their targeted audience for good.
Selling A Dream
DraftKings and FanDuel are currently the two most visible representatives of the ever-growing popularity of the fantasy sports industry. DraftKings (which has a funding relationship with 21st Century Fox, which owns Fox Broadcasting, which — hey, lucky coincidence — airs half of the NFL games every Sunday) raised $300 million in July; a week earlier, FanDuel scored $275 million in funding.
In the first week of the 2015 NFL season, both companies spent a combined $31 million on approximately 9,000 national TV spots, according to iSpot.tv, and were predicted by Adam Krejcik, a partner at Eilers Research (via Bloomberg), to bring in a combined $60 million in entry fees.
You can’t exactly call what they’re doing false advertising, as the word “fantasy” is right there in the product. But the central premise of the marketing from both companies is that a novice player can win big money from the smallest of investments (DraftKings leans heavily on last year’s million-dollar-winning Gomes brothers in its current commercials). If that were widely true, of course, neither company would be able to stay in business.
As Bloomberg put it bluntly in the aforementioned article: “Daily fantasy is getting ready to generate more losers in 2015 than ever before.”
Analysis from Rotogrinders conducted for the outlet shows that the top 100 ranked players in daily fantasy football enter 330 winning lineups per day, and the top 10 players combine to win an average of 873 times daily. That leaves the remaining field of approximately 20,000 players — the vast majority — winning just 13 times per day, on average.
Moving to the realm of fantasy baseball for some additional context, data collected by Sports Business Journal in July showed that 36 percent of lost entry fees on one daily site during the first half of the current baseball season came from just 5 percent of the participants.
“That 5 percent is a critical number,” Daniel Singer, a senior adviser at McKinsey & Co.’s Global Sports & Gaming Practice and co-author of the Sports Business Journal study, told Bloomberg. “These big spenders invested an average of $3,600 on entry fees and lost an average of $1,100, a negative 31 percent return.”
Faced with the reality of these numbers, fantasy sports companies hold fast to the argument that the real product they’re selling to consumers is playing the game, not winning it.
“Whether they win or lose, the feedback is that they love the experience,” Nigel Eccles, the chief executive of FanDuel, told Bloomberg. “By definition, the average player is going to lose money.”
The gist: There’s big money to be had in daily fantasy football, just not by the consumers who are being marketed to on the notion that they can win big money.
The Consumer Backlash
For the number of consumers that might be buying (figuratively, if not literally) what daily fantasy football brands are selling, there is a growing number who are at their wit’s end with respect to the effort.
Digiday collected a sampling of tweets following the first Sunday of the current NFL season through which televised football viewers expressed their irritation with the maelstrom of DraftKings and FanDuel commercials, ranging from the sarcastic…
At this point, I wouldn’t be surprised if Draft Kings or Fan Duel sends someone to my apartment to convince me to sign up.
— Jesse Pickard (@jessepickard) September 13, 2015
To the pragmatic…
Would a federal law banning all FanDuel and Draft Kings ads be illegal? Probably, but we should think it over.
— Tom Ley (@ToLey88) September 13, 2015
To the sublime…
Does anybody know if FanDuel or DraftKings offer opportunities for ordinary fans like me to make easy money weekly?
— Daniel Fienberg (@TheFienPrint) September 13, 2015
Beyond the issue of general (and widespread) annoyance, the glut of advertising that DraftKings and FanDuel are currently putting forth is problematic because it could make consumers — if they think about it — realize that these companies have so much ad money to spend because there are so many losers contributing to their coffers.
Maximizing visibility is the goal of any product targeted for mass consumption, but there is a point past achieving that goal where it can become counterproductive to a business model’s bottom line.
As Boston.com puts it, “Fantasy football isn’t killing football. Advertisements for the new fantasy football are killing football.”
The Digiday story shared data from Brandwatch proving the fact that online conversation among consumers about both DraftKings’ and FanDuel’s ads during Week 1 of the NFL season was overwhelmingly negative, tracking in the did-not-like categories at 75 percent and 76 percent, respectively.
Stating that the Twitter outcry was a “good lesson learned” that his company should perhaps consider slowing its roll, DraftKings CEO Jason Robins told The Wall Street Journal that the marketing onslaught is “not something that is year-round for us. It’s a brief window where you can fish when the fish are biting.”
No offense to Mr. Robins but — duh. You can’t participate in genuine, NFL statistics-based fantasy football when the NFL season is not in progress.
The Takeaway
The moral gray area of promoting legalized gambling while not having to call it gambling — as in the specific case of fantasy sports companies — aside, any retail business could take a lesson from what DraftKings and FanDuel are currently experiencing.
If not “less is more,” it’s at the very least a case of — when a company’s targeted consumers are rallying together to share how much they hate seeing its commercials — “that much is quite enough.”
Not to mention the need for variety in advertising. As the WSJ story pointed out (based on data from iSpot.tv), DraftKings only aired four unique TV spots during the NFL’s opening weekend — and it aired them over … and over … and over again.
It’s enough to make football fans miss beer commercials — and that’s saying something.
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