“We are the media company”: Sports betting spends millions on media contracts, but publishers should cover their bets
Relationships between sports publishers and sports betting companies are increasingly common and the result for media companies is extremely lucrative in the grand scheme of sponsorship deals.
But in the vast landscape of digital advertising, what is sports betting getting from these investments? The short answer is that they are able to acquire new sports bettors in the United States quickly, as states continually legalize online gambling. However, media companies may not want to invest their money in sports betting staking it for the long term. Sports bettors are becoming full-fledged media companies, and the potential for consolidation could eventually take away piles of revenue.
“The economy doesn’t make sense,” said Sam Yardley, general manager of North America at sports marketing agency Two Circles. “There is a bubble forming, and there will be a calculation at some point.”
Working with sports betting is becoming big business for media companies as punters see the US market as a jackpot and publishers as having a hot hand in helping them acquire customers.
In July, Gannett signed a five-year deal with European bookmaker Tipico, which is worth $ 90 million in fixed cash, and gives the publisher the opportunity to earn affiliate revenue on new betting customers he it brings to Tipico, according to Michael Reed, CEO and chairman of Gannett. The publisher also has the option of owning up to 4.9% of the betting company based on various performance targets, although he declined to share those.
Reed said his team approached Tipico, which was the largest sports betting company in Germany, and ultimately chose to pursue the partnership because the sports betting operator told him he viewed the United States as its “greatest opportunity for growth” and wanted to invest seriously in growing there.
The demands of the partnership, Reed said, were for Gannett to be seen as a priority for Tipico and for the bookmaker to compensate the publisher in cash, stocks and affiliate commissions. In exchange, Tipico would have branded content reaching 50 million monthly visitors across Gannett’s niche sports brands, including Golf Week and MMA Junkie, as well as access to 250 local sports markets, reaching nationwide. The publishers’ 500 sports journalists and local marketing teams will produce everything from branded columns, video series, blogs, newsletters, promotions and events, he added.
The Blue Wire sports podcast network has also been able to capitalize on the media interests of sports betting. In February, WynnBET signed a three-year deal with Blue Wire that is worth a $ 3.5 million investment in the media company in return for partial ownership, at least $ 1 million in advertising revenue, and a multi-million dollar recording studio built at Wynn Las Vegas that opened in early September, according to Blue Wire founder and CEO Kevin Jones.
However, other sports betting operators, like DraftKings, have taken a broader approach to media partnerships, signing deals left and right with more publishers including WarnerMedia, Vox Media and even individual creators to start producing internal content.
This multi-year media strategy appears to have helped DraftKings acquire customers. This year’s NFL season opener saw more than double last season opener betse placed on his platform, although he does not disclose the total number of bets placed, and placed 1.5 million total bets on the season opener between the Tampa Bay Buccaneers and the Dallas Cowboys, a amount that took more than a month to reach when the business first launched in 2018, according to a company spokesperson.
Regardless of where they orchestrate their media partnership strategies, these sports betting companies spend millions of dollars on what boils down to paid media and branded content.
But why do sports betting companies favor media partnerships for their digital campaigns? Because it can be easier than jumping through the hoops needed to run ads.
Social media platforms, like Facebook, make the traditional digital advertising process difficult with state-by-state apps and regulations taking time and effort, Yardley said. So when a sports publisher already has 1 million sports fans on that platform, it becomes more appealing to create a branded video, for example, and have it spread organically on their page – with the added benefit that it also looks more authentic to the viewer.
In their media campaigns, sports betting companies primarily target casual punters or those interested in betting but who are not big players, Yardley explained. This is because this demographic of gamers are likely to download and set up a sports betting app and use it for the bulk of their online betting in the future.
There is so little differentiation between sports betting, at the end of the day, unless you are a serious gamer, there is no reason to place bets on multiple apps, Yardley said. It all comes down to the inertia of customers and those companies who are curious about sports betting to place their first bet with them.
This cohort, however, tends to have low lifetime value, betting $ 10 to $ 50 at a time on an irregular cadence, Yardley said. So the cost of acquiring through some of these partnerships just doesn’t add up. In five years, Yardley doesn’t think there will be 20 sportsbook operating in the United States. Instead, there will likely be three to four large sports betting conglomerates that have acquired all of the small and mid-sized businesses that could not participate in the user acquisition race.
Yardley said there are many parallels that can be drawn with sports betting companies based in the UK and Europe, which are several years ahead of the US in building these businesses. During this time, many consolidations occurred and there are only two large sports betting companies that have acquired the smaller entities in the space – William Hill and Paddy Power.
Sports betting has been the most important source of revenue for Blue Wire since the company was founded in 2018, Jones said. And Reed said the Tipico deal was also one of the biggest sponsorship deals Gannett has had in its history.
But as publishers like Gannett and Blue Wire see multi-million dollar sportsbook checks, it stands to reason that once the bubble bursts, those transactions will shrink in volume and size. So publishers should probably be careful not to view this as a long-term recurring revenue opportunity.
Another threat to sports publishers’ relationships with sports betting is the possibility that more sports betting will turn into competition between publishers. After getting a taste of the media market and its role in their marketing strategies, sports bettors like DraftKings and Penn National Gaming are all in.
In January 2020, Penn National Gaming purchased a 36% stake in Barstool Sports for approximately $ 163 million in cash and convertible preferred stock, according to the company’s announcement. And on October 19 of this year, the bookmaker completed a $ 2 billion purchase of Canadian sports media company theScore, which rolled out its own sports betting app in 2019.
DraftKings aims to become a full-fledged publisher, according to the company’s chief marketing officer, Brian Angiolet.
In 2019, DraftKings first attempted to become a content creator by partnering with Vox Media’s SB Nation to create the DraftKings vertical nation. Then, in March 2021, the company acquired sports betting radio and streaming network Vegas Sports Information Network (VSiN) for an undisclosed price, which is named DraftKings on 24-hour sports betting coverage. and 7 days a week, said Angiolet.
Last September, the company even started scheduling video content on its YouTube channel, which had 121,000 subscribers at the time of publication, with the help of influencers and content creators like Gary Vaynerchuck. The entrepreneur and vocal sports fan, who goes by his name GaryVee, hosts his new weekly show for DraftKings called “GaryVee’s Die Hard Dialogue” and is tasked with creating more cultural content for the bookmaker, rather than one. thorough analysis, said Vaynerchuck.
For sports bettors like DraftKings and Penn National Gaming, becoming a publisher is considered the smartest bet considering all of the competition taking place at the bustling American table.
“Owning our own network allows us to cut the noise out of all the paid media spent today,” said Jon Kaplowitz, director of Penn Interactive in an email to Digiday about the decision to acquire a minority stake in Barstool Sports. “We don’t have to pay [third-party] media company to spread the word; we are the media company and we are able to deliver our messages with more focus and authenticity. It is a huge competitive advantage to own the media business [versus] rent the eyeballs from the media company.