At a large organization like PepsiCo, change rarely comes quickly or easily. For more than a decade after its initial foray into esports (a partnership with Halo 3 back in 2007), the company relied almost exclusively on agencies and consultants to drive its nascent strategy. But while those outside partners worked directly with PepsiCo brand managers, the approach eventually proved untenable. “Over time as brand managers would rotate into other roles, we found that it would often create a disconnect in developing a larger and ongoing gaming strategy,” says Paul Mascali, head of esports and gaming at PepsiCo.
The turning point came in the fall of 2018, when Mascali joined PepsiCo’s media, sports and entertainment team from the gaming and virtual reality division of OMD USA, an Omnicom agency. It was the first role at the company dedicated to esports and gaming, timed just ahead of the launch of Mtn Dew Game Fuel energy drink, one of the first brands developed specifically for the gaming audience. “My role is similar to our people on the sports side who liaison with the National Football League or partner with musicians,” says Mascali. “I’m responsible for owning the direct relationships with [videogame] publishers, partners, teams, influencers and [esports] leagues, and making sure we’re showing up in authentic and meaningful ways.”
Mascali currently holds the only position dedicated to gaming across the company’s portfolio, but more roles on individual brand teams are beginning to focus on gaming specifically, he says. PepsiCo’s future plans include a new center of excellence devoted to gaming modelled after the one established in 2011 for media, sports and entertainment. Mascali says his hiring was “the first step in developing a long-term vision” for gaming within PepsiCo.
PepsiCo is not alone in trying to keep pace with the rapid growth of esports, whose popularity has spilled over into the broader culture and opened up new avenues for partnerships between the gaming industry and traditional sports, music and entertainment. The trend is evident in recent collaborations between artists and video game makers, such as rapper Travis Scott’s estimated eight-figure console deal with Sony, and content ventures like Rolling Stone’s new deal with Twitch to produce original music videos for its own channel on the live streaming platform.
“Esports, influencers and music are merging to the point where the lifestyle of the stars is almost more important than the athletic component of the sport,” says Jesse Kirshbaum, CEO of Nue, a creative music agency that partners entertainment brands with technology companies. The lines have blurred in part, he says, due to the ability of so-called gaming lifestyle organizations like 100 Thieves and Faze Clan to forge marketing partnerships with major brands. “Some of Faze Clan’s biggest stars don’t even play competitive video games. Their whole strategy is to market themselves as a record label,” he says. “Faze Clan gets most of its revenue from the entertainment side, and that’s where a lot of brands want to be.”
These cultural shifts may prove to be a boon for many brands, including those with no previous connection to esports. But they have also added a new layer of complexity to the gaming category that can be vexing for marketers accustomed to thinking about sports and entertainment in more conventional ways. So much so, in fact, that Kirshbaum has been advocating for adding a new role to the C-suite, a chief “entertainment” officer, whom he envisions as being a direct report of the chief marketing officer.
“There’s a need for a new seat at the table,” he says. “Because the entertainment marketing space is so nuanced—it moves fast and there are different pillars and rules of playing in culture—it requires having someone full time who is really plugged into that space.”
Below, four keys to winning in the fast-rising category.
Know the difference between gaming and esports
For many brands today, it is no longer a question of whether to be involved in gaming or esports, but how. Agencies that specialize in crafting gaming partnerships say that marketers often struggle when faced with critical decisions about which groups, teams or individuals to partner with, how to construct a deal and the best ways to measure success. Many of these challenges, according to the experts, stem from confusion over the differences between gaming (a broad term that encompasses many forms of entertainment) and esports (which is specific to organized professional competition).
“The most common question clients are asking is should I be in esports, but once you unpack that question it becomes one of, should I be in gaming?” says Sarah Stringer, executive VP and head of U.S. media partnerships at Dentsu Media. While brands are often initially drawn to the buzz that esports has generated, “the conversation usually naturally pivots from esports to gaming broadly once we start discussing where different audiences are connecting and the scale of platforms,” Stringer says. Global esports revenues, at around $1 billion in 2020, are dwarfed by the nearly $160 billion global gaming market, which is expected to surpass $250 billion by 2025, according to Mordor Intelligence, a market research firm that studies the gaming market.
