Is esports an untapped market in Australia for advertisers?

Esports is a divisive topic among advertisers and gaming companies in Australia. Some in the industry, including those who run esports tournaments, believe that the market is yet to be fully tapped by marketers.

Experts at specialist gaming agencies point to brands making the mistake of approaching esports and gaming with a traditional media mindset, while media buyers express frustration that clients either throw investment in the ‘too hard’ basket, or expect to get returns without bothering to learn the intricacies of how to approach the area.

What’s not up for debate is the growth in engagement with esports and gaming. According to Roy Morgan data from December 2020, 5.5 million Aussies played video games in the past three months. Specifically looking at esports, The Newzoo Global Esports & Live Streaming Market Report (2021) places Australia’s current esports audience at 2.3 million.

Newzoo estimates that by 2023 there will be 646 million people globally watching esports at a growth rate of 10.7% year-on-year. And gaming companies are making bank on this growth as well, with PwC’s latest Australian Entertainment and Media Outlook finding that total interactive gaming and esports revenues rose by 7.2% in 2020 to $3.41 billion in Australia.

So is esports an untapped market or do the above figures hide bigger challenges in the space? We spoke with experts from specialist esports and gaming agencies Blood UTD and Livewire, esports provider Fortress, and media buyers from Initiative, UM and Mindshare, to uncover what’s stopping brands unlocking the long-predicted potential of esports and gaming.

Gatekeepers and ticking boxes

Jon Satterley is the CEO of Fortress Esports, which he co-founded in Melbourne in 2018. He strongly believes that esports and gaming is an underutilised area, and it’s a problem that extends beyond just individual brands. The issue is embedded in the media and through those in charge of the big marketing budgets in Australia, he suggests.

“There’s this mad obsession with whether my shit-kicking wedding or the latest reality show junk on Channel Ten got 90,000 viewers, or whether so-and-so from Good Morning Australia had a wedding on the weekend.

“I mean, a giant who gives a fuck. There are hundreds of thousands of people playing Minecraft or COD (Call Of Duty) or Rainbow Six.”

Satterley says it’ll take top-down change to see more money filter through

Being obsessed with mainstream channels leads to what Satterley calls the spending of “lazy money”. He says it’s simply not good enough for advertisers to not have a position on gaming and esports.

“For some people gaming is polarising and for a lot of gatekeepers who control the big budgets of big brands, the senior staff, just aren’t gamers. They don’t understand, it’s not their world and they’re not really that adventurous to go after it.

“You should urgently figure it out because it’s something so vast and enormous that if you’re ignoring it, you probably shouldn’t in 2021; what are you doing? Can you really think you can be a serious marketer? Or a serious brand custodian? That just doesn’t wash.”

Brad Manuel, who earlier this year launched new gametech marketing company Livewire with Indy Kabra, agrees with Satterley that brands are hamstringing themselves in gaming and esports because they aren’t using gaming-specific strategy for buying and sponsorship. It’s a problem that feeds into itself, because when results aren’t forthcoming, it’s difficult to justify putting aside a bigger spend budget for the space, he explains.

“I definitely think it is an untapped area for marketers. There’s a gap currently within esports teams about how to market the product to marketers.

“I think the challenge for a lot of brands, firstly, is that gaming might literally be 1% of their budget initially. So therefore they want to spend less than 1% of their time on it. And it’s quite a complex space to learn in a very short period of time.”

Satterley speaks about an issue that came up a lot during these chats, which is that brands and marketers often approach ad spend around esports and gaming as if it were any other media channel. A nuanced approach is required, he says. “When a brand does choose to have a foray into games, it might be ‘we spent 20 grand or 50 grand on a Twitch campaign and it didn’t work.

“Good on Twitch for getting the money. But that’s not a marketing campaign. Just giving Twitch a big cheque and saying, let’s run ads on Twitch. Twitch is just part of the marketing mix to tackle this segment of gamers.”

Manuel also uses the example of defaulting to silo platforms like Twitch as the solution to best target gaming audiences, which seems to be a common gripe among those with deeper understanding of how best to target audiences across gaming and esports. “If you just throw an ad that doesn’t belong somewhere with no context into a space, it’s really not going to land.

“I see that happening currently where brands do not have an integrated gaming strategy. They just take their TV ad and go ‘I’m going to pick 30 seconds up and put it over here. That’s just ticking the box and saying ‘yes I’m doing gaming’.

