Marketers don’t get games and an enthusiast wants to help

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It was a difficult time for publicly traded publishers. Tech stocks have also taken a beating, and video game companies are seeing a slowdown from the highs they hit during pandemic-era shutdowns.

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

Enthusiast’s share price has fallen below $2 from its peak of around $8.50 in April 2021. This prompted its largest investor, Greywood Investments, to call reorganize the management of the company. Greywood successfully added two of his favorite contestants to the company’s board, and enthusiastic CEO Adrian Montgomery has agreed to step down from his role and join the board as chairman once a replacement CEO is found.

But Enthusiast sees the bright side, as advertiser interest in gaming-related properties is on the rise. And its second-quarter 2022 revenue, which saw a year-over-year increase in total revenue of $29 million to $40 million, a year-over-year increase in subscription revenue of $1.6 million to 2, $7 million and a 111% year-over-year increase in direct sales revenue to $7.2 million, suggest things are moving in a positive direction.

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

AdExchanger: What is the value proposition that Enthusiast Gaming offers advertisers?

BILL DROLET: We’re a 360-degree solution for portfolio companies and their marketers. We started out 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 to emerging channels, such as TikTok. We create custom content on behalf of marketers. And with Luminosity, we compete in 10 different esports leagues.

Our content is centered around gaming communities like League of Legends, Rocket League, Overwatch, Fortnite. This creates scalable and engaged audiences, and we’re able to deliver those to marketers.

Why do you think the stock price fell so much?

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

Great marketers are just getting started in games. It’s like 2002 when marketers realized the internet wasn’t going away and it was just getting bigger, but it still took them a long time to change their budgets.

Most of Enthusiast’s revenue comes from digital advertising, especially programmatic. But building direct ad selling capabilities was a top priority identified in your Q2 2022 revenue. Why is direct selling a priority?

Marketers realize the value of gaming culture and want to embed their brand into the gaming lifestyle. Direct deals are an opportunity to help a brand learn more about gamers and how to integrate authentically their brand. You cannot do this programmatically by placing banners and pre-rolls. And when marketers execute direct plans, they tend to come back because they see results they don’t see from programmatic.

Major marketers are not bidding for programmatic. Sometimes they will 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 deliver 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 Google Chrome’s delayed third-party cookie obsolescence deadline?

We’re collecting first-party data and we have incredible scale to pull from, so that’s an important foundation for the future. We have worked with a multitude of different partners, but I cannot name any names on file at this stage. We’re starting to get test budgets from marketers looking to figure out how to use first-party data in games. But we are in a testing and learning phase.

Even with the revenue growth reported by Enthusiast in the second quarter, the company posted losses of $1.1 million. What do you attribute these losses to?

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

There are fears that marketers are cutting budgets due to recession fears. Are you seeing a setback?

We’ve seen some brands continue to spend, but not as much. RFPs have fluctuated and some continue to grow. But this is a time of caution.

In-game advertising is all the rage right now, and Enthusiast is making in-game ad placements easy in ev.io, a first-person shooter developed by Addicting Games, which Enthusiast acquired last year. What technology is used to sell and serve these ads?

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

This interview has been edited and condensed.

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