DFS Marketing Plans, Where the cart leads the horse

Written By PlayPicks Staff on October 14, 2014 - Last Updated on June 27, 2018
dfs marketing

The first half of the Monday Night Football game was shaping up like a boring event so I had the iPad out and starting reading the Twitter feed and noticed about a hundred referral links that looked just like this:

 

 

 

There’s another new DFS site that popped up called Fantasy Draft, which is not the big news or what sparked the controversy. What did was the marketing plan. There are two main reasons for this and let me go through each so you fully understand the situation.    

 

User Base before Product Launch

 

I’m a DFS degenerate. Let’s face it, most of you probably are as well if you are reading this. I’ll give every site a try. I get links from fellow players about small and newer sites weekly. The strange thing recently though is that some of these sites are not even sites at all. For the second time in as many months I linked through to a site and signed up only to realize that I could not even play games on it yet. Sites are going live with their marketing before they even finish building and offering the games. I understand the reasoning that you need people so you can fill games, but this is getting a little ridiculous. I have often done this where I sign up, don’t like what I see, and never deposit a single cent. While I admit this is a pet peeve of mine, this particular instance was a little different. @Fantasyinsider co-founder and DKTV pro David Kitchen @socrdave said it best:  

 

 

I admit I was curious why the sudden barrage of links was popping up. I clicked on one of them randomly and low and behold I saw what all the fuss was about. If you click through on someone’s referral link, you can see it for yourself. There’s a pyramid structure bonus being offered that rewards the first people to start bringing in new players heaviest. You not only get paid from your own referrals, but your referrals referral’s, and so on down the list. After you sign up, the referrals page tells you that the point is to get five people to sign up and refer. If they do this and the five people they get each do this and so on and so forth, eventually you get a piece of some silly number like 15,000 people. This is what @socrdave was talking about when he mentioned MLM (Multi Level Marketing). It’s not quite a Ponzi or Pyramid scheme because it doesn’t rely on others money to fund it, but it does rely on very tough marketing to achieve goals to reach the peak they talk about. Whether you knew someone who sold products like knives, or cheeses, or cosmetics through a plan like this, it is highly doubtful you knew one that attained the fortunes they felt they were going to achieve by following this path. That only leaves the question then of is it a good strategy or not?  

 

Pro’s:

 

The prevailing mindset for new DFS sites is that they need to build up a user base as quickly as possible. In order to do so, they all begin marketing even before perfecting the user interface experience on the sites. Fantasy Draft rolled out the marketing campaign before the site so they are not the first guys on the block to do so. They are also not the first site to give bonuses for derivative referrals as smaller sites like Star Fantasy League’s also offers a layered referral structure. I know I signed up amidst the massive amount of referral link tweets that flooded my account during the game tonight, and I in turn began tweeting out the link myself to start building my own pyramid. The reasoning for this dates back to an article I read while getting my business degree.   The point of this article was that all MLM plans have an inherent flaw in that in order for them to succeed you need to have an enormous demand for the product and enthusiasm from the newest additions. It might be easy for the first ten people to get 5 more referrals, but now your first ten is up to 60. Those 50 people in the second level would then need to recruit 250 people to satisfy the requirements and those 250 would need to find 1250 to get through level 4. At this point you would need another 6250 and ultimately 31,250 new additions. The site would love it if they got the numbers to 40,000 total people that quickly. The question really becomes one of demand. Is there enough demand to justify me working hard at getting referrals and doing the job of the site for them? The article goes on to explain that at some point down the line that is where the system always fails. Demand for the product dries up and it gets tougher to recruit new users into the fold since everyone interested is already there. At the same time the people lower on the food chain get discouraged and realize they can not make the top, so they stop trying. When they stop trying the people at the top never make it there either, because the new users at the bottom stop playing and referring on the site altogether. The article obviously was not about DFS when I was in business school, but I am using the concepts to relate it to and illustrate this situation.  

