No. 126: 🤔 Why do brands ignore gaming?
+ Interoperable clouds, TikTok leaks, Dogs see with their noses
Hola!
I’m sending this one out earlier because the Substack scheduler never sends the emails on time. As of tomorrow, I shall be in Spain for a few days. Yes, again. Fourth trip in about six weeks, since you ask.
But that’s not why we’re here. We’re here to ask a question, then try - perhaps in vain - to answer it.
That question: Why do brands ignore gaming?
We’ll start with basic syllogistic reasoning:
Brands want to be where their audience spends time
Their audience spends time gaming
THEREFORE:
Brands should spend money on gaming platforms
Right?
Well, sort of.
A new WARC report finds that 38% of brands believe gaming is one of the most significant consumer behaviors for the marketing industry.
That puts it in the top three overall, behind mobile and video. (And a lot of gaming happens on mobile, watched in a similar fashion to video streaming.)
If we’re following this logical flow, we’d assume that brands are falling over themselves to spend money on gaming platforms. After all, they’ve had no issue splurging on metaverse platforms that no-one actually uses. (Check out this thread on the insane money a16z has wasted on Axie Infinity already.)
But no: the WARC report finds brands are spending, on average, 3% of ad budget on gaming platforms.
That means some brands are experimenting with gaming, yet most are steering clear.
And this is just one report, of course, but its findings do chime with what I typically see in the industry. Everyone has gone beyond the clichés about gaming as a nerdy pursuit for dateless wonders, without their ad budgets following the new logic.
So we must ask: at which point does the chain break?
Our first assumption (Brands want to be where their audience spends time) holds up to some scrutiny. It’s not true all the time, or for every company, but it has broadly been the case since Moses was in shorts.
If people are glued to screens, paying attention to something, brands will pay to interrupt and get their message across for as long as they can sustain said attention.
So let’s look at how that intersects with our second assumption: People spend a lot of time gaming.
At a macro level, this is true and has been since Mario pulled on his first pair of dungarees.
See here:
“Over 3.2 billion people played video games in 2021. Asia recorded the largest number of video game players (1.48 billion) and was followed by Europe (715.8 million), Latin America (419.6 million), and North America (284.9 million)”
Statista
There are plenty of casual, mobile-only gamers, but there are still gargantuan volumes of people playing games consoles.
And people spend a lot of time watching other people game, too.
As I type, there are over 2.5 million people watching streams on Twitch (per Twitch Tracker).
Typically, gamers are relatively young - over two thirds of Twitch users are aged under 35; only 3% of viewers are aged 55 or above. The gender split on Twitch is 65% male, 35% female. The company likes to tout the fact that the female proportion is increasing each year, although there are still far too many, depressing stories about misogyny on there.
I’ll refer to Twitch quite often, as it is the dominant streaming platform in Western markets. That’s not to say it is the only one, nor is it to say that Western markets are the most important. As we’ll see, the newest trends are coming to us from Asia.
However, Twitch still has a strong presence worldwide and it is owned by Amazon (they bought it in 2014 for $970mn cash), which means it also plays host to broader trends in ecommerce and mobile.
YouTube and Facebook are keen to get into gaming, but they still trail Twitch:
People are spending money on these platforms, too. Twitch generated $2.6 billion of revenue in 2021, up 40% on 2020. It takes a cut of all subscription fees and tips paid to streamers, and it has a self-serve platform for advertisers.
I have written at length about Twitch Ads here (and there are examples of effective campaigns in that post too), but suffice it to say the main options are to work with influencers, run display ads, set up a branded channel, or run pre-/mid-roll ads.
SensorTower took a look at the top-grossing mobile streaming apps worldwide. This only looks at the mobile app versions of each streaming platform:
Bigo Live (number 1 on the list above) is a Singapore-based livestreaming app that is very popular in Indonesia. It has a fantastic mascot and it looks like this:
This format merges rather neatly with the boom in livestream shopping.
Livestream shopping does exactly what you think it does: influencers use their channel to host a stream, during which they sell products on behalf of their clients.
It’s QVC for Gen Z.
The livestream shopping industry is projected to bring in $480 billion in China this year, according to eMarketer, but only $11 billion in the US. Expect that trend to flow westwards very soon, with games streaming platforms playing their part.
From my limited experience and the anecdotal evidence I have heard and read, it would be fair to surmise that gaming streamers can create a closer relationship with their audiences than some other social media influencers.
As always, that creates an opportunity for thoughtful brands that understand how fragile that fertile bond can be.
You probably knew all of the above.
And it’s certainly the case that advertising on gaming platforms is not for every company. There’s little sense advertising Werther’s Originals on Twitch.
Yeah, maybe leave him off the creative for the 16-24s campaign.
