Is esports prepared for the coming influx of freed-up marketing spend?
With live sports frozen and gaming booming, esports faces an opportunity to solidify a place as a mainstream media channel. But while brands are flocking to esports to replace eyes lost, they face difficulties in navigating a frontier space for which the rulebook is still being written.
PwC's global esports leader Andy Fahey claims that under lockdown esports is the “only competitive ‘sport’ in town”. So far, The Grand National, Formula 1, Moto GP, Spain’s La Liga and Nascar have all run digitally. There's more to follow and an increasing likelihood that more esports will fill depleted broadcast schedules.
Prior to the Covid-19 outbreak, sports revenues were predicted by PwC to rise from $980m in 2019 to almost $1.8bn by 2023, a prediction that is being revised upwards by the accounting group.
In esports, the live stadium spectacle is gone, but the competition endures. Some competitions are pivoting to play-from-home models. There is a swell of players too; in the first week of lockdown, telecom giant Verizon said US domestic peak-hour online gaming was up 75%. This trend is consistent across the globe.
Esports could also pull spend from other marketing channels. By the end of lockdown, Fahey says that new investors and commercial partners will likely be attracted to the space. Chester King, chief executive of the British Esports Association, is pinning his hopes on it happening. ”Sponsors who have taken their money out of live sports will have the revenue to invest with us,” he tells The Drum.
The opportunity is clear. But it won't be an easy jump for many when few decision-makers truly understand the space.
“There’s no rulebook yet,” one ad exec told The Drum at the B2B conference Cannes Esports Bar earlier this year. Esports is no longer a sector in beta - but more work needs to be done to onboard partners and deliver results.
Some estimates claim that there are 2.2 billion gamers in the world today, and a slim – but growing – portion of those billions show an interest in esports. One Cannes attendee also said: “Most of us are gamer in some way. Advertisers must understand this.” Consequently, any brand investing in the space must first have a feel for the sheer breadth of gamers.
As a commercial entity, esports teams are building drastically different models to attract partners. Julien Dupont, head of partnerships at Team Vitality, a French esports team with a gaming base in Paris called The Hive and an apparel partnership with Adidas, has noticed the market maturing. Non-endemic brands are now piling in, (most recently BMW in League of Legends).
Before lockdown, Vitality had already started matching brand partners with specific teams. Given that the industry norm has been to plug brands into every team on a roster, this was a significant development for Dupont.
Now the market is enjoying a level of demand that enables sponsorship packages to be granular. Naturally, the medium appeals to some sectors more than others and Dupont has positioned Vitality so it can sign non-conflicting deals with rivals in the FMCG or beverages spaces without the risk of a clash.
But what do advertisers get in return? Currently, that's open for debate. For some, is a chance to align oneself with competitive excellence and associated fandoms while others are, are Dupont puts it, are "buying our ability to make them cool and create a unique product".
The former sponsorships exec, previously at Havas Sports & Entertainment, concludes: “Partners are not just buying a logo on a shirt."
Glen Calvert, chief operating officer of esports team Fnatic, sees his organisation as an “entertainment company and talent agency”. The former adtech chief believes its easier to prove the value of a sponsorship that is tailored around engagement and reach of content, “If you can’t prove your value you will fail” he said.
Therefore, Calvert is now looking to build a lifestyle brand that has a voice beyond the competitive elements of esports, (which would help tide it through fallow periods between competitions).
However, work needs to be done across the channel in order to prove its worth. “We’re not at the level we need to be at yet... we don’t know that much about the fanbase yet. The more we focus on that, the more brands will buy-in,“ says Calvert.
Lindsey Eckhouse, commercial director of German team G2, hunts for brands that can improve the fan experience. A recent flagship deal for G2 was a 2019 partnership with Domino’s Pizza, which allowed fans in Berlin to gather and watch the G2 team compete in Paris for the League of Legends World Championship.
“We don’t need full-blown brand partnerships, we are happy to do individual events,“ she says.
According to Eckhouse, performance metrics and outcome measurements need to be brought up to scratch to increase the sector's value.
She said: “You cannot communicate value in the same way as traditional sports. We’ve renewed every partner we’ve had, but now we need the numbers to back that up.”
What do brands want?
Mathieu Lacrouts co-founded esports ad agency Hurrah in 2015, at a time when there were few marketers specialising in the space. The former TBWA and Darewin planner admitted that the “ad industry is just now starting to catch up”, though planners are still struggling to get creative ideas past stakeholders.
