One month ago, DraftKings and FanDuel called off their plan to merge. Now a new NFL season is three weeks away, and the two leading daily fantasy sports operators have to quickly move from working together to working against each other. And the run-up to a new NFL season is their biggest time of year to acquire new users.
FanDuel this month doubled down on “season-long” contests that place the newer ‘daily’ draft structure in a setting that lasts all football season. DraftKings went in a different direction, announcing (on the same day) new “pick ’em” contests that remove the burdens of a salary cap to spend when you draft a roster.
It’s just one divergence for the two companies that spent eight months planning how they’d combine into one entity.
What else is DraftKings planning in order to lure new customers? CEO Jason Robins tells Yahoo Finance that much of the task is to set people straight on current misconceptions.
One misconception, he says, is that daily fantasy sports is just for expert “sharks” who play to win money. “I think people think these are games that are only for really good players,” says Robins. “There’s a lot that we’ve done in the last year or two to create different segments of skill-set.”
Another misconception: that the games aren’t legal. There are still 10 states where DraftKings does not operate and 11 where FanDuel does not, but in many of the other states, Robins says, “What we’re doing now is actually fully regulated.” And yet, Robins says, in New York City (DraftKings is headquartered in Boston, but has a New York office), he still frequently gets asked, “Can I play it in New York yet?”
The answer is yes, and has been yes for a year, but many New York sports fans think DraftKings and FanDuel are still banned. “The last thing that they remember hearing was, ‘I can’t play in New York,’ so I think there’s some upside there, but also some work for us to do to get the word out,” he says.
So, how can a tech startup get the word out about its product? You guessed it: advertising.
“I think we were going to have a higher presence in terms of advertising anyway,” Robins says—that is, even before the FanDuel merger was called off. “So we’ll continue to do that. Not much has really changed there.”
What has changed, then, because of the cancelled merger? Robins gives a candid answer: “I think the biggest impact is actually free time. So much of what we were focused on, and were going to be focused on, was how do we integrate the companies, how do we integrate the platforms, how do we bring the cultures together. That, personally for me, was going to be the dominant focus probably for the next year after the merger. Now all of a sudden, there’s a little bit of relief. We can focus on product, and customer, and innovation.”
And advertising. Two years ago, at the start of the 2015 NFL season, DraftKings and FanDuel spent more than $200 million combined on advertising their apps to football fans. They flooded the airwaves. It got their names out there, but also with a lot of groaning from sports fans who felt inundated. Last season, they went practically silent as they dealt with a legal morass in many states, but most notably New York.
Now, DraftKings ads will return.
They won’t be quite as relentless (occasionally during that season ESPN was airing back-to-back ads for the two competitors), but the companies must return to customer acquisition. They must convince season-long fantasy football players to try daily. DraftKings, then, has already rolled out a new ad campaign called “Dr. Aftkings” in which a doctor advises a patient to use DraftKings to cure conditions like “draftitis” and “lose-onic plague.”
DraftKings is also touting a $1 billion prize (yes, billion) for a “perfect lineup” in Week 1 of the NFL season. For the purposes of the contest, a perfect lineup would mean picking the player, at each position, who ends up earning the most fantasy points of every possibly player at their position that week; the chances of nailing it are, experts say, likely even lower than calling a perfect NCAA bracket. But it’s a savvy marketing play attract new users.
DraftKings says its revenue in 2017 so far is up 30% from this point last year.
“I think there’s a huge market out there, but it’s not just going to magically appear on our doorstep,” Robins says. “We have to have a combination of great products and great marketing.”
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Disclaimer: Yahoo offers its own daily fantasy sports product.
Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.
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