“To successfully work across the gaming space, brands need to work with specialists who can help them build an integrated gaming marketing strategy across the ecosystem and across their internal teams. Early entries for brands have included utilising platforms like YouTube and Twitch to supplement TV ads without changing creative messaging, engaging esports teams to replace sports teams and swapping traditional influencers for gaming influencers in isolation, without creating a cohesive strategy that lives across gaming.”

Narrow thinking

Satterley adds that a marketing plan needs to be tailored, and not just a TVC that you air during an esports tournament or throw on a streaming video.

“You need to have a sophisticated marketing plan, with your advertising and your messaging and your data and all of that. [Agencies] should be doing your segmentation and doing your positioning and doing your placements in your ad buys and your copy and your creative in a holistic way,” he says.

“I don’t really think that the opportunities should be defined as being one in [just] esports. So I think that the opportunity should be defined as being one in games, generally in games, culture, and esports sits as a subset or a part of that culture.”

Manuel says that another challenge is that marketers are thinking too narrow. Yes, there are opportunities around esports, but in the end it’s difficult to execute a media plan without considering everything the wider gaming ecosystem has to offer.

“There’s not a good enough awareness of everything present in the gaming ecosystem. So people are often making choices without knowing all the things to choose between. I think that’s a challenge in general, helping marketers understand the gaming space.”

There’s no use just throwing a TVC on Twitch or YouTube, Manuel says

For those wanting to hone in closer on esports, Manuel says sponsorship is one of the best strategies to grow brand equity among viewers and players. “In esports particularly, some of the bigger teams have spaces for sponsorship. They will drive high conversions, user acquisition, and engagement rates through highly passionate gamers who follow esports.

“I think we’ll see other things that will pop up including mobile esports sports teams, because mobile is huge.”

David Smith, executive creative director at specialist gaming and esports agency Blood UTD, agrees that there are opportunities within esports, but says spend should sit as part of a wider and detailed marketing strategy.

“Yes, esports follows a more traditional sort of sports model where you can, as a sponsor, come on board and sponsor the athletes. You can sponsor the team. You can sponsor a league. You can get involved in that sort of way, but gaming is the big wide-open play at the moment.

“There are a massive amount of eyeballs within that space. That’s the reason you’re sponsoring a team, you’re looking for audience and looking to create affiliation with that audience through a common shared interest.”

He agrees with Manuel that sponsorship is a great way for a brand to get involved, and sponsoring a team can be significantly more impactful than simply advertising on Twitch or YouTube.

“There are some brands inside the space, the E-League recently picked up Nivea Men’s as a sponsor. I think it’s got a way to grow,” Smith says.

There are other examples of companies that do esports well, Manuel says, and unsurprisingly that success comes from thinking outside the box of a common media channel strategy. “I know one team that works closely with JB-Hi Fi, supplying their players as talent for catalogues,” Manuel explains.

“So if I was going to sponsor an esports team, I would consider where those teams also have their other relationships and where that can bleed on to.”

Smith also says that marketers who imagine gamers as some sort of impossible-to-reach demographic are looking at things the wrong way.

“Gamers don’t live in another world. They walk down the same streets, they see the same posters. They may just not be interested in what you’re trying to sell.

“If you’re not reaching them it might be because your product isn’t right. They’re not some alien anomaly, they are everybody. So it’s hard to apply single truths to, because they are so wide and it’s not like they’re a niche of people.”

Buyers respond

Media buyers we spoke to agreed there’s little doubting the opportunity within esports and gaming, but not all bought into the idea that the market is “untapped”.

Initiative Australia chief strategy officer, Chris Colter, tells Mumbrella the opportunity is recognised by all marketers, but it’s simply easier to keep spending money across traditional channels, especially if you are already getting results. “I haven’t found a marketer who doesn’t acknowledge the size, scale and opportunity in esports, but finding one who is willing to jump in is another story,” he says

“Unlike other sports, the experience and exposure of esports in our industry is limited which sadly sees it put in the ‘too hard’ basket more often than not. Even if your brand has perfect alignment with esports, the fact remains it’s easier to sell a CEO on AFL than WoW (World Of Warcraft).”

UM’s Stephen Highe

UM Brisbane digital director, Stephen Highe, says esports’ “slow uptake from advertisers” means the market remains untapped at this point. “Esports is unsurprisingly growing in Australia and globally (and has been for many years) and is currently the fastest growing sports segment in the world.

