Caesars cuts ad spend as sports betting category suffers growing pains – Sportico.com

Amid a continued slowdown in the U.S. advertising market and fears that consumers are about to turn to some sort of ominously ascetic and recessive belt-tightening mode, TV sales executives are keeping a close eye on the sports betting category. While gambling dollars have served as a welcome panacea during a period of reduced auto spending, at least one prominent online bookmaker is cutting back on TV investments.

Speaking to investors earlier this week, Caesars Entertainment CEO Thomas Reeg said the casino conglomerate has cut its marketing costs to the bone. “We pulled in…hundreds of millions of dollars that we planned to spend,” Reeg said, noting that the company retained a 15% market share of the national online sports betting (OSB) handle.

Since the start of the year, Caesars has reabsorbed “nearly half a billion dollars” in funds originally earmarked for customer acquisition/marketing efforts. And while cut ad spend may have reduced sports fans’ exposure to Caesars pitchman JB Smoove – according to iSpot.tv’s estimates, the comic’s two most-deployed spots generated 519 million. in impressions during the 2020-21 TV season – so cuts so far have not coincided with a commensurate decline in share.

The free-spend FanDuel is the highest profile among OSB operators, closing 2021 with a 40% domestic market share. In New York, FanDuel claimed a 45% market share last month, overtaking DraftKings (26%) and Caesars (15%). A total of nine sportsbooks have been licensed to operate within Empire State boundaries.

Caesars austerity measures are also tied to a wad of white pages in the metaphorical register of legalization, which has not resulted in a major market launch since OSB launched in New York on the 8th January. Ohio will be the next big state to roll out mobile betting, as the state’s casino commission flips the switch on New Year’s Day 2023 – a day too late for locals to place their bets on half-bets. college football playoff finals, but well before the Jan. 9 national championship game.

Reeg told shareholders that Caesars rivals have not withheld their own marketing activities. “We don’t think our competitors have followed us; they’re still spending,” he said, which is in line with last year’s trends. According to a year-end filing with the Securities Exchange Commission, DraftKings’ sales and marketing costs nearly doubled in 2021, totaling $981.5 million. DraftKings went on to reveal that nearly 80% of that spend went to activities related to player acquisition and retention.

As has been the case with rival FanDuel, DraftKings has not deviated from its “you gotta spend money to make money” philosophy. In a note to investors, MoffettNathanson analyst Robert Fishman wrote on Wednesday that DraftKings was likely to “continue to invest in its business to retain its share for the long term,” before adding that a “slightly more restricted on [customer acquisition costs] investment levels” may be on the short-term horizon.

For its part, FanDuel appears to be taking its marketing push to an even more immersive level, with plans to rebrand its in-house horse racing network, TVG, to FanDuel TV. With deals in place with the likes of Pat McAfee and Bill Simmons The ring, FanDuel may choose to develop a daily list of studio shows and low-stakes live sports programs. The new cable outlet is expected to bow before the fall football season.

Speaking of which, Reeg said Caesars’ existing deal with ESPN ensures the brand will still be on TV in September, even if its airings won’t be as frequent as they were a year ago. (According to iSpot, Caesars accounted for 22% of all television sports betting ad impressions between September 2021 and May 2022, making it the second most visible brand in the category behind FanDuel.) “This fall, you’ll see of the [of our] commercials, largely on ESPN, and you’ll also see local commercials playing locally,” Reeg said. “Compared to last fall, it will look like we’ve left the air entirely, but you’ll still encounter an ad or two depending on where you are and what you’re watching.”

Reeg went on to note that Caesar’s online sports unit “nearly broke even in July,” following a loss of $116 million in net revenue in the April-June quarter. He went on to say that the reduction in marketing spend is seen as a “dramatic pivot” for the OSB unit, and that the relative stability in market share suggests the program is paying off. However, the casino expects its online division to become profitable only in the fourth quarter of 2023.

Investors and network sales executives will get a better idea of ​​how DraftKings will approach the fall advertising market when the company releases its quarterly results before market open Friday morning. Meanwhile, many of the biggest sports gaming markets have seen pronounced seasonal downturns, with the New York handle falling to a low of $149.7 million in the week ended July 24.

The amount wagered via state-approved mobile books has steadily declined throughout the smoldering summer season. In March, when the novelty effect was still in bloom and the NBA playoff picture was taking shape, the handful reached $1.64 billion. In April, the grip fell to just under $1.4 billion, while the May grip fell to $1.27 billion and the June grip to $1.05 billion.

Any suggestion that the go-go games market is slowing is particularly troubling for the networks, as many executives are counting on the emerging category to help offset some of the automotive sector’s losses. Among automakers, domestic television ad spending in June fell 23% from the same period a year earlier, to $161.3 million. According to iSpot, automotive spending was down nearly $50 million from June 2021, while sports purchases accounted for just 21% of all automotive ad impressions, down from 26% previously.

Auto spending has been hampered by a shortage of microchips that has made new vehicles harder to find, even at the busiest dealerships. Dwindling supply is driving up prices, and rumors of a recession have prompted many Americans to hold off on major purchases. With no cars to move, the annual holiday outlets that typically dominate the airwaves as Memorial Day and Independence Day approach have largely failed to materialize this summer, and overall media spending are, as expected, low.

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