FanDuel optimizes spend levels on YouTube via 3-cell diminishing returns test

January 23, 2024

The Challenge

FanDuel knew that YouTube was a key channel for their business and wanted to understand the optimal level of investment in YouTube. They specifically wanted to understand where their business-as-usual spend fell on a diminishing marginal returns curve, and whether they had room to spend more on YouTube efficiently.

The Solution

FanDuel designed a 3-cell, no holdout test in the Haus app - treating 1/3 of their eligible Sportsbook markets with ‘low’ spend levels, reaching 20% of their target audience, 1/3 with medium spend, reaching 40% of their target audience, and 1/3 with high spend, reaching 60% of their target audience.

The Results

After running this test for 3 weeks, FanDuel learned that the medium spend tier was the optimal spend level in Youtube to efficiently maximize activations. There was no observed lift between the medium spend level and high spend level, indicating that 40-60% reach is where they might be hitting diminishing returns.

It is important to note, however, that the media buying tactics within each of the cells was different based on the target reach %. Cell C had the highest budget allocation towards YouTube’s direct response product Video Action Campaigns but produced the least efficient cost per incremental activation. Cell B favored an upper funnel optimization approach with only 20% of budget allocated towards Video Action Campaigns and drove the greatest efficiency and lift in new customer acquisition.

These results suggest that diversifying media buying objectives on YouTube may lead to better results. However, since these media buying tactics were not isolated with equal spend, target reach, and saturation levels between cells–the brand can’t say for certain whether the same results would hold across consistent spend levels in all three cells. For example, it may have been the case that 50% allocation towards Video Action Campaigns in high spending cell C could have exhausted the pool of conversion optimized impressions available and led to decreasing efficiency from oversaturating the audience.

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Next Steps

FanDuel is eager to dive deeper into YouTube and isolate different reach and spend levels with equivalent media buying strategies across all 3 cells. This is in an effort to ensure that conclusions regarding diminishing marginal returns in spend levels from this test were not impacted by the unique media buying approaches in each cell.

Concurrently, FanDuel is going to test further into intra-YouTube media mix allocations to further investigate the optimal budget split between direct response and non direct response objectives at equal spend levels across cells.

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