If fundraising is any indication, the arms race is on in the fantasy sports world.
The two largest daily fantasy companies, Fan Duel and Draft Kings, were joined this week by a third large competitor, Yahoo Sports. Fan Duel announced last week that they have raised $275 million in a new round of financing, and there are reports that Draft Kings is raising a new round of financing to the tune of $300 million.
Federal law, or more specifically the UIGEA (The Unlawful Internet Gambling Enforcement Act), states that fantasy sports leagues do not violate online gambling laws, because of the skill involved with picking a daily fantasy sports team. Investors are captivated by the lucrative potential of the industry, which essentially provides a legal loophole for online gambling.
Investors are right to perk up their ears, but it’s marketers who really stand to benefit the most from the fantasy sports industry. they now have over 1 million unique paying users, with over $560 million awarded to their users in 2014. With that kind of site traffic, and in today’s day and age where every second is treated as a marketing occasion, it is surprising that these sites have not embraced advertising more quickly. With millions of participants, opportunity is knocking for these daily fantasy companies. In short: these sites are sitting on an advertising gold mine.
Defining the fantasy sports industry’s target market
Marketers are largely consumed with two main goals: identifying a brand’s target market (the group of people most likely to purchase a company’s products/services), and segmenting that target market into smaller groups in order to craft custom messaging that speaks to each segments’ subtle nuances.
According to Adweek magazine, “DraftKings says its target demo is comprised of 18- to 49-year-old, college-educated, early adopter males who actively play fantasy sports games, are at the forefront of online gaming, sports, technology, music and trendy lifestyle events—and possess disposable income.” This demographic is relevant to thousands of brands, and they reliably visit fantasy sports sites on the daily.
More importantly, these fantasy sites open us up to the potential for limitless and seamless segmentation.
Marketers can segment the users of these sites by a range of useful data points: team allegiances, amount of money per wager, risk tolerance, betting history– the list goes on. Classic geographic segmentation is also an option. You could segment users by geographical boundaries, by demographics, or a cross section of the two.
The aggregate data that these sites collect offer a rare opportunity for advertisers to understand a target market segment on a very detailed level.
While some of the aforementioned data points can be found on other sites, information that is unique to these daily fantasy sites (such as betting history) provide invaluable opportunities to get to know the consumer even better, thereby allowing a brand to sell to the consumer with more expertise and efficiency. With this data, these sites can isolate and reveal the most profitable segments using their product, or even find segments that they might be underserving or possibly over serving.
A gold rush is coming in more than one way for these daily fantasy sites, and it seems there is no stopping the money from coming in. As investors continue piling up the dollars, and more people continue to bet and use these sites, the data gold is also piling up. Let the rush begin.
By Eli Sachs, Summer Intern