Its first-mover advantage is coming to an end as agencies pay more attention to gaming and teams themselves position as the creative solutions.
Right now, a lot of its attention is going towards consulting, with an influx of sports marketing budgets ready to experiment with esports spend. Budgets remain small and speculative to test the waters, but there's a chance to build trust and effectiveness.
In recent years, Hurrah may be best known for its Esports Moments campaign that crammed Coca-Cola and Domino’s Pizza into a single combo spot for the US market. Both clients have a large investment in the space and were seen as natural companions in the spot.
The 'Wildest Fans' campaign it ran with Nestle capitalised on the fact there were no major tournaments held on French soil. It challenged fans to roar into their devices. The loudest French esports fans were taken to the European League of Legends Championships in Hamburg, and were noted for being the 'wildest fans' in the arena. Hurrah claims the work hit 40m impressions.
The agency also bought the media, leaning on its understanding of the fragmented and misunderstood ecosystem. Lacrouts says that working with esports doesn't just mean agencies knowing what to run, but where to run it. Gamers can be a tough crowd to please and one slip up or badly judged meme can ruin a brand's credibility in the space.
One difficulty he identifies facing esports is that many brands otherwise interested in getting involved would really prefer something fun in the gaming space. One of the reasons behind brands' involvement with Fortnite is its broad appeal and reduced emphasis on competition, and even weapons are being phased out as it positions as a social space.
Nicholas Aaron Khoo has been in esports for 15 years. Last year, the Singaporean advised on the launch of the Global Esports Federation and runs gamer creator marketplace Yup.GG. He helps brands enter the complex esports ecosystem, from grassroots to pro gamers, content producers and influencers, teams, events, competitions and publishers.
“Everything initially looks so fragmented and messy,“ Khoo admits. “Brands can invest in everything from the top pros to the hundreds of thousands of aspiring players in the grassroots. A balance must be struck between the credibility of supporting top talent and the authenticity of supporting the masses trying to make it.“
“A lot of the value really is created in the center,” he says.
While some non-endemic brands don’t mind spending big, like Microsoft’s Mixer did for Ninja, others see the value in a long-term plan supporting years worth of 500-people events.
He concludes: “The truth is only there are only a few events actually filling up the stadiums, so it is important to have a broad view of the ecosystem.”
The tools to measure the impact and effectiveness of these partnerships are still being built. No matter which strategy brands adopt, the larger the audiences, no matter where they are, the larger the benefit.
For top esports events, multiple streams are simulcast on channels like YouTube Gaming and Twitch. Players can cast (that is, offer their own commentary channels) over these too, generating additional views and reach, while social and linear TV can boost viewership further. It's a complex web of consumption and a bit more difficult than tracking the linear and catch-up viewership of live TV.
Michael Heina, head of esports Europe and Middle East at Nielsen, says: “Esports is definitely growing. Our research found that a fifth of current esports fans joined in the last year. In 2017 it grew by one third. The growth is decreasing but any traditional sports would sign a deal with the devil for this growth.”
And its not really had its TV moment yet. Early indications show that TV broadcasts of esports don't cannibalise online views, but serve as an audience additive. “Esports is actually something that could draw a live audience towards the TV channels again,” he suggests.
The challenge for a firm like Nielsen is in ensuring that this growth isn’t being overstated, or that cursory views aren’t being missold as passionate fandom. Seeking to solve that conundrum, Heina's team is building a product as close to TV audience measurement as possible as part of a joint project with the Association of National Advertisers. “We take concurrent viewers, take into account the length of the broadcast, and work out the averages,“ he explains.
The industry lacks formal standardised measurements, and tournament organisers have been less than keen to have their homework checked – although Heina credited the Overwatch League as one of the first to do so. Its not alone either, Comscore recently partnered with Twitch to do much the same.
He concludes: “We are trying to grow the sport sustainably with the audience measurement numbers that we have had on TV for 60 years. The industry is keen to help but you have to imagine the difficulty they’d have in going into a sales pitch with much lower numbers all of a sudden.”
Stephen Broderick, chief executive of consultancy FirmDecisions, said that esports is a "prime target" for many advertisers now. For those who can free up existing and frozen spend (many can't), anyway.
Broderick warns: "New media owners can harbour different trading patterns, environments, rebate and/or free space deals. And where those who have a history investing budgets in channels currently reaching smaller audiences may experience more flexibility from media owners – newer players must recognise that with any new relationship, it can take time to build."