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Sports Business: Despite Industry Crisis, Fantasy Sports Leaders Pour On Ads
An ad for DraftKings, which along with its rival FanDuel has spent nearly $45 million on advertising since early October.Credit Justin Lane/European Pressphoto Agency

The get-rich commercial messages of the fantasy sports leaders DraftKings and FanDuel have inundated the airwaves as no advertising category has in recent memory, suffocating almost any other advertiser except for the irksome 1-877-Kars4Kids band.

Since August, Draft Kings has plowed $107.5 million into commercials, and FanDuel has paid out $85.8 million, according to iSpot.tv, which tracks advertising spending.In one three-week stretch during the summer, ads from the fantasy sports companies appeared every 90 seconds on national networks. In the month that ended Sept. 15, they outspent the pizza and beer industries in pursuit of more people to play their contests. When their 30-second commercials are not being shown, their names are attached to statistical features during football and postseason baseball games.But FanDuel and DraftKings have more than a simple, ferocious business rivalry to contend with. Lawmakers are demanding a change to their unregulated status, and the F.B.I. has begun an inquiry into their business practices. Do they pull back on their advertising or continue the prodigious spending that is critical to acquiring new customers and maintaining existing ones?“They have no choice,” said Howard Bragman, a crisis communications expert who is chairman of the Fifteen Minutes public relations firm.“Either you disappear or you thunder forward, and I think they’ll thunder forward,” he added. “There’s no advantage in undermining your business. Somebody else will take it. The more money they have, the more money they have to protect themselves. Put a strong face on, move forward cautiously, and keep advertising.”But Jack Desachauer, a senior vice president of the public relations firm Levick, who also specializes in helping companies cope with crises, advised a different course.“I’d think they’d want to dial back the advertising,” he said. “You don’t want to be seen as poking a stick in the eyes of the federal government or the F.B.I. To continue with that level of unabated advertising, in every single break of an N.F.L. game for weeks at a time, yeah, they can tone it down. And they can save some money for their legal fees.”FanDuel and DraftKings have turned hundreds of millions of dollars in investment into a fierce rivalry. Their sudden rise, and extreme spending to build their profiles and player (or gambler) rolls, has surprised even an industry veteran like Brad Adgate, senior vice president for search at Horizon Media. But he sees something quite familiar about the rivalry.“There is a long history in advertising of product category wars such as cola, beer and quick-service restaurants,” he said. “So that competitiveness for marketing share is driving ad spending.”The planned ubiquity derived from huge ad spending has enriched the companies but has also made them easy targets for those who want them not only to admit that they are as much about gambling as a Las Vegas sports book but also to change the way they do business.Members of Congress want to re-examine the 2006 federal legislation that outlawed online poker and sports betting but allowed fantasy sports contests to be classified as games of skill.The New York State attorney general has opened an inquiry into the prospect that employees of both companies won lucrative payouts based on information unavailable to the public. And the F.B.I. has opened an inquiry into allegations about the use of predatory tactics and the possible use of insider information by the fantasy sports companies.F.B.I. agents also want to know if DraftKings employees passed on proprietary information or preyed on players in contests.State regulators are targeting fantasy sports operators. On Thursday, the Nevada gaming board stopped the companies from operating in the state, saying they needed gaming licenses.On Friday, the Illinois Gaming Board said it would seek a legal opinion on whether the websites had violated state law.The high profile of DraftKings and FanDuel is unlikely to change. The advertising has done its job, as has the current burst of legal and legislative scrutiny that has cast notoriety upon them. It is not known if the slowdown in FanDuel and DraftKings’ national ad spending — which may be hard to believe has occurred — is a reaction to the crises or if they are pursuing strategies about when to raise and lower their commercial purchases.According to iSpot.tv, DraftKings’ recent spending peaked around the start of the N.F.L. season, while FanDuel’s hit its peak earlier this month. Since the industry crisis began in early October, FanDuel has spent $29.8 million on 5,568 airings of ads, while DraftKings has paid $15.1 million for 3,752 airings through Oct. 15.No one could call that level of advertising shrinking from the federal or state regulators in the midst of a crisis.

Read more http://rss.nytimes.com/c/34625/f/640350/s/4abe4333/sc/38/l/0L0Snytimes0N0C20A150C10A0C170Csports0Cdespite0Eindustry0Ecrisis0Efantasy0Esports0Eleaders0Epour0Eon0Eads0Bhtml0Dpartner0Frss0Gemc0Frss/story01.htm


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