“Although many brands have aligned themselves with esports, the uptake has been measured, hesitant and mirrors that of the adoption of many new platforms and categories. From my experience, I believe this is primarily down to both the lack of understanding of esports and how brands can take advantage.”

Mindshare Sydney strategy director, Elliott Eldridge, says asking whether esports is untapped is the wrong question if you’re wanting brands to think about whether esports and gaming are worth their ad spend. “I think the real question marketers should be asking is not “should I be seeing esports as an opportunity?” But instead, why would esports be an opportunity for my brand, specifically.

“The ‘why’ is important. Is there an audience you aren’t speaking to? Is there an untapped audience for your brand or products to address?

“A good example I’ve seen of this is Mercedes becoming a global partner of League of Legends, one of the largest esports. This was a smart move for Mercedes because it wasn’t just esports being an untapped market for Mercedes in the short term, they recognised that there was a large segment of esport fans who were likely to end up in lucrative software and tech roles, forming a key luxury consumer for them in the future.

Colter disagrees with assertions that a lack of industry measurement makes esports any less attractive for brands. Rather, the challenge for marketers is “bleed”.

“Measurement isn’t the problem. Being able to prove exposure and impact is as strong as any other sport, in many ways more so given its heavily digital consumption. The challenge is bleed.”

Initiative’s Chris Colter

“The impact you’d get from an AFL sponsorship, where your logos incidentally feature in newspapers, reports and even other ads, makes it an unfair comparison. As with anything, being realistic with expectations (and therefore associated investment) is the key to building trust and success.”

Eldridge says that it’s about expectations. Measurement is great, but sometimes we measure things just because we can, and in a lot of ways we focus on the wrong measure.

“If you are after reach, clicks and conversions, then maybe investing a big budget into this area wouldn’t be wise. But, I would say the same thing for NRL or AFL, even a TV sponsorship. Different channels work in different ways – so it comes back to the client’s objective, and the consumer insight.”

Expectations and opportunities

All three buyers we spoke to agree there’s a lot to be gained by getting involved with esports and gaming.

Eldridge says that while Australia is behind other markets, it’s all about brand equity. “Marketers who just view esports as potential eyeballs are missing a giant opportunity.

“With the sport’s popularity globally, Australia is a bit behind due to infrastructure and support, so I would suggest marketers consider not just thinking about hitting someone with an ad in esports, but growing long term brand equity by supporting the growth of something they love to engage with.

Mindshare’s Elliott Eldridge

Highe believes that opportunities will likely become more like standard sports. “I predict that as esports matures the advertising opportunities and even advertising investment will begin to mirror those of standard sports.

“If you think about a major established sporting tournament such as the Fifa World Cup you will know that the tournament itself has sponsors (many with exclusivity rights), the teams have sponsors and even the individual players have sponsors.

“The main point of difference in marketing with esports compared to regular sports is firstly the audience and the context of their viewing but also understanding the main screen for consumption is a digital one as opposed to a television screen.”

Livewire’s Manuel says the successful esports companies are ones that read the market well and understand it’s not as mature as Asia, so they have low barriers to entry for teams and players; and they also realise that there’s money in putting on the actual events rather than owning the leagues and charging people to be a part of it.

Satterley admits that it’s also a generational problem, and also that there currently isn’t enough data. “It would be a market failure if Brad [Manuel] and other smart people working on these things can’t draw the big brands and the wealth. I also think there’s an inevitability and a generational thing. In five-to-six years or sooner or daily. There’ll be audience numbers for gaming on trade websites.

“Games publishers aren’t out there promoting the data. There’s no standardised metrics around gameplay. There’s an absence of data. There’s not enough data points for the bean counters.”

While the gatekeepers are still in charge, change is already coming to them, in the form of hybrid opportunities where gaming comes together with traditional media channels. Just recently, DDB Sydney and Volkswagen produced an advertising campaign centred around a commercial that showed viewers a QR code, taking them to a mobile game, where they raced against others in real-time to win a Volkswagen Golf.

We’re almost certain to see more of this sort of thing, and as gaming and esports numbers continue to grow, these channels will become harder and harder for brands to ignore.

Zanda Wilson

Zanda Wilson was a reporter and podcast producer at Mumbrella, specialising in radio reporting. He left Mumbrella in September 2021.

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topics Brad ManuelChris ColterElliott EldridgeeSportsFortress EsportsgamingInitiativeInitiative AustraliaIPG MediabrandsLivewireMediabrandsMindshareStephen HigheUMUM Brisbane

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