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Fantasy Sports Generate Booming New Online Ad Market

15 Million Consumers Pour $1.5 Billion Into Make-Believe Teams

By Published on .

NEW YORK (AdAge.com) -- It's a dream come true for the media business: Some 15 million people laying out more than $1.5 billion on fantasy sports, and marketers spending big to play along.
Online fantasy-sports networks are rapidly expanding with different models: subscription-based offerings, like those of Yahoo and CBS Sportsline, and free services, such as ESPN and Fox Sports/MSN.
Online fantasy-sports networks are rapidly expanding with different models: subscription-based offerings, like those of Yahoo and CBS Sportsline, and free services, such as ESPN and Fox Sports/MSN.

While fantasy sports were born of paper, pencil and calculator, the preferred venue to trade players and trash-talk is now online, through live drafts, message boards and instant messaging. And those 15 million players who indulge in fantasy sports each year are lucrative targets for advertisers. A University of Mississippi study found most are home-owning men with an average age of 36 who spend an average of 3.8 hours a week managing their teams.

'They spend a lot'
"They've got a high household income, most are married, educated, big spenders," said Eric Bader, senior VP at Media-Vest Digital. "And they spend a lot on fantasy sports."

Some $265 a year, according to Ole Miss data that peg industry growth at a 7% to 10% annual clip.

With an eye on that financial prize, fantasy-sports networks are busy recruiting enthusiasts with a couple different models: subscription-based offerings, like those of Yahoo and CBS Sportsline, and free services, such as ESPN and Fox Sports/MSN, which sell additional services. This football season, networks are also adding a host of features such as mobile alerts and interactive TV applications.

All are selling advertising, and according to media buyers the price of entry for advertisers has skyrocketed as fantasy's popularity has grown among marketers seeking engaged audiences. "It's the original great community social-networking product," Mr. Bader said. "Its highly targeted marketing environments are the holy grail if you're looking to find active, like-minded audiences that are mostly male."

Don't disrupt the consumer
While a marketer used to be able to buy into fantasy football with a low six-figure deal, today's main sponsorships command seven figures, with smaller sponsorships running around the half-million mark. It can be a great way for marketers to reach an at-work audience, but as with all social-network advertising, marketers must tread lightly so as not to disrupt the consumer experience.

"The opportunities for marketers don't necessarily align with what the consumer behavior is," said Art Sindlinger, VP-media director at Starcom, suggesting that advertising can go unnoticed -- or worse, seem intrusive -- if it keeps consumers from getting what they want. "It's like having billboards on the autobahn. Users are tearing through multiple page views with a laser focus on what they want to get."

He said networks have had so little trouble selling the packages to advertisers that there was little incentive to move beyond basic offerings of banner ads and sponsored buttons. But this year, they've gotten more creative.

MSN/Fox Sports's fantasy offering, for example, is incorporating its MSN Messenger into live scoring. CBS Sportsline is selling session-based ad units, much like it did for March Madness on Demand, in which a single advertiser follows a user deeper into his or her session on the site. And ESPN is selling cross-platform packages that include fantasy podcasts, three radio shows and a weekly ESPN Original Entertainment show dedicated to the subject. "Fantasy players index higher across all ESPN media, so it's an opportunity for the whole company to benefit," said John Kosner, general manager of ESPN.com.

ESPN's cellular service
ESPN will use fantasy to drive adoption of its Mobile ESPN cellular service and its mobile publishing; the others have struck similar deals with carriers. "The reason you subscribe to a sports service on the phone is because you're a fantasy player," said Mr. Kosner. "You want the alerts, injury updates."

For ESPN, a smooth fantasy season is imperative if it hopes to continue to grow the business. Last year glitches in the network caused delays in the draft tool and frustrated players who had switched to the newly free offering. Mr. Kosner said the issues were due to "two separate technical problems" and ESPN stayed out of free fantasy baseball this year in order to devote time to making sure football would work smoothly. "It was a dark day for us," he said.

DirecTV doesn't have its own fantasy league, but is sponsoring ESPN's and has made its NFL Sunday Ticket package, which includes access to every game, fully interactive with fantasy stats and injury updates. One feature, the Red Zone package, automatically switches the channel to a game whenever a team is inside 10 yards of the end zone. And that foreshadowing -- fantasy of the future on every screen -- has marketers and media buyers really excited.

"Mobile's definitely the next step," said Mr. Bader. "But as soon as true iTV arrives on a wide scale, that's when we'll see great integration between actual games and fantasy activity that isn't just two-screen stuff."
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