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Why Are FanDuel Television Advertisements So Effective?

Fantasy sports companies use psychology ingeniously to attract new customers

Sports Fans by Corepics VOF/ Shutterstock
Source: Sports Fans by Corepics VOF/ Shutterstock

A few years ago, a fantasy sports league meant meeting with friends in someone’s basement or a sports bar and having fun. Hanging out together, showing off one’s arcane knowledge of sports statistics, and talking trash were the main reasons people played fantasy sports. Hardly anyone thought about getting rich overnight by winning millions of dollars.

How things have changed! Much like the commercialization of other private activities, fantasy sports games (called “daily fantasy sports” or DFS) have grown from virtually nothing into a $1.5 billion organized industry this year. Fantasy sports are now played by 57 million North Americans, most of them young men in their 20s and 30s. Instead of friendly socializing, many DFS participants have one sole ambition: to make serious money. Some have even taken on DFS as a full-time job.

The Meteoric Rise of FanDuel and DraftKings

Two companies in particular, FanDuel and DraftKings, have benefitted tremendously from the growth of DFS. In an industry with hundreds of small companies, these two are the giants, attracting investments totaling hundreds of millions of dollars and cornering the market on daily games. (Fantasy sports companies are highly profitable, with margins of more than 37%, according to one reputable industry analysis).

Chances are that if you watched any sports on TV over the past six months, you have seen FanDuel and DraftKings ads. This September alone, the two companies spent a total of $107 million on television advertising and were among the largest and most frequent TV advertisers in America. While many of us may have had enough of their TV ads, marketing experts credit the TV ads for much of FanDuel and DraftKings’ success and rapid growth.

How does the FanDuel TV Ad Work? Decoding its Psychological Triggers

What makes these ads so effective? They use a host of persuasion principles deftly to reel in new customers and get them interested enough to sign up and make that first deposit.

Let’s watch a FanDuel ad that has been running frequently this fall and then consider what makes it effective:

First, it is important to know this ad’s main goal is to attract new customers --- twenty- and thirty-something men who enjoy sports but haven’t yet joined the DFS site. (They may or may not have participated in fantasy sports before, and could even play on a competing site).

Notice how this ad communicates directly to its targets but has little meaning for other groups such as women or older men.

#1 The ad leads off with a tepid testimonial from a real customer.

Very few things create an aura of authenticity than a testimonial offered by a seemingly normal customer, which is what Bradley C. appears to be. Advertising experts call these as “typical person testimonials” and studies have found that they work even more effectively than actual factual information or experience of the product, especially for consumers who value peer opinions. What is more, the FanDuel ad notches up its authenticity in another powerful way: Bradley C.’s winnings are a very reasonable (and moderate) $349. Because he hasn’t won a lot, the targeted viewer can easily see himself doing what Bradley C. has done.

#2 The testimonial is about having fun, not winning money.

Throughout the ad, there is an undercurrent of “you will win big.” But in the first testimonial, Bradley C. tells us that his main motivation is to have fun and enjoy the experience of watching football even more because of FanDuel. He’s not in it to make money. The beauty of this message is that it evokes an emotional response from the viewer rather than a calculative one (I should play for fun rather than for money). Such a message is more likely to resonate and get the targeted viewer’s attention for what is to come next.

#3 Within a span of 30 seconds, the ad provides a ton of factual information.

It tells the viewer essential facts about how FanDuel works: the leagues are one week long, the weekly payout is $75 million, payouts are made in cash and are given right away, and players don’t have to commit for a full season (several months). To viewers who did not know exactly what FanDuel is, this is invaluable information that will drive their behavior. Any advertising expert will tell you that it is notoriously difficult to pull this dual task off. Most TV ads tend to provide either factual content or evoke emotional responses, never both. But in this case, FanDuel is able to do both things effectively.

#4 The second testimonial in the ad is very powerful, from a customer who has won a staggering sum of money.

Winning in Hand by David Fulmer Flickr Licensed Under CC BY 2.0
Source: Winning in Hand by David Fulmer Flickr Licensed Under CC BY 2.0

After Bradley C. who won just $349, the next testimonial is from Scott H. who has won over 2 million dollars on FanDuel! This theme of huge payoffs is reinforced by a third testimonial from another customer, Arman K. who has also won a lot of money, over $22,000. While all three are men in their 20s and 30s, did you notice that Arman is a different race than the first two customers? The clear message is one of inclusiveness to help broaden FanDuel’s appeal among a wider audience of young men. Scott and Arman reinforce the key benefit of the service: You will win money (a LOT of it!). It also evokes emotion, but this is all about winning and greed, having fun is incidental.

#5 The ad uses a specific promo code to track performance.

When running a large number of ads repeatedly across so many television channels, tracking their performance to see what works and what does not is essential. Because most TV ads try to build brands or simply remind consumers, few advertisers are able to do this meaningfully. The effects of a television ad are notoriously difficult to measure. The benefits of many TV ads may lie in increasing the consumer’s brand knowledge, so the ad may pay off the next time the customer wants to buy the product whether it is fast food or an SUV, months or even years later. Such is not the case for the FanDuel ad. It seeks a very specific and measurable behavioral response from the viewer: sign up for a new FanDuel account and deposit money. Providing a promo code in the ad helps measure this behavior.

Did you notice that the $200 bonus required the use of a promo code “Youtube31”? Cleverly, the promo code changes across different versions of the ad to evaluate the effectiveness of such variables as which TV channel it runs on (e.g., ESPN vs. Fox Sports, vs. NBC or CBS), the specific sport (football, golf, baseball, etc.), and even the time of day (or night) minutely. (In fact, in just the past 30 days, the company ran 37 different versions). Such knowledge can be used to either run more or less advertising in the future.

#6 Finally, repetition is the key to the ad’s success.

Many consumers might wonder why FanDuel runs its ads over and over again on TV at great expense. For example, in the past thirty days (from September 11 to October 10, 2015), FanDuel ads ran a staggering 14,400 times on national TV, or an average of 480 times every day. This might seem like a colossal waste of money. But the truth is that repetition is the key to an ad’s success. Repetition produces what psychologists call the “mere exposure effect” – a greater familiarity for the brand and greater liking for it. At this point, there are few 20 and 30-something men in America who don’t know FanDuel (or its competitor, DraftKings).

Fantasy sports rejuvenates TV advertising

The last few months have been eventful for FanDuel. On the positive side, it has grown at a remarkable rate and has seen its market value balloon to over a billion dollars. Yet it, along with DraftKings linger on the cusp of potential calamity, with recent revelations of employee malfeasance, class action law-suits, and potential federal scrutiny.

Regardless of what happens to these companies in the future, one thing is clear. In an era where many marketers are moving away from advertising on TV and spending more of their ad dollars on social media and mobile advertising, FanDuel and DraftKings have bucked the trend. They have used television advertising in clever and unconventional, if somewhat aggressive, ways to grow their customer bases rapidly within a very short time. Don Draper would be proud of them. Sometimes, what was old once is new again.

I teach core marketing and pricing to MBA students at Rice University. You can find more information about me on my website or connect with me on LinkedIn or Facebook.