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As an "agency-side" creative strategist, I’m often asked for my perspective on a popular topic in the marketing world – the challenges associated with the user acquisition and customer lifetime value of Millennials. It’s no secret that the era of the baby boomer is waning and Millennials are quickly emerging as the dominant market segment for a majority of brands and businesses. A recent report shows that as of this year an estimated 75.3 million Millennials are spending upwards of $200 billion dollars annually, finally surpassing boomers. So why are brands struggling to reach this new generation of consumers?

Through both my professional endeavours and personal experiences (as a Millennial myself), I've identified a pattern. Many of these brands don’t actually understand Millennials, or any generation born of the digital-era for that matter. Regardless of their exhaustive market research and constant pursuit of “innovation” or “disruptive campaigns,” a portion of these brands are still led by a strategy hailing from an older, non-digital generation. As a result, they remain susceptible to the pitfalls of traditional media, communication strategies and tactics that may have driven past success. The hard truth is that brands don’t natively speak the language. They aren’t quick to adapt to the latest platforms, and are hesitant to take risks in emerging areas without seeing definitive return on their investment. In 2014, the Wall Street Journal published an article declaring that fast food giant, McDonalds, had lost its “midas touch” on millennials, reporting a 13% loss in revenue while brands like Shake Shack have skyrocketed, nearly doubling their IPO at $675 million.

Being “Human” is no longer enough

When it comes to Millennials, what these brands are lacking most is authenticity. They’re failing to create experiences that actually resonate. Research has shown that only 6% of Millennials find traditional advertising credible. 6%. That’s an astounding number compared to the spend of some advertising campaigns. Over the past few years, we’ve seen a similar situation as brands fought to defuse the perception of being too “corporate” or impersonal with their customers, ultimately driving a movement toward embracing humanity. Today, tech companies are selling lifestyles and aspirations. Agencies are selling people and thought process instead of their work. Brands who’ve gotten on board have seen tremendous growth as a result. In their appropriately named campaign, “Air on the Side of Humanity,” JetBlue completely paralleled the customer experience of flying to the life of a pigeon, which according to their 2014 Annual Report, was a contributing factor in allowing them to boast a continual 38% growth in net income with revenues reaching $5.8 billion. In another instance, Red Bull’s sales rose 7% in the six months following their globally renowned free-fall stunt. Like with all emerging trends though, one of two outcomes is almost always certain. The white space that brands create from them quickly becomes white noise, opening the flood gates for "me-too" brands to follow, or brands will use trends to blaze the trail and commoditize themselves – setting a new standard for others to innovate on.

As Millennials become increasingly resilient to the novelty of human-centric voice it's inevitable that authenticity will take stage as the next major trend. With an expectation level that’s constantly rising, these consumers are creating a barrier for brands that’s forcing them to think beyond a new voice. It’s urging them to create a strategy that’s focused on maintaining relevance with this audience in actual execution. Being authentic means creating content that’s connecting with these consumers at a constantly evolving set of touchpoints. It’s finding a way to be part of the conversation when it actually matters. It’s building a content strategy that can give the Millennials the content they want, when they actually want it. Recent studies published on Statista and PSFK revealed that unlike past generations, Millennials are consuming content in small burst sessions that can add up to a whopping 18 hours of media consumption per day. The majority of their consumption time is being spent on varying internet sources that include a significant amount video and user generated content from social media. So how can brands leverage these insights and create business growth through authenticity?

Build Authenticity through eSports

One answer has been flying under the marketing radar for years – gaming. Gaming as entertainment has reached revenues north of $100 billion dollars, with over 1.7 billion people now a part of the broader gaming community. The days of stereotyping gamers as “teenage boys in mom’s basement” are officially over. Adult men and women (over the age of 18) have surpassed teenage boys as the dominant gaming demographic, making up a combined 71% of all gamers. Although gaming as a whole has the potential to yield significant results in terms of targeting and market segmentation, brands should be directing their attention to a very specific subset of the gaming universe; eSports.

Competitive gaming, officially dubbed “eSports,” has essentially created its own ecosystem of players, fans, and businesses born of truly digital-native Millennials that are now coming of age – ones who’ve carried their childhood passions as gamers into their professional adult lives. Even in its infancy, eSports is aggressively growing and is predicted to reach market potential and viewership numbers that rival traditional sports and entertainment over the next few years. A popular report from gaming research firm, Newzoo, revealed that viewership of eSports is nearly equal to that of Ice Hockey, and by 2017, is predicted to be comparable to American Football. This is creating an enormous opportunity for brands to stake their claim early and gain natural affinity with a passionate Millennial audience at a extremely low CPA (cost per acquisition), especially when compared to traditional sports.

Not only is the eSports industry here to stay, but it’s rapidly moving into the mainstream spotlight. Competitive gaming was once considered “niche,” backed by sponsorships from equipment-focused brands predominantly at the local level. A recent shift in market forces, however, are proof of its transformation. Venture capitalists and Silicon Valley startups are both investing large sums of money and resources toward it. Start-ups like Discord, Battlefy, and Faceit are surfacing to help facilitate better communication and event organization for games. VCs and brands alike are partnering with teams (and in some cases, acquiring them) allowing them to operate as full fledged businesses with a global presence. Big brands that were once known for their activity in the gaming space like HP and Logitech are returning to the scene with entirely new positioning and go-to-market strategies focused on the eSports enthusiast.

