Marketers Don't Get Gaming, And Enthusiast Wants To Help – AdExchanger

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Bill Drolet, Enthusiast Gaming CRO

The Sell Sider” is a column written by the sell side of the digital media community.

After this exclusive first look for subscribers, the story by AdExchanger’s Anthony Vargas will be published in full on AdExchanger.com tomorrow.

It’s been a tough time for publicly traded publishers. Tech stocks have also been put through the wringer, and video game companies are seeing a downturn from the highs they reached during pandemic-era lockdowns.

For Enthusiast Gaming, a publisher that specializes in ad-supported gaming content and game development, these trends have contributed to a perfect storm.

Enthusiast’s share price has tumbled to below $2 from its high of around $8.50 in April 2021. That prompted calls from its largest investor, Greywood Investments, to overhaul the company’s leadership. Greywood successfully added two of its preferred candidates to the company’s board of directors, and Enthusiast CEO Adrian Montgomery has agreed to step down from his role and join the board as chair once a replacement CEO is found.

But Enthusiast is looking at the bright side, as advertiser interest in game-related properties is on the rise. And its Q2 2022 earnings, which saw a YoY increase in total revenue from $29 million to $40 million, a YoY increase in subscription revenue from $1.6 million to $2.7 million and a 111% YoY increase in direct sales revenue to $7.2 million, suggest things are moving in a positive direction.

Enthusiast CRO Bill Drolet talked to AdExchanger about gaming’s cross-platform value proposition, plans for continued direct sales growth, early forays into in-game advertising and more.

AdExchanger: What’s the value proposition Enthusiast Gaming offers advertisers?

BILL DROLET: We’re a 360-degree solution for holding companies and their marketers. We started as a programmatic ad network primarily for display and video, and we acquired Omnia, the largest multi-channel network on YouTube. We create a ton of content on our YouTube channels and push that content across emerging channels, such as TikTok. We create bespoke content on behalf of marketers. And with Luminosity, we’re competing in 10 different esports leagues.

Our content centers around gaming communities like League of Legends, Rocket League, Overwatch, Fortnite. That creates scalable, engaged audiences, and we’re able to offer those up to marketers.

Why do you think the stock price has dipped so much?

The tech market is down quite a bit. We’re dealing with the macroeconomics of uncertainty. People are excited about the gaming sector because all signs show that it will continue to grow. The future is bright, but the pressure the economy is under right now is holding back the gaming and tech industries.

Big marketers are just getting started in gaming. It’s like 2002, when marketers realized the internet isn’t going away and it’s only getting bigger, but it still took a long time for them to shift their budgets.

Most of Enthusiast’s revenue comes from digital advertising, particularly programmatic. But building out direct ad sales capabilities was a major priority identified in your Q2 2022 earnings. Why are direct sales a priority?

Marketers are realizing the value of gaming culture, and they want to ingrain their brand into the gaming lifestyle. Direct deals are an opportunity to help a brand learn about gamers and how to authentically integrate their brand. You can’t do that in programmatic by placing banners and pre-rolls. And when marketers execute direct plans, they tend to come back, because they see results they’re not seeing from programmatic.

Major marketers aren’t RFPing for programmatic. Sometimes they’ll want to do a PMP with attribution. But they’re usually looking for a big idea, an engagement strategy. And they need reach and frequency to hit their KPIs. We can align the right creators with the right communities and come up with an execution that drives results.

How important is first-party data to your ad revenue diversification efforts? Have your first-party data plans been affected by the delay of Google Chrome’s third-party cookie deprecation deadline?

We collect first-party data, and we’ve got incredible scale to pull from, so that’s an important foundation for the future. We’ve worked with a host of different partners, but I can’t mention any names on the record at this point. We’re starting to get test budgets from marketers looking to figure out how to use first-party data in gaming. But we’re in a test-and-learn phase.

Even with the revenue growth Enthusiast reported in Q2, the company reported losses of $1.1 million. What do you attribute those losses to?

I can’t comment on losses, but I can tell you we’re in hyper-growth mode, and we have to invest in growth and continue to build our sales infrastructure.

There’s fear that marketers will pull back on their budgets because of recession concerns. Are you seeing a pullback?

We’ve seen some brands continue to spend, but not as much. RFPs have fluctuated, and some continue to get bigger. But it’s a cautious time.

In-game advertising is trendy right now, and Enthusiast is facilitating in-game ad placements in ev.io, a first-person shooter developed by Addicting Games, which Enthusiast acquired last year. What tech is being used to sell and serve those ads?

It’s our proprietary technology. We also launched an NFT marketplace for ev.io. We’re seeing strong engagement from advertisers.

This interview has been edited and condensed.

 

 

 


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