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CEO spending $100 million on digital ads says Twitter and Snap aren't 'monetizable' yet

Key Points
  • Sports apparel online retailer Fanatics says it has seen 30% growth from Thursday night's NFL game versus the year prior.
  • The company is investing in social media marketing, which is where fans are increasingly watching clips and other sports content.
  • The company spends $100 million on digital marketing, Executive Chairman Michael Rubin says.
VIDEO7:1707:17
Social media marketing helps boost sports merchandise sales

Sports apparel online retailer Fanatics spends big on digital marketing, but it isn't quite seeing Snap and Twitter's audiences translate to big sales yet, Executive Chairman Michael Rubin said Friday.

The company spends $100 million on digital marketing each year, on top of the hundreds of millions of dollars it spends with the sports leagues, Rubin said on CNBC's "Squawk Box." 

Half of the company's investment in digital marketing goes to social media, which he said is overwhelmingly Facebook and Instagram. The other half goes to Google, where he said the company has identified hundreds of keywords it uses to advertise against.

"It used to be … for us, the traffic came from the NFL and what came from Google. Today, social media has become really meaningful," he said. "Instagram, Facebook, these channels are working really well for us. … I think sometimes you can find something like a Snap or a Twitter that have huge audiences, but they're not really monetizable yet."

Snap has been building features to allow users to directly buy products within its app. Instagram has similar features.

Though Google and Facebook do dominate global digital ad dollars, second quarter earnings from some of the smaller players showed they're gaining some traction. Snap showed it was still losing a lot of money ($255 million in the second quarter), but advertisers are enthusiastic about its young devoted user base and are looking for ways to diversify their spending beyond the Facebook-Google duopoly. Snap reported revenue of $388 million for the second quarter, up 48% from a year prior.

Twitter advertising revenue jumped 21% in the second quarter from a year earlier to reach $727 million, thanks to 29% growth in the U.S.

Rubin added the company has seen recent growth. He said Fanatics had $250 million in revenue when he bought it back from eBay earlier this decade and will be over $3 billion next year. Rubin said the NFL is Fanatic's biggest business. The first game of the NFL's 100th season was Thursday night, with the Green Bay Packers defeating the Chicago Bears, 10-3. It was televised by NBC.

"We're having a great year. During the game last night against last year's game, we were up 30%, and those are big numbers," he said. "Since August 1, we've been up 25%."

"People always talk about media ratings, but you really consume media in so many different places," he said. "Today for me, I really consumer all of my media and clips [on] social media. I'm getting it from Instagram, I'm getting it from Twitter."

VIDEO7:1707:17
Social media marketing helps boost sports merchandise sales

Disclosure: NBC and CNBC are divisions of NBCUniversal.