Fanatics shifts focus to customer value

Fanatics Sportsbook has shifted its approach to performance marketing, particularly on connected TV (CTV), after experimenting with ad tech company Cognitiv, focusing on optimizing campaigns for customer lifetime value (LTV).

For years, performance marketers have built campaigns around defining the ideal customer and placing media buys accordingly. However, Fanatics found better results when it stopped defining its audience and adopted a more data-led approach.

According to the filing, this approach enabled Fanatics to increase projected customer LTV by 19% from campaigns run with Cognitiv’s “full-funnel CTV solution.”

Andy Magnes, director of paid marketing at Fanatics Betting & Gaming, said the uptick was the result of shifting from targeting predefined audience segments to employing tactics that optimize directly against customer value signals.

They reflect a broader evolution in digital advertising, where machine-learning systems are being tasked with determining who the target audiences should be.

Early work with Cognitiv focused on modeling audiences based on specific betting behaviors rather than optimizing campaigns for the lowest cost per acquisition. It ultimately achieved stronger performance when it stopped trying to define the audience itself and instead optimized for business outcomes.

Cognitiv trains custom machine-learning models against advertiser-defined outcomes, rather than relying primarily on demographic profiles or manually constructed audience segments.

Andy Magnes said, “We just started modeling on value,” adding that the more recent technique enabled Fanatics to better establish a link between ad spend and generating customer LTV.

The strategy was also aided by Cognitiv’s AudienceGPT product, which lets marketers describe prospective audiences in natural language, with the product then using machine learning systems to construct appropriate behavioral segments.

Jeremy Fain, CEO of Cognitiv, explained that advertisers are increasingly better served by defining desired business outcomes rather than applying hypotheses towards a predefined audience type.

Fanatics tells Cognitiv who the high-value people are, and they go out and find more of those people, using algorithms to identify the characteristics associated with valuable customers instead of relying on marketer assumptions.

Although at the top of the marketing funnel, you do need a hypothesis as to the target customer-base, and these prompts end up being that hypothesis, according to Fain.

As AI scrutiny grows, brands, agencies, and tech vendors are starting to face harder questions about whether generative AI can deliver meaningful business results. However, some companies, like supply chain managers, are finding value in AI tools, such as using technology to improve efficiency.

DUDE Wipes has implemented AI tools across the company, reducing man hours in supply chain tasks and providing employees with more time to focus on other areas.

The use of AI in marketing is still evolving.

Companies like Fanatics are finding new ways to optimize their campaigns and improve customer LTV, and it will likely continue to explore new ways to use data and machine learning to optimize its marketing efforts, by using tools like a firewall to protect their systems.

Fanatics’ shift in approach has led to improved results.