The year of programmatic ad spend

There’s going to be one major challenge that will define all big brand operators in the United States in 2023. In short, working out how to turn a profit.

We all know what the challenge is right now – the honeymoon period for big bucks’ acquisition campaigns needs to stop if big brands want to find themselves in the green.

This is especially the case given we’re now almost five years into regulated online betting and, as we’ve seen, the last few years have been all about throwing immense resources into player acquisition.

Whether that’s DraftKings’ $1,000 in free bets, or BetMGM signing up Jamie Foxx for promotion, the use-case is clear, it’s all about planting the flag.

This, however, has led to a massive black hole in finances, where more and more money keeps being spent for diminishing marginal returns.

So, how can this be solved? In short, marketing spend on acquisition and retention needs to become far more efficient if any book wants to start being profitable.

Enter programmatic advertising – which can start delivering campaigns to tailored audiences with surgical precision.

So, what is it? In essence, programmatic advertising is the use of automated technology for media buying (the process of buying advertising space), as opposed to the traditional approach of throwing as much at the wall as possible to see what sticks.

This tech is already proving revolutionary for the wider world. By utilizing data insights and algorithms to serve ads to the right user at the right time, and at the right price, you’re able to deliver automated campaigns that evolve in real-time.

The cost-savings, and increased efficiency are huge. In many ways, it can be the silver bullet that big brands need right now, as we need change and fast.

Of course, there’s a reason why the US approach to acquisition is stuck in the past. The traditional Vegas model for acquisition has always been about ‘comps’. Identify your best customers and incentivize them to keep playing at your casino with free stuff.

If you want to turn a profit however, you need to adapt and evolve, as this model online is quite simply, unsustainable.

The power of data

With programmatic – you have a ready-made solution. You can rely on an algorithm that will determine where your ad money is best spent.

Thanks to a combination of AI, machine learning and big data, you can harness the likes of Google Audiences to draw up your key set of demographics, betting preferences, and habits.

Because of these econometrics, your sample size of thousands upon thousands of customers can then be distilled into sub-sections. Once you have this set, you’re able to tailor your ads and delivery to each of those segmented audiences, all in real-time.

Not only that – but this technology allows users to harness AI and machine learning to then automate the process entirely, ensuring that your marketing spend now becomes truly efficient, targeted, and scalable.

Now, taking London over in the UK as a prime example – it’s easy to see how this works. Football (‘soccer’) is the universal language here.

Football is tribal – you can easily target each region and set of customers with automated campaigns tailored to the local team. Arsenal and Spurs for North London, Chelsea and Fulham for West London, etc.

Using programmatic, you can then run automated campaigns with dynamic content and odds tailored to each set of fans, incentivizing them to bet on their favorite team that weekend.

Of course, it’s arguably easy in the UK, given football is inherently the universal language and, in most cases, very tribal, meaning you can identify and target audiences with ease.

The US, however, is a completely different kettle of fish. The approach to betting is completely different. For a start, betting is driven not by teams, but by the superstars within the team, with geographical location having far less influence.

Take Brady or Mahomes, US sports fans bet on what those superstars are going to do within a game, rather than say, someone from North London betting on Arsenal week in, week out.

Not only do you have a highly diverse audience, say people from New Jersey, Florida, and Colorado all having the same betting habits driven by their favorite quarterback, but you then also have a huge spread of additional sports and teams followed.

Again, this is where programmatic and econometrics get interesting. Thanks to AI, you can use automation to identify and sub-divide your target audiences and deliver a tailored campaign to each in ways you never thought possible (or indeed, could do manually).

Arizona is the perfect example of this – here, you have a state that does not have one team in the big four leagues. So, as a result, you’re going to have a real medley of betting habits.

Only with AI and big data can you start to market to such a place with precision – identifying unique customer profiles and then targeting each sub-group with content that perfectly fits with their preferences.

This technology, in many ways, is nothing new – it’s been around for a few years already. Our industry, as always, is slower to adopt – but once this tech starts being adopted, we’ll start seeing some real first-mover advantages.

Looking at other industries, programmatic is already making a huge impact. Just two years ago, the spend by US marketers on programmatic ads was over $61bn. In 2023, that figure is projected to rise to $133bn.

To say this technology is a game-changer is putting it mildly – we’re at a real watershed moment in the US, with the pressure to start turning a profit no doubt being one of the most pervasive issues faced right now.

This technology solves that instantly – and can be the driver that truly defines the next era in US sportsbook marketing. I have no doubt that those who adopt it first, will have a significant first-mover advantage.

Programmatic – you heard it here first.

Alex Kornilov is the CEO and founder of Betegy. Betegy provides global betting operators and media outlets with analytics and data visualisation by generating instant, high-quality personalised content using machine learning. Betegy’s clients include the likes of ESPN, Yahoo Sports, Bwin, Parimatch, Tipico and Sportsbet.io.