I have laid out the above primarily as a backdrop to our main question:
If so many people are playing and watching games (we’ve covered that - they are), why are brands largely ignoring gaming platforms?
I believe there are a few causes, some more reasonable than others:
Community: Do marketers know enough about the gaming community to connect with them through advertising? The same challenge arises with Reddit advertising: brands want maximum return for minimal effort. That might work on some channels, but it won’t fool anyone on Twitch.
Context: Do Twitch viewers really want to hear from brands when they are watching live streams? Well we know they don’t, but will they tolerate brands in the way they do/did on TV?
Some of the new ad formats (like in-play display ads) are less intrusive, however the question remains. Advertisers struggle to smuggle their message into a gaming context.
Head & Shoulders actually did a decent job of this by offering in-game prizes in Animal Crossing to competition winners. It made the exchange clear, put it in terms that mattered to gamers, and attracted a lot of attention.
Complexity: There were 8.5 million channels on Twitch alone in 2021. Advertising here is not as simple as buying a batch of TV slots on a cable network.
And the platform itself is complex for the novice viewer. It is highly interactive and viewer attention is fragmented.
Here’s what you can expect on-screen:
Measurement: This is where I do think Amazon can crack livestream shopping, but as it stands the measurement on Twitch Ads is sub-par. Advertisers need to be able to track the audience from ad engagement through to purchase (or non-purchase). If Amazon could keep that full experience within their own walled garden, they could offer this measurement. Right now, Twitch all-too-often feels like a platform where advertisers can buy impressions, without knowing if they made any impression at all.
There are some metrics to look out for, though:
Peak concurrent viewers (PCV): the highest number of simultaneous viewers a stream had over a single stream
Average concurrent viewership (ACV): ACV—accessed through a Twitch creator’s internal dashboard—is the average number of viewers watching throughout a whole stream.
Audience loyalty: This helps show whether the audience watches a wide variety of games played by one streamer. A high score suggests they will be more amenable to new messaging; say, from a company.
Cost: The above all creates cost, in time and real money. To get Twitch (or any other, similar platform) advertising right, brands would need to conduct a lot of research, create a new content experience, partner with influencers, and engage with the community live during the campaign.
That would be fine - it’s what brands already do on other channels - if there were some sense of the financial returns from such great expense.
Amazon is struggling to make Twitch work for both advertisers and streamers.
The Metro reports that Twitch has frustrated some of its headline streamers by “removing the 70/30 split in revenue from subscriptions to their channel, forcing them to begin running more adverts to make up the difference.” In turn, the streamers say the increased volume of ads is leading viewers to switch off.
How can this be fixed?
Well now that we know what we know, let’s return to our introductory syllogism:
Brands want to be where their audience spends time
Their audience spends time gaming
THEREFORE:
Brands should advertise on gaming platforms
We have seen that the bottleneck develops at the end. Perhaps brands should invest more time in gaming - I would suggest that this is the case for a variety of industries.
I also believe that more brands would do so, were it more accessible and measurable.
Many brands are willing to trial Twitch advertising but when it doesn’t deliver the instant results other platforms can provide, they go back to the sugar rush of search and social media marketing.
As a result, we can say that there are two parties who need to take action. The streaming platforms need to collaborate with brands to come up with creative formats that engage audiences without ruining the gaming experience.
The onus is on the likes of Twitch (or third parties) to develop measurement solutions that demonstrate a positive ROI, using new metrics befitting of the medium. Google and Facebook certainly understood this early on, but Amazon has shown little innovation here so far. Better tools for matching influencers to brand campaigns would be very helpful, too.
With Microsoft buying Activision Blizzard, and then partnering with Netflix to deliver in-stream ads, there is increasing competition in online entertainment advertising. Perhaps this will help spur some action from the other tech giants.
As livestream shopping grows in popularity, there will be plenty of opportunities for marketers to monetize live gaming through collaborations and creative campaign ideas.
Instead of planting flags in the imaginary metaverse, brands should instead focus their attention on where their audience already spends a lot of time.
Further reading:
I created a short presentation about e-sports waaaaay back in 2019, but it still has a lot of relevant data in it.
The hi, tech. Esports special.
Tech Bites
Oracle and Microsoft Agree to Deepen Interoperability of Cloud Platforms - WSJ
Toronto wants to kill the smart city - MIT
Dogs ‘see’ with their noses - NBC
Shopify Lays Off 10% of Staff, Says Pandemic Bet 'Didn’t Pay Off' - Gizmodo
Inside TikTok's Attempts to ‘Downplay the China Association’ - Gizmodo
Google’s new smart glasses won’t make you look like a creepy cyborg - QZ
They’ll still make you look like a nerd, though.