The Esports Party — Are You Already Too Late?
Or should you get an invite
Let’s take a trip to the past. It’s 2010, Kobe Bryant just secured the second straight championship for the LA Lakers, Instagram gets launched, Apple presented the first iPad, and playing computer games was merely a hobby.
Since 2010, many things have changed, but one of the most epic developments was the emergence of eSports. Back in 2010, nobody could have imagined that your friend, who used to play too much FIFA in school, will soon become a professional athlete. While eSports dates back to 1999, it is only in the last 10 years that brands have considered it a credible marketing platform. Many are still yet to make their first investment in the space.
Today, if you are a brand aiming to join the eSports sponsorship ranks, are you too late to the party? The question arises, is the price tag of an eSports sponsorship worth the investment?
The Measurement Problem
Historically, brands have utilized MEA as a quantifiable measure of the success of a traditional sport sponsorship. The main variables of the MEA are awareness-based variables like the size and location of the logo, as well as screen time. The MEA or other awareness-based methodologies gave sponsors a benchmark to understand the value of their properties and it also allowed them to compare different properties in their portfolio. However, MEA has a ignores many sources of value in sponsorship.
Besides those quantitative goals, there were other qualitative measures like Brand awareness or brand image. Sponsorships have always been a distinct form of marketing. Cornwell, one of the leading sponsorship researchers, notes that authenticity and the relationship between consumer and brand have gained importance (Source). Consequently, qualitative metrics like brand image have become a key driver for sponsorship success. Thus, previous sponsorship measurement techniques like the MEA fail to capture the true value of sponsorships.
Concerning Esports, there are a couple of things that make measuring even more challenging . The streaming landscape is more fragmented than in traditional sports. Thus, the metrics used for viewership are not consistent, or easy to compare across Esports competitions given their formats.
Still, modern streaming services such as Twitch, YouTube, or Discord generate huge audiences. In March 2021, League of Legends fans watched 149.5 million hours of game footage on Twitch alone, and the Fortnite World Cup in 2019 was streamed by over 2 million fans. Internal research revealed that the global eSports audience is about as big as the global motorsports audience, and it is still growing.
Who watches eSports?
Most brands are justifying eSports sponsorships because of the size and demographic of the audience. . Comparing eSports fans to the global base population, esports is much more popular amongst the younger generation, especially Gen Z. 54% of the esports audience is under 30 years old (GWI) which is undoubtably a factor that has seen many global brands such as BMW, Nike, Adidas, Nestlé, and many more jump on the bandwagon in the last 5 years.
Interestingly, data has shown that there might be a greater propensity to purchase certain products amongst the Esports Interested audience than other traditional sports fans. When analyzing global sporting goods purchases from the previous two years, eSports fans registered more purchases than traditional football and basketball fans (GWI); an interesting observation given the investment that dominant sporting goods brands have made in both football and basketball over their long history.
Yet, even these early movers in the Esports space have a decision to make. As their first sponsorship deals start to expire, these brands must decide whether to renew their eSports Partnerships. eSports teams, leagues and athletes are aware of their growth and the increasing strength of their proposition. The fees being sought by Rights Holders are only going one way.
For these early adopters, and for those still weighing up Esports, the question remains the same. Can Esports provide me access to an audience that will help me achieve my brand and business objectives?
Is the interested eSports audience interested in your sponsorship?
Part of the appeal for brands who invest in Esports is the opportunity to gain access to a broad pool of talent from many different areas of the globe. Esports teams often feature players from various nationalities. Take the Berlin-based team G2 as an example. Their League of Legends team alone consists of 6 players from 4 countries. In total, they have eight teams. You get the point. It gets interesting when you consider two aspects (a) that eSports fans mostly follow players, not teams, and (b) sometimes entire teams are traded.
For the sponsoring brands of eSports teams/organizations, this means that their audience is changing fast. Take the US-based organization Cloud9 as an example. Through Google Trends, we discovered that the countries with the highest search volumes of Cloud 9 are Singapore, Denmark, and Canada. Their sponsors, such as PUMA, should be aware of this when making renewal decisions in the context of their brand and business objectives. If the fee is going up dramatically due to a vastly bigger audience than when we first signed the deal, does this really matter if the majority of this audience exists outside of our priority markets?
As previously explained, it is still a challenge for brands to monetize reach. A big audience alone does not bring in more money. In many aspects, social media and streaming statistics have the same downfalls as the traditional MEA for TV-Broadcast. That is why brands should heavily weigh metrics that have a tangible outcome, such as direct sales.
Prior, we compared eSports and motorsports. At first glance based on audience alone, eSports looks a comparable proposition to motorsports. They have a slightly larger audience that is growing, is predominantly younger, and affluent. Yet, the eSports licensing business pales in comparison to the motorsports licensing business. Sponsors may receive a more tangible output from a motorsport sponsorship than they do from an eSports one. While one outcome is not better than the other, brands must be aware of their objectives to make an informed decision.
To evaluate the return of marketing investment of an eSports sponsorship, a brand must have clear objectives. Non-endemic brands should be prepared to sell a lower volume of direct products through an eSports sponsorship, compared with traditional sports. On the other side, endemic brands like a gaming headset company can already access the purchase power of the eSports audience. However, current trends show that sponsors are finding new ways to incorporate licensed products in the world of gaming. For example, Louis Vuitton created branded skins for the virtual characters that can be bought by all players worldwide. Another example is the digital-only jerseys many football clubs have launched in the past years.
Esports is an exciting area for sponsorship. Now that the eSports market is one of the biggest global markets, prices have spiked dramatically. Brands must decide how much their eSports sponsorships are worth. The answer to that question has many dimensions but is grounded in their individual objectives.
Brands need to better understand their audience. A big audience does not correspond to a successful sponsorship anymore. Brands must know where their property is relevant, who watches them, and if their audience is even interested in the sponsor’s products. Nevertheless, our analysis has shown the potential power of an eSports audience.
They are young and seem to purchase more sponsored products than traditional fans. In addition to the direct sales, a sponsor property creates indirect and Halo Sales. Our internal data team can quantify those numbers and help brands to contextualize this value with a return on marketing investment model.
The only way to maneuver the waters of eSports is to collect and evaluate data. At A.S.I, we utilize up to 250,000 data points in addition to expert input to measure the effectiveness of a sponsorship. Those data points are then translated into actionable insights that help brands to define the relevant return of marketing objectives. This framework helps you to base your decisions on evidence rather than your gut feeling. Ultimately, the right use of data empowers marketers to make better and faster decisions.
For more expert insights into sponsorship data & analytics, visit us on Advanced Sponsorship Insights. Or write us directly: