How big names are costing sportsbooks big profits

Mat Ratty, the CEO and founder of TrafficGuard, explains why big-name sportsbooks must prioritise advertisement fraud prevention to protect their outlay on brand ambassador campaigns.

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The sports betting industry is witnessing unprecedented growth, with new markets emerging from the US to the Middle East. This expansion is driving intense competition among sportsbooks, prompting them to adopt more aggressive and expensive advertising strategies.

Companies are increasingly spending campaign budgets on hiring big names to be the faces of their ad campaigns, but this ad spend is dissolving in front of them without realisation. An estimated 26 per cent of ad spend is lost to ad fraud, meaning companies are wasting big money on these campaigns instead of targeting the root of the problem.

Fraudsters are aware of the increased ad spend going into sportsbooks campaigns, and they’re constantly trying to take it for themselves. Without securing their systems before launching expensive ads, sportsbooks are at risk of wasting budgets.

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Big Budgets Wasted

In today’s competitive landscape, bigger is better. The American Gaming Association estimated that in 2023, over US$1.9bn was spent on advertising campaigns in the US alone. With such a large amount being spent to bring in household names, it’s integral that sportsbooks see as big a return on advertising spend (ROAS) as possible.

Spending on influencers or celebrities forces sportsbooks to also bid on brand keywords to prevent competitors from stealing potential users searching for them. The number of ads on a Google search page can reach up to seven including top and bottom placements, meaning users must scroll through multiple ads before they’ll see organic search results.

Competition for brand keywords is increasing, which can significantly deplete pay-per-click (PPC) budgets for sportsbooks while leading to no new net revenue. WordStream found that up to 29 per cent of PPC budgets are lost on this bidding.

This makes it even more crucial that no extra budget is wasted for sportsbooks, however PPC campaigns are a prime target for fraudsters as they bring in big numbers. These fraudsters are able to undermine campaigns and harm budgets by leveraging invalid traffic (IVT).

IVT is non-human traffic that doesn’t contribute to growth or legitimate conversions. This stealthy form of ad fraud is detrimental to campaigns as it artificially inflates impressions. As a result of this, sportsbooks are fed back inaccurate campaign data, leading them to misdirect future spend into underperforming projects and fraudulent sources.

Advertising budgets are significantly impacted by IVT, as engagement from this traffic never ends in a legitimate or incremental conversion. This means ad spend is wasted on fraudulent traffic, and genuine potential customers won’t see the campaign.

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The Navigational Traffic Challenge

In addition to ad fraud, sportsbooks face a significant challenge with navigational traffic - existing customers clicking on branded keywords simply to log in to their accounts.

This behaviour inflates customer acquisition costs (CACs), skewing the effectiveness of PPC campaigns. When existing users utilise paid search results instead of organic links or direct bookmarks, it drives up costs without contributing to new user acquisition.

This issue is detrimental because it impacts the cost-efficiency of acquiring first-time depositors, a critical metric for sportsbooks. High CACs due to navigational traffic means that marketing budgets are less effective, reducing overall ROI.

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Protecting Sportsbooks Interests

To protect their investments, sportsbooks need to adopt a multi-faceted approach that addresses both ad fraud and the navigational traffic challenge.

To prevent fraudsters from entering systems unnoticed, sportsbooks can monitor their traffic and analyse it for suspicious activity.  Any fraudulent traffic can then be swiftly identified and dealt with.

Legacy fraud tools fail to detect IVT as they don’t analyse traffic across the full funnel (impression, click, on site behaviour and conversion points). They also fail to consider the context of the business which is advertising.

To compensate for this, sportsbooks can leverage an ad verification platform. These platforms analyse and report traffic irregularities in real-time. With the right analytics tools, it’s possible to block fraud before it can harm budgets.

Additionally, sportsbooks can implement strategies to minimise the impact of navigational traffic on CAC. This might include encouraging existing customers to use direct bookmarks or mobile apps for logging in, thereby reducing their reliance on PPC campaigns for navigation.

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Clean Traffic, Clear Future

The reliance on high-profile endorsements and large-scale ad campaigns has become a staple in the sports betting industry's marketing playbook. While these strategies can drive substantial brand awareness and customer acquisition, they also attract fraudsters and lead to inefficiencies caused by navigational traffic.

To truly capitalise on their advertising efforts, sportsbooks must prioritise ad fraud prevention. By deploying sophisticated tools to filter out invalid traffic and protect campaign data, as well as encouraging more efficient navigation methods for existing customers, they can focus on driving genuine growth.

In turn, sportsbooks can ensure that their marketing dollars are spent effectively, securing their competitive edge in a rapidly expanding market.

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