DraftKings' new CMO: 'We could have reduced the ads a bit'
As legal pressure continues to dog the daily fantasy sports industry, its two leading private companies, DraftKings and FanDuel, have taken different approaches to their situation. In Illinois, for example, where both companies have filed counter-suits against Attorney General Lisa Madigan after she asked them to stop operating in the state, FanDuel filed its suit in tandem with a season-long fantasy sports company, Head2Head Sports. In New York, where Attorney General Eric Schneiderman is determined to have the two companies shut down, DraftKings has arguably been more aggressive in the language of its statements to the press.
Both companies are fighting for their business, as officials in state after state come out each week to either declare daily fantasy sports illegal gambling or to announce their intention to keep it legal and regulate it.
Now DraftKings, amid all this activity, has announced a major new executive hire: The company has appointed Janet Holian as its first-ever chief marketing officer.
Holian is the former CMO of publicly traded Vistaprint, which changed its name to Cimpress (CMPR) in 2014. While at Vistaprint she worked with the cofounders of DraftKings, Jason Robins, Matt Kalish and Paul Liberman. Since they launched DraftKings in 2012 Holian has served as an informal adviser, and since August she had been its acting CMO. Now she joins full time as DraftKings' global CMO.
Holian spent the past five years at Gemvara, an online jewelry retailer based in Massachusetts. She will help steer DraftKings into its next phase and manage its advertising approach and image. In the first week of this NFL season, DraftKings and FanDuel spent nearly $30 million combined to air some 8,000 TV spots, according to iSpot.tv.
Holian spoke exclusively to Yahoo Finance about her appointment; she is the first DraftKings executive to talk to the media since October. What follows is an edited transcript.
Yahoo Finance: You obviously saw the company's advertising strategy this past fall, and how the ads were seemingly everywhere for a while. Did they run too many?
I would say a couple things about that. First and foremost, in 2014 I think they learned that this time period—the two weeks prior to Week One [of the NFL season] and Week One—was the critical time when we needed to acquire customers. So there was a definitive decision to have a very wide media footprint during that time. I will say, we are a very analytics-driven company. We had eight ads running in the market during that three-week period, and we were testing to make sure we came out of that period with the best two ads. I think we could have done that testing sooner, so that we could have known which one was the winner. We should have done that in late July or early August so that we got a read and went out there with just two ads.
The best analogy I can give is major retailers around Black Friday. They flood the airwaves too, because they have a seasonal business where one time period is very crucial. We wanted to acquire a lot of customers in that crucial period.
But when you talk about how many different ads there were, that's separate from how frequently the ads are running, right?
Well, you need to get statistical significance around which ad was the winner, so the footprint was a little bigger because of that. I'm saying we could have done that earlier, gotten a read to figure out which one would be best. And we could have reduced the ads a bit. But I would expect that we will execute a similar strategy, whatever our budget is, in 2016. The majority of our ad spend will happen in that same period of time and then gradually scale down.
With the exception of getting some backlash around the amount of ads people were seeing, the strategy worked. We more than accomplished our goals.
Now the ads have quieted down. I don't see as many, or any. Should we expect to see more again soon, or not until next football season?
We were getting ready to execute both for NHL and NBA around how to acquire customers in those sports, and then I looked around and said, 'What’s most important is that we educate the NFL [fantasy] players around why they would want to play NBA and NHL.' And we decided that was where we should really spend our time and resources. But I could see us reentering the ad market around MLB.
The reality is that we’re a household name at this point, so the need to spend on ads is not as important. We can grow our business at much lower cost now.
Are there any other specific sports you might advertise?
We have done some advertising around golf in the past, before my time here, and it did quite well, so I think we will be focusing on the four Majors.
Does DraftKings try to show why it's better than FanDuel in its advertising, or should it?
I don't think we necessarily come out with that specific messaging, but I do think we differentiated ourselves with our broadcast ads. FanDuel continued to show a very similar ad with a player that won money, and 'here is how you pick a lineup.' We went a lot more emotive in our approach. Granted, we did show winnings in some of it, but our research shows that people play for many different reasons: It’s a game within a game; it’s entertaining; it makes them care about the sport more; they do it with friends. So our ads had a lot of that different messaging, and I think we elevated our brand during that time frame.
What we continue to focus on is making our product better than FanDuel’s. Our messaging will continue to differentiate us from FanDuel, without necessarily aggressively hitting them head-on.
I noticed you guys had more celebrities in ads, like you did the Ed Norton voiceover, whereas FanDuel went with regular Joe's.
We did do that, the Ed Norton thing, and I was hoping a lot of people would recognize his voice. It elevated the brand a little bit. I do think we’ll focus a lot more on talent. For example, Gronk [New England Patriots player Rob Gronkowski] we mainly used in the Boston area, but he’s a pretty popular player even outside of Boston, so we feel comfortable we can use him more.
What's your impression of what people think of DraftKings? Those who play and those who don't. What is its image right now?
I think the people who play on the sites have a different impression of the company than the people who aren’t playing, and we need to work on that.
The people who do play probably have a more positive impression, right?
I believe so. Because they love it! Right? It’s part of the entertainment of their weekend. We know that due to daily fantasy, people are into watching the sports more, and into following the players more. And I really see us transforming the company from a daily fantasy site to an entertainment site.
What does that mean, make it more of an entertainment site?
For example, we have our DraftKings lounge in Gillette Stadium, and that is fun, but are there ways we can make that an even bigger experience? We have people who approach us who want to license our name to run a DraftKings lounge at an airport. That would become a place where DraftKings players can go to meet other DraftKings players.
When I interviewed Jason [Robins, the CEO] in September at a Patriots game, I noticed the whole company suite was very male-dominated, all guys, fratty men. Do you think part of what you can do for the company, as its first female executive, is to market more to women?
Definitely. I think there’s a huge opportunity to expand the people that get exposed to our game. We have women, but not as many as those that play season-long. So why is that? Well, I think we target men more. And I want to shift that. I think we’ve already shifted that a little bit. We made our ads more female-friendly, including showing a woman winning in one of the ads. I think there is an opportunity, since there are plenty of women who love sports. When I played the game before I ever joined the company, I had a blast. I played the U.S. Open for golf, and I already love golf, but I was obsessed watching it that week.
Of course, now that you're working for them, you can't play.
With everything that's going on legally, how does that impact the advertising strategy for the future?
Well, for NFL that’s quite a few months away. I think that we have to understand what the environment is like at that time. Legal is not my purview, but I am certainly aware of what’s going on. We are in an environment where our ads will be reviewed closely by the legal team.
You saw the situation this fall unfold, as an outside adviser, and you saw all the negative attention in the media. What was your take on that?
We learned a lot about what to do when a situation like this surfaces. And I think the things we did were admirable and impressive. Some companies would have chosen to say, 'This employee [Ethan Haskell, a DraftKings employee who won $350,000 in a FanDuel contest] is out there in the media, we need to just get rid of him, fire him, that’s that.' But that wasn't the right answer. He didn’t do anything wrong. We tried to make that clear, we brought in outside auditors to prove that fact. He made a mistake and released some data but it didn’t have any impact on anything, and he didn’t have any advantage when he won that money. Maybe there was more we could have and should have done, but it was just such a media overload, and all of us were suddenly in a situation we had never been in before.
Had you ever seen that much attention on any other company you've worked?
I have never experienced anything like it.
Disclaimer: Yahoo launched its own daily fantasy sports platform last year.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.
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