Sportsbooks need to focus their marketing on retention, not just new user acquisition

Author: Mike Adorno, VP of Communications

The spike in popularity surrounding the rise of earnings around DraftKings and FanDuel drowns out the real story. Both DraftKings and FanDuel are losing money every single quarter. According to CNNBusiness, DraftKings paid $203 million in sales and marketing this past quarter while only netting $133 million in revenue.

The sports betting market is currently immature and in start-up mode: red on the balance sheet now isn’t necessarily a red flag. But as the market matures and expands, smart investors looking for smart and sustainable investment opportunities will question why the marketing spend is outpacing revenue.

Sportsbooks need to quickly rethink if their huge marketing spend is actually generating enough revenue, or if it will in the near future. While the growth opportunities to attract new users on a state to state basis are huge, what about all those one time customers who are being left in the dust because the art of retention is so sorely lacking? Sportsbooks can build easier revenue by becoming more sophisticated in their marketing and communications approaches to keep customers coming back, spending more and creating something that hasn’t really ever been discussed in this emerging category — loyalty.

The proof is in the pudding as to how Sportsbooks are all operating from the same playbook, “attract new users through promotions”:

  • Match your first deposit up to $100
  • $200 sign-on bonus
  • Sign-on a friend and each party gets a $100 bonus

The problem is each individual sportsbook is commoditizing itself. There is nothing distinguishable between any of these entities other than different logos and maybe a famous celebrity behind an ad or piece of communications. While more advanced and savvy bettors will leverage many books to get the best odds, what is keeping the millions of casual bettors coming back to one book? What is keeping your gained promo user from being a one-and-done?

HPL Digital Sport conducted a recent survey of more than 600 sports bettors across the country about their loyalty to sportsbooks:

  • 51% of respondents said that sports betting ads haven’t pushed them into action.
  • 3 out of 5 respondents said that they aren’t loyal to any sports betting platform.
  • 36% of respondents said that they’d be more loyal to a sportsbook if the ads or promotions were more personal, witty or connected with them beyond simple promos.
  • 29% of respondents said that they’d be more loyal to a sports book if friends and/or family referred them to play or bet there.

The data shows that bettors are craving personalization and a brand that they can rally around. A shift in marketing mentality now can be the key to successfully growing a more loyal and sustainable user base before the market turns and everyone is scrambling for a new strategy. The question now is how can sportsbooks reach a new level of maturity when it really counts to be one of the leading market players that survives and thrives as this gold rush won’t last forever.

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