After a difficult 2023, brand sponsorship is on the rise in esports in 2024, but in a more experimental form than the blind trust of years past.
The cold winter continues for esports, but the weather is also milder for the first month of 2024. Brands like Kia are re-entering the space by sponsoring both teams and leagues, as well as the Overwatch League, which died an ignominious death last year. It returns in the form of ESL/FACEIT Group's Overwatch Champion Series.
But brands are also getting smarter about esports, spending less blindly than they did during the hype-filled FOMO era of 2018-2019. It has become clear that the ROI of esports sponsorships is significantly lower than that of traditional sports partnerships, and marketers can no longer simply copy and paste their sports marketing budgets into esports. not. Additionally, esports companies still rely on revenue from brand partnerships and are forced to cut deals with brands to survive.
“Brands know that they have the power now and that these teams need revenue from the brand side. That's where the majority of the revenue is coming from.” , said Ryan Dow, head of games and esports for the Americas at agency Sports Five. “That's why they have the power. Negotiations are going to be a little harder for teams.”
Here's the current breakdown of brand partnerships in esports:
important numbers
- Esports is a growing industry, but it remains a small niche within the broader gaming community. According to Insider Intelligence, he had 31.6 million esports viewers in 2023. On the other hand, there are well over 3 billion gamers around the world. “Esports is a $2 billion industry, but gaming is a $180 billion industry,” Dow said.
- Esports companies are announcing a number of new brand partnerships and renewals in January 2024, with Riot Games announcing sponsorships with brands such as Kia, HyperX, KitKat, and Omen. But despite this sponsorship, esports and gaming companies are preparing for fiscal austerity in 2024. Over the past week, Riot has laid off more than 500 staffers, and just days later, Activision Blizzard also cut nearly 2,000 people.
- Despite a slowdown in brand partnership activity last year, ad spending on esports more broadly continues to rise, driven by increased brand interest in gaming as a general category. Insider Intelligence estimates that esports advertising revenue will increase by 10% in 2023, reaching a total of $264.3 million.
redefine relationships
Being smart means admitting that you don't know as much as you think you do, and this is more or less what's happening with savvy brands in esports at the moment. Advertisers have for years viewed esports as analogous to traditional sports, replete with multi-million dollar contracts and jersey logo slaps that sports teams and their brand partners have enjoyed for years. . In 2024, brands learned that esports is a completely different animal with unique viewing behaviors and audience trends, and as a result, returned to a more experimental approach to esports sponsorship.
“In 2023, I think many companies will be affected by the macroeconomic uncertainty of the past two years. This applies to non-trendy brands that are pulling back on their investments in esports,” said Victor Goossens, co-CEO of esports organization Team Liquid. “But we see things starting to look up again, perhaps with a more experimental and exploratory approach to proving value first. How esports will work within a brand's marketing strategy It can be short-term or small-scale, just to check.”
Benefits of integration
Over the past few years, the diversity of esports companies and the opportunities to engage with esports audiences has been a challenge for some marketers looking to enter the space. But in 2024, he says, integration will be the name of the game, and esports could become a more accessible playing field for brands. As esports companies like ESL/FACEIT Group and Blast look to license rights to multiple esports at the same time, this bundle allows partners to collaborate with a single sales team while providing more It could be possible to easily access multiple gaming communities.
“Our commercial capabilities are unparalleled in the industry in terms of our ability to forge long-term partnerships with brands like Intel, Monster, and DHL, and we believe this is activating in a way that adds value to our community. I think so,” said ESL/FACEIT. Group Co-CEO Craig Levine. “So I think we've done a good job with these partnerships and generated renewal and community acceptance and ultimately support for it. I think that's valuable to consumers.”
Remaining recognition
If esports companies want to convince brands to treat this space as a default marketing channel rather than an experiment, they may need to correct the persistent perception that the industry is relatively lacking in diversity. While some brands still view esports as an edgier and less brand-safe space, that perception is a result of the antics of the wild-partying influencer leaders of esports organizations like FaZe Clan. Not helped by attitude either. Esports organizations are taking notice of brands' wariness about these issues and are taking steps to correct these perceptions in 2024.
“They're looking at the makeup of a lot of organizations and teams and thinking, 'We want to stand for something and be more visible,'” said Max Bass, director of emerging connections at agency Gail. says Mr. . “He's one of the reasons why so many organizations are investing in more women in their gaming efforts.”
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