There’s talk iGaming companies and online sportsbook operators are reducing advertising expenditures. But BIA Advisory Services says internet gaming will remain a boon for local media.
The Online Gambling business vertical is presenting a continuing boost for local media sellers that operate in states where gambling is legal. For 2022, BIA estimates that the total nationwide advertising spend will be close to $1.8 billion and, for local markets, this spend can be a win-win for identifying and securing local ad revenue,” according to the firm’s forecasts.
BIA estimates that $164 million of that $1.8 billion will be spent on radio ads. That jibes with another study earlier this year indicating AM/FM radio is among the most effective avenues for engaging prospective sports bettors.
Local Ad Spending on the Rise
Those $1.8 billion and $164 million estimates are sharply higher than the $1.6 billion and $150 million BIA forecast in its 2022 outlook published in March.
In these early stages of iGaming and sports wagering, customer acquisition and retention is vital, and operators are willing to spend on advertising, often at the expense of profitability. In the first quarter, sports wagering companies spent $154 million on local TV advertising — a more than 14-fold increase in just two years.
Those numbers could grow — perhaps as soon as next year — as more mid-sized and large states join the live and legal sports betting fray.
“With the potential of more states, such as California, coming on board in the next couple of years, this new vertical is poised to deliver profitable advertising revenue opportunities,” noted BIA.
While it’s far from a slam dunk that California will sign off on sports betting, it’s clear Massachusetts and Ohio, and perhaps Maryland, will launch mobile sports wagering in 2023.
Don’t Be Deceived by Q2 Pullback
Because of a light sports calendar, sportsbook operators such as Caesars Sportsbook and DraftKings dialed back ad spending from April through June. The first month-plus of the third quarter is likely to show a similar pattern. Still, with the 2022 football season fast approaching, gaming companies may only be able to restrain advertising expenditures for so long.
Online gambling has become a strong advertising vertical at a time when local media channels are all looking to capitalize on opportunities to perhaps fill in where other categories have dropped off,” BIA added. “Timing couldn’t be better.”
Still, this year could be unusual in terms of gaming companies’ late third- and fourth-quarter marketing spending. That’s because the World Cup kicks off in late November. That event takes place every four years and is usually played in the second quarter.