Other major household brands like Red Bull and Coca-Cola have successfully entered the space, hiring full eSports-centric marketing teams dedicated to understanding or empowering these consumers through highly relevant micro-content and event sponsorships. In a recent example, Coca-Cola sponsored top eSports title, League of Legends' Challenger Series and Mid-Season Invitational, giving amateur players a chance to make it to the professional scene. Although exact numbers have yet to be disclosed regarding its actual ROI, a survey was done revealing that after one year of involvement, Coke is now considered the #1 household brand associated with the game - showcasing an impressive 97% neutral or positive consumer affinity rating.

Livestreaming has also heavily contributed to the recent growth of eSports. With Amazon’s $970 million dollar acquisition of Twitch and the development of YouTube Gaming, it’s evident that powerhouse brands like Amazon and Google are responding to consumption habits of digitally-native generations with relevant media channel strategies focused specifically on gaming and eSports. Twitch currently accounts for 43% of all livestreaming with over 100 million users consuming an average of 3.7 million hours of content per month. By and large, Twitch has turned competitive gaming into a very real spectator sport and entertainment medium across all screens. Another report from Newzoo revealed that 40% of regular channel viewers don’t actually play the game they watch. This staggering fact alone alludes to the growth potential with eSports. Even looking past the numbers, platforms like Twitch have a strength unique to eSports; the ability to establish a constant dialogue between professional players and their fans. For brands, this is incredible opportunity to activate a highly contagious network of advocates and influencers on a global scale at such a low cost.

Even looking past the numbers, platforms like Twitch have a strength unique to eSports; the ability to establish a constant dialogue between professional players and their fans. For brands, this is incredible opportunity to activate a highly contagious network of advocates and influencers on a global scale at such a low cost.

Relevance equals Returns

If this is truly the case, why haven’t more brands capitalized on this explosive growth opportunity? Although a genuine, fine-tuned messaging strategy (with proper user of gaming dialect) is a great start, the fact is that Millennials today are both tech-savvy and have an extremely low tolerance for typical ad placements and tactics. Statistics show that over 50% of consumers will do anything to avoid ads and over 198 million consumers are using some form of ad blocking to remove ads that disrupt their experience. Sponsorship opportunities through platforms like Twitch let brands bypass being adblocked altogether. Broadcasts allow brands to embed ads directly into the stream itself, significantly increasing their chance to garner qualified impressions – and more often than not, viewership will be promoted by the sponsored influencer, since it impacts their revenue as well.

The other notable reason is relevance. Building brand affinity and growing a customer base with Millennials through a primary psycho-demographic or market segment like eSports (or any segment for that matter) directly correlates with how closely a brand aligns itself to their lifestyle. The purchase intent of Millennials is largely driven by personal and professional goals, agendas, or causes. An article recently published on Forbes shows that 33% of Millennials rely primarily on blogs or other influencer networks to inform their purchases. With eSports, brands that don’t have natural relevance can create it through sponsorships opportunities and community engagement. Where apparel brands may find co-branded opportunities with professional teams a perfect fit, other CPG brands in less intuitive categories can look to sponsorships and event activations to secure their place in this ecosystem. Although finding relevance will surely drive user acquisition, maintaining that relevance is equally critical. This is where brands can really maximize their returns and build customer lifetime value with consistent engagement. As part of Coke’s their marketing strategy in eSports, Coke has invested in a content strategy that helps them stay on-top of the IP (Intellectual Property) itself, going as far as creating snackable content that highlights frequent updates to the game or newly added champions – giving consumers real-time, regular content that’s highly relevant to community.

Even with a number of qualitative and quantitative data to support it, I want to make sure to underscore the very simple reason why authentic brand engagement in eSports works. When brands are willing to invest in eSports through consistent authentic experiences, they’re not only extending their reach to a new audience, they’re becoming a part of the community. Unlike other market segments, Brands who gain affinity with eSports enthusiasts can unlock and leverage its true marketing potential strength – passion. At its core, it’s the love for the games and the dedication to the community that continues to organically feed the ecosystem and drive eSports forward regardless of being a player, fan, or business associated with it. Being part of the community gives brands the ability to leverage advocates and influencers in a way that can quickly snowball reach on both the global and hyper-local levels.

The Future of Brand Engagement in eSports

As the eSports industry continues to mature, even more opportunities for brands to authentically reach millennials and find revenue growth will surface. Even now, publishers are beginning to partner with brands to meet business objectives with completely revamped business models. Gameplay is evolving with an eSports economy in mind, creating in-game advertising opportunities for brands to gain affinity with players through rewards during “breakthrough” moments and experiences. In-game cosmetic purchases are also extending the potential reach for brands in a way that’s helping to foster the growth of the community. Beyond the games themselves, the lines between eSports and traditional sports are continuing to blur every day. Multi-million dollar businesses like DraftKings and FanDuel, running fantasy leagues widely popular in traditional sports, are expanding into eSports and rapidly gaining popularity. Professional teams are also taking steps toward establishing structure by creating player unions and regulated tournament structures with whispers of the Olympics, exclusivity and licensing rights waiting in the periphery. At this point it’s not a question of if, but when brands and traditional mass media realize that eSports is fertile ground for authentically reaching Millennials and future generations to come.

TL;DR – It’s time for brands to get in the game and start investing in eSports, an emerging, billion-dollar market with the Millennial consumer at its core. With an extremely low CPA, the opportunities for increasing your UA and building higher CLV are massive. See how Digital Surgeons can take your brand to the next level.