What to Expect From the Coming Sports Betting Marketing WaveBy Robert H. Mann | Published: April 10, 2018 at 12:15 pm
Sports fans and prospective sports bettors, should a legal sports wagering market become available to them, are certain to be greeted by massive advertising and marketing campaigns as bookmaking entities try to earn their patronage. Right now bookmakers and casinos are positioning ahead of the Supreme Court ruling to come spring in Murphy v NCAA, which would allow a sports-betting expansion outside Nevada if the decision goes favorably for New Jersey (Murphy). The rush for patrons would begin without delay, and we can take educated guesses as to the nature of the ad campaigns.
Expect a two-pronged message no matter which sportsbook operator gains a foothold near you. If or when sports betting is legalized in your state, one element will be an educationally-focused message to start, directed towards “squares” — the Las Vegas euphemism for less knowledgeable bettors. This message will gradually transition to appeals focused on the recreational or “fun” component of sports wagering.
Operators will approach “sharps,” the Las Vegas term for bigger, more data-driven and disciplined players, largely through online advertising in an effort to wean them away from offshore markets and/or their local bookie.
Dr. Stuart Esrock (Ph.D) is an advertising industry veteran, currently serving as an associate professor at the University of Louisville. Esrock, 59, told SportHandle he believes that bookmaking companies, as is customary when a new business enters an area, will rely on research to identify their target audience and market accordingly. He expects customers familiar with online horse wagering apps to be targeted with ads focusing on reliable, secure systems, and print and broadcast ads to focus on the more recreational players, with an emphasis on the social aspects of sports betting.
“Research will tell bookmakers where their audience is, and who they are and the message will follow,” Esrock said.
Esrock warns that marketers chosen to help bookmakers disseminate their message would do well to pay close attention to what FanDuel and DraftKings, the daily fantasy giants, did when they launched a massive national ad campaign in 2015.
“It’s called ‘effective reach’ and it tells us that if you can get a message to a potential customer three to 10 times that’s all you need. Over 10 times is a waste of money and has the potential to turn the customer off.”
Other critics of those campaigns noted that the advertising bombardment largely via television ads developed into a negative rather than a positive when the message became somewhat overwhelming. The onslaught also seemed to communicate that most players were winners, a message that was neither subtle nor true.
Educated Customers and Impact of Tax Rates
Customers more likely to visit a physical location will receive a largely educational message. As a now-defunct East Coast discount clothing chain used to say, “An educated customer is our best customer.” There’s a lot for new and even some experienced sport bettors to learn. If high tax rates in certain states (such as Pennsylvania) result in bookmakers offering -120 or -115 lines, rather than the customary -110, many straight bets and the sportsbook itself will become significantly less attractive.
Legendary Las Vegas bookmaker Bob Martin, known for taking numerous and significant wagers, used to remind his colleagues that the 10-cent vigorish on straight bets, often called juice, will make a judicious bookmaker (one that can balance the betting action) quite successful.
It’s hard to say right now exactly what percentage will be deducted from a gambler’s winnings by the organizers of the betting markets. When a state sets a licensing fee and tax rate for sports betting operators, each bookmaker will have to decide how to price their wager menu. Because bookmaking is a volatile activity and winning is never guaranteed on either side of a sports bet, expect excessively high taxes to keep some operators away from jurisdictions where the tax rate is prohibitive in an already low-margin business.
The prediction here is that newly minted bookmakers in the various states will spend major marketing dollars explaining to prospective customers what payouts to expect and showing them exactly what can be won on a wager in addition to what the cost of a sport bet actually is. In Nevada, an educated customer who bets a three-team parlay does so where it pays more than the book down the street.
As customers become better educated, they will need to know which bookmaker has the best payoffs on the ever-growing multiplicity of wagers. New players would do well to learn the difference in a parlay that pays 6 to 1 versus a parlay the might pay 6 for 1. (An example: a two-dollar wager at 6 to 1 would pay $14.00. A two dollar wager at 6 for 1 would only get you back $12.00. It’s a subtle but important point.)
Line and Bookmaker Shopping
It will be up to the player to determine where he or she gets the best number on a game (called “line shopping”) in addition to who offers the best payout. Also, major players will have to determine how big a bet their local establishment will take (some books might impose limits). Advertising larger odds on parlays can be meaningless if a book will not take a large bet.
The newly-licensed bookmaker near you will soon supplement the educational message with ads that are likely to be aimed at differentiating their operation from the competition. Big players who now play into illegal bookies or offshore betting houses will be willing to move into the regulated market, but only if odds and payoffs are comparable. If -120 becomes the norm rather than -110, expect these bettors to continue wagering right where they are.
Another key element consumers will have to be aware of is whether a particular bookmaking company receives any sort of exclusivity in a particular state. As is usually the case, the customer is at a disadvantage when choices are limited and competition is non-existent. But in either case, prospective sports bettors should expect to receive promotional offers, likely sign-up or deposit match bonuses.
As for depositing, credit card companies and banks frown on assisting in any illegal activity, but should sports betting become legal in a number of new states, they might gradually relax their rules to allow deposits into a mobile account, but only slightly. Bet taking is largely a “cash only” business and new state regulations may strictly prohibit betting on credit (which is another advantage of the local bookie).
Online Ad Spending Passes TV
Expect ads focusing on the recreational aspects of sports betting to pop up on your phone and laptop computer. As reported by tech and business website Recode, online advertisers are expected to outspend TV advertisers by $40 billion this year. According to new forecasts from the advertising measurement company Zenith, this translates to 40 percent of the world’s ad spending volume, making 2018 the second straight year that online spends outpace TV.
In states that allow wagering online and via mobile apps, which based on existing legislation will be the norm, bookmakers will highlight the ease of use of mobile platforms. That said, some states may require a trip to a physical sportsbook licensee to register for a mobile wagering account.
The message that sports wagering is fun will be ubiquitous and for most bettors it is an honest message. The states that require physical locations for sports betting will have ads that reflect the social nature of this kind of betting. Nevada’s most successful sportsbooks have large seating areas and big screens showing all the games. Drinks are either discounted or even free to players.
Scenes from Sin City: @TheMirageLV sportsbook erupts with cheers and applause as Maryland-Baltimore County knocks off Virginia. The first time in NCAA Tournament history a No. 16 seed beat a No. 1 seed! @Covers pic.twitter.com/6UGj03W1CW
— Patrick Everson (@Covers_Vegas) March 17, 2018
Successful Nevada sports-betting operations emphasize this element of the equation because they know big screens, camaraderie and cheap drinks get people inside the casino and can be a significant revenue driver throughout the casino, not just in the sportsbook. But square footage is an issue for some properties and slot machines, by design, deliver a consistent and higher return for casinos. A cozier sportsbook may suit some casinos and sports bettors just fine.
Those bookmakers who understand there will be a learning curve for new customers are likely to be the most successful. Nevada books usually require a balance of both “square” and “sharp” betting to thrive. Expect the marketing of sports betting to have elements that appeal to both groups. In a competitive market, the bookmaker that does this better will be the most profitable.
Robert H. Mann, a 31-year resident of Las Vegas, is the industry writer and columnist for Gaming Today newspaper and gamingtoday.com. His opinions are his own and may not reflect those of SportsHandle.com.