 

In defense of Fantasy Draft though, I did sign up and I did tweet it out, and people did use the link and I have seen some of them Tweet it out already too. While Pyramid schemes suck when you are stuck at the bottom, they work out OK for those who get in first. This site and this referral craze are still in their infancy, so now is the time if there ever is going to be to get in on the action. I think the guys at Fantasy Draft are pretty shrewd with this move, because the idea is to grow fast and if everyone else is thinking like I am, then everyone is and should be signing up now to get higher up on the food chain. They are also going to be tweeting the link out and sending it via email, because the sooner you get in the sooner you can start referring and the sooner your referrals can begin to do the same. The window to be on the right side of one of these things closes very quickly as the numbers balloon exponentially, but for now that window is still open. The ultimate success of this still comes down to the site putting out a good product, but imagine if this turns into a Draft Kings or a Fan Duel with user bases into the 6 digits. It is entirely conceivable that you could be raking in the referral money if that becomes the case. This is a positive for the site, because they will at the very least have a ton of eyeballs on them early, and whether or not they can keep those players giving them a look is their challenge. With acquisition being the major hurdle for a new company I would say that this strategy has a chance to succeed for them.  

 

Con’s:  

 

Well, the big one that underlies what @Socrdave was saying is that you are referring for the sake of getting some personal gain and not because you believe in the product. I admit I have never played on this site and I doubt many others have either. In fact the only live game I was able to see was a cheap MLB game for Tuesday night. The NFL slate was not up yet so I could not even go in and check the prices and kick the tires. Just on first glance the site has a very minimalist feel to it, more Fan Duel style then a Draft Kings or Draft Day. I can see his argument, because I did not tweet it out or because I was giving it a ringing endorsement, but because I wanted to hurry and get started on my referral stream. If I was really being honest I would tell anyone who asked me that they should probably join a Fan Duel or a Draft Kings as their first site and then maybe branch out to a Fantasy Aces, Draft Day, or Star Fantasy. Getting the referrals trumped those sites and that could potentially be a negative thing if the user experience happens to be sub par. Fantasy Draft has succeeded in getting our attention with this marketing ploy, time will tell if they can keep it.  

 

Affiliate vs. Referral Pyramid:

 

Some have argued that this MLM scheme hurts the daily sites that rely on affiliate income from referrals, but I say if these guys are smart about it they can clean up. If I am the owner of a Fantasy advice website, I can use this structure to my advantage in order to maximize my income. If I start the referral link, then I am at the top of the food chain. If I have five employees, instead of recruiting all five to my link I have employer 1 be my first referral. I have him recruit employer 2 who in turn recruits employee 4. Employee 4 then sends the link to the site’s account to sign up making the site the fifth person in your pyramid. Figuring that by posting the link to your site is going to be the largest, richest source of referrals if your site is in your fifth rung and you post the link to that account on your website then everyone who clicks through that link will be in your sixth level of the pyramid and you will receive the maximum 30% of all their play if they sign up through your website. Some of these sites receive that much already for first and second degree signs up though their affiliate links, so this is how they can keep that level of income up and kind of game the system. I know I would do it this way if I was in their shoes. It’s not illegal to maximize your edge in DFS, in fact that is kind of what the good players do. If you happen to be one of those site owners, you are welcome for the idea.  

 

Ownership Question:

 

There has also been some discussion on twitter about this program because of who the guys involved with the site are. I have been unable to confirm these rumors, but the word is some of the guys involved here were some of the same monetary backers involved with Full Tilt poker. In case you are not aware, when black Friday hit and Full Tilt poker was seized by the government, it came to light that money was being taken right out of player accounts and not held in any sort of segregated account. I’m giving this out as a word of caution, because this industry remains out of the spotlight of law makers unless something happens that gives the critics a soapbox. I think this industry is not in danger of anything like that by any means, so do not misunderstand, but there is really no need for any negative publicity that could stir up a hornet’s nest.  

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