Even if you’re a pretty serious sports fan, you probably hadn’t heard of “daily fantasy sports” — fantasy sports games that let you make short-term bets instead of playing an entire season of pretend sports — until a year or two ago.
Those DraftKings and FanDuel Ads You’re Already Sick of Are Keeping the TV Business Afloat
TV is slipping, but digital dollars will keep it propped up for a while.
DraftKings, via YouTube
Peter Kafka covered media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.
Now you hear about it all the time. You don’t have a choice.
https://twitter.com/ischafer/status/642888341298507776
There are some reasons for that.
One is that DraftKings and FanDuel, the two biggest daily fantasy sports players, ramped up their marketing significantly over the last few months, in sync with the start of the NFL season last week. (There are daily fantasy sports games for all kinds of sports. But just like in TV, football is king in daily fantasy.)
Nomura analyst Anthony DiClemente thinks DraftKings and FanDuel collectively spent more than $150 million on TV and Web ads in the last three months. And yes, you saw a lot more of them in the last few days: DiClemente thinks about a third of that spending came in the last week, as football kicked off.
The other reason you’re seeing so much advertising right now is that FanDuel and DraftKings, which have both raised hundreds of millions via venture and strategic investors, are racing to lock up market share in a brand-new industry.
This may not be sustainable for the long term — especially if one of the two companies buys the other, a la Sirius and XM in the satellite radio business — but you’re probably going to see it for a while. DraftKings, for instance, has promised to spend half a billion dollars on ads with ESPN and Fox Sports over the next few years.
And that’s real money, even by TV standards. DiClemente thinks that daily fantasy ads, along with new ads from other app companies like Game of War maker Machine Zone, “may represent a modest but otherwise unexpected factor in 3Q results, providing a partial CPM offset to continued volume declines.”
In English: Digital advertisers are helping keeping TV afloat.
https://www.youtube.com/watch?v=bfCm6PJuL5I
This article originally appeared on Recode.net.