Part of the challenge is perhaps having too many choices. Both gaming and esports comprise a wide spectrum of audiences and interests—from casual gamers and influencers with catchy names and millions of followers on YouTube and Twitch (PewDewPie, Markiplier, Ninja and TimTheTatman come to mind) for whom gaming is a passion to esports (led by professional leagues like Overwatch and League of Legends), where gaming is pure bloodsport.
Talent agencies that represent growing numbers of gamers believe that marketers may be operating under false premises about the audience. “There’s a big misconception that by working with a single esports team or influencer, you’re going to hit a broad audience in gaming,” says Nick Allen, senior VP of partnerships and operations at Loaded, a gaming talent management and consulting firm based in Los Angeles. “Fans of Counter-Strike are predominantly older and European, versus Fortnite or Rocket League or Minecraft, where audiences skew a lot younger. And even those break down differently depending on whether you’re watching on YouTube, versus Facebook or Twitch.”
Some brands that remain skeptical of gaming as a marketing vehicle may be clinging to outdated stereotypes about gamers and their fans, adds Chris Mann, senior VP of REV/XP, the gaming and esports division of Revolution, whose clients include Chipotle. “There is absolutely a misconception about who [plays or] watches esports and gaming,” he says. “These are not your average kids who spend all day and night playing videogames in the basement. There is a ton of recent data to show that gamers are achievers, trendsetters and tech-savvy influencers on both a micro and macro level.”
To Mann’s point, data provided by YouGov included the following statistic: Among U.S. 18 to 34-year-olds, 78.5% of esports fans agree with the statement, “I usually know all the new and emerging music artists,” and they are 32% more likely to agree than all individuals in that age group. In addition, esports fans may be even more receptive to sponsor activity than traditional sports fans. For example, individuals who identify esports as a top interest are far more likely to buy products from their favorite teams’ sponsors (by as much as 26 points) than fans of both esports and traditional sports, according to YouGov.
If marketers haven’t quite perfected their gaming strategies, part of the reason may be that companies that have been steeped in traditional sports marketing for decades aren’t necessarily built for success in gaming or esports. “Most big CPG firms have had the same plumbing and wiring for the past 80 years,” says Matt Wolf, a Los-Angeles based consultant who was head of global gaming at Coca-Cola for three years before leaving the company in 2017. “The people at the top might be paying lip service to what they’re doing in esports, but have they ramped up internally to execute properly? In many cases, the answer is no.”
But at PepsiCo and elsewhere, the tide may be turning. At Anheuser-Busch, Bud Light hired a new brand manager with a gaming focus in October of 2020 and continues to add gaming expertise to its social monitoring teams, according to Joe Barnes, director of sports marketing at Bud Light. “Bud Light takes understanding the gaming community and our consumers very seriously. We spend tons of time with our partners to understand their fan bases,” says Barnes. Bud Light recently signed with four new League of Legends teams, bolstering its partnerships with 2K, a U.S. publisher, and Tekken, a Japanese media company and video game franchise.
Marketers like Bud Light that have enhanced their gaming knowledge are getting better at activation in gaming and esports, says Richard “Shibby” Webb, digital media agent at WME (the former William Morris Hollywood talent agency, now part of Endeavor Group), which has also added to its roster of gaming talent. “The most successful brands are the ones that have been at it a while and hired people who have a background in gaming or a strong passion for gaming,” says Webb. “Brands that have done this are able to come to us with a much more nuanced understanding so we can get to the strategic part of the discussion quickly, versus spending a lot of time on education.”
Yet marketers that have been involved with esports for at least a few years point out that there’s more than one way to increase aptitude. While strengthening expertise among in-house staff is important, they argue, it is also critical to select agency partners that are immersed in gaming culture. “We’ve been working with specialized agencies that have brought in people from the gaming community. We learn a lot from them and lean on them to fine-tune our strategy,” says Pia Schoerner, head of BMW esports. BMW, a global esports sponsor since 2017, has been working with Jung von Matt in Hamburg for the past two years on esports strategy and creative development.
Marketing executives can also do more to help advance their own cause. “It is important to get out into the community and soak up as much information as you can—or as much as possible during the pandemic,” says Scott Robinson, senior manager of brand marketing at Chipotle, whose gaming activation includes a recurring sponsorship of the Chipotle Challenger series, a pro-am style tournament. As it continues to grow its investments in gaming, Robinson says that Chipotle is weighing the addition of an internal position with a gaming focus to support the brand’s marketing efforts in music, as well as its cultural ties to sports including youth soccer and USA Hockey.