COVID Has Not Accelerated The Shift In Sponsorship Dollars From Pro Sports To Esports As Expected
The Coronavirus outbreak and subsequent sports hiatus has resulted in countless sponsorship activations being postponed or canceled. It would have been reasonable to assume back in mid-March that brands impacted by the loss of traditional sports marketing and advertising opportunities would look to esports to fill the void. In fact, Norm O’Reilly (Professor of Sport Management, University of Guelph & Partner/Consultant at The T1 Agency) said, “the sponsorship community, which has long believed brand involvement within the esports business is ready to explode, expected COVID (and a pause in the sports calendar) to accelerate the shift in dollars from traditional sports. But that has not been the case.” A recent study from SponsorshipX indicated that 68.3% of the 500 predominantly U.S. and Canadian industry professionals polled have not been actively investing in (or activating) gaming competitions; nor do they have plans to do so in the future.
Our Take: The big overarching theme one should take from the B2B sponsorship survey is that “esports do not have the ability to replace the value sponsors gain from other live sports properties.” O'Reilly suggested that's likely the case because they're not reaching the same audience. “It’s not as if people started tuning in to Fortnite games when the NBA or MLB seasons were suspended.”
While the lack of product fit and/or the inability to operate in a digital environment has prevented most traditional sports sponsors from making a move into esports, those who had already been investing in the “under 35, mostly male, gaming community” (12.7% of those who responded) have benefitted from the country being locked down (see: gaming usage is up +75% since the pandemic began) and now are doubling down on their activation efforts. One survey participant stated that his/her agency was currently investing more heavily than ever in the sector as “lots of esports clients want to use the increased focus to showcase their brand.” O’Reilly says that’s a particularly promising sign for esports rights owners considering where the greater economy is. “Just take a look at other sports, music and entertainment properties, their sponsorship businesses are being decimated.”
It’s important to point out that while 12.7% might seem like a small percentage of the population, “most industries would be ecstatic if 12% of sponsorship decision makers were investing like crazy in their product(s)." O'Reilly said NASCAR - a sponsorship driven sport - "would dream of having that much brand interest.”
It should be noted that in addition to those already actively investing in esports, another 19.6% of survey respondents indicated they would be willing to consider a sponsorship opportunity within the gaming ecosystem (up from 18% in April). O’Reilly said people understanding “the reality of how long it’s bound to take for sports to truly bounce back” (see: with fans) explains the gradual increase. “Brands are starting to forecast revenues and are realizing they won’t have traditional sporting events [to activate] in the fall. That's been the impetus for brands to start evaluating other options.” It reasons to believe the percentage of those sniffing around the esports sector will continue to rise until a COVID vaccine is found and stadiums can once again be packed to capacity.
Esports sponsorship very much remains a niche play (think: energy drinks, technology products), but there is room for non-endemic brands to find success. As John Pierce (partner, Player 2 Studios) said, “programs that genuinely make life better for a specific gaming/esports community can utilize traditional sponsorship and/or advertising partnerships to tell that story.” But as mentioned, it's not a simple ‘plug and play’ migration from traditional sports. Brands need to “identify the appropriate game, audience and fit" for the partnership to satisfy their KPI and ROI goals. That takes time and diligence and likely explains why a significant number of respondents said they’re intrigued by the prospect of using esports as a marketing vehicle, but have not yet made the decision to press forward.
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