Both companies have generated a lot of name recognition by spending more than $200 million on advertising during the 2015 NFL season.
DraftKings and FanDuel are taking the concept of brand awareness to a whole different level this NFL season.
Barely known to most Americans a year ago, the two daily fantasy sports (DFS) titans are now cramming their brands down viewers’ throats via television commercials seemingly between every series of downs. Take your car out for a halftime beer run and you’ll likely hear multiple DraftKings or FanDuel radio ads before making it back to the driveway.
And if you’d rather buy a ticket and avoid all the commercials, there’s an even chance you’ll see DraftKings or FanDuel ads splattered all over the stadium as well. The companies have individual in-stadium ad deals with half the NFL’s teams.
The two giants, comprising 95 percent of the DFS market, have spent more than $200 million on combined advertising this season in an all-out battle to win new users and become the undisputed industry leader. New York-based FanDuel has held the No. 1 spot since its formation in 2009, but Boston-based DraftKings has closed the gap and may already have passed its archrival since the NFL season opened.
“In our opinion, this level of TV ad spend is unsustainable,’’ said a September report by Eilers Research, the boutique firm that has carried out a comprehensive independent study of the exploding industry. “However, we do believe that each company has created significant brand value/awareness.’’
In the seven days after the opening of the NFL schedule, DraftKings was No. 2 in the iSpot.TV rankings of television’s top-10 ad spenders — coming in at $16.6 million. FanDuel was No. 5 on the list at $13.7 million.
Those numbers are huge, considering FanDuel reported $57.3 million in revenues last year while DraftKings claimed $30 million.
The two DFS companies have been spending TV ad money at amounts rivaling Warner Bros, Geico, AT&T and Verizon, which generate nearly 500 times more revenue.
As of late last month, DraftKings had dropped out of the iSpot.tv top-10 while FanDuel was at No. 9 with $11.1 million in spending.
Still, the initial all-out blitz on NFL viewers appears to have worked. Before the more recent federal investigations and state legislation crackdowns cast a cloud over the industry, revenue forecasts for both companies had increased.
By late September, Eilers had revised its previous forecasts for what users would spend on DFS entry fees this year and beyond. Eilers bumped its spending projections for this year from $2.4 billion to $3.7 billion and its 2020 forecast from $14.5 billion to $17.7 billion.
Fueling the ad binges was a summer round of capitalization that saw DraftKings raise $300 million from investors while FanDuel raised $275 million, much of it coming from media companies. DraftKings scored a $150 million investment from Fox Networks in return for an 11 percent stake in the company.
In a related deal, DraftKings agreed to spend more than $250 million over the next three years on advertising via Fox Sports. It also announced a two-year, $250 million ad deal with ESPN that blocks competitors from advertising on the network during the 2016 football season.
ESPN recently announced it was pulling some DraftKings sponsored segments in the wake of the current scandal, but CEO John Skipper continues to publicly back the company, saying he’s convinced daily fantasy truly is a game of “skill” rather than “chance.’’
FanDuel media investors include Time Warner, NBC Sports and Comcast. TimeWarner and Google Capital helped contribute the bulk of the $275 million raised by FanDuel last summer.
Unlike DraftKings, FanDuel has avoided massive spending with media networks, choosing instead to gradually expand its digital platform and sustain what it says will be growth over the long haul.