Creator Marketing within the Gaming & E-Sports Market

by Sebastian Koller, Director and Practice Lead Transaction Services
Munich, July 2023

Content creator marketing plays a crucial role in targeting specific groups of e-gamers and achieving desired reach. Understanding the mechanics, business models, and key success factors is essential for investors to navigate the dynamic landscape of content creator marketing in the growing Gaming and E-Sports industry.

During the COVID-19 pandemic, while many individuals were confined to their homes, the gaming and e-sports market witnessed remarkable growth. Germany, for instance, experienced a 12% annual growth from 2017 to 2022, with sales reaching €7.5 billion in 2022.

At the same time, companies augmented their digital advertising expenditures, with a particular emphasis on social media and content creator marketing.
Total spending on digital advertising in Germany surged from €10 billion in 2017 to €17 billion in 2022, of which content creator marketing is estimated at €120 million.

This whitepaper explores the mechanics of content creator marketing, different types of collaborations, market structure, business and monetization models, key success factors, and potential opportunities for private equity investors.

Content Creator Marketing in the Gaming & E-Sports Market

To effectively target specific groups of e-gamers and achieve desired reach, brands collaborate with content creators (streamers) who have substantial follower bases on platforms like Twitch and YouTube. Content creators are categorized based on follower counts, distinguishing between nano (1-5k), micro (5-20k), macro (20-250k), and mega creators (250k+). Depending on the campaign goals, brand characteristics, and financial resources, streamers integrate the brand’s products in various ways into their channels and postings (streams) for a designated period.

Four main types of collaborations exist:

Product placement – products are presented in tweets, posts or videos of the creator, but are not necessarily the focus (e.g. an energy drink the creator is drinking during the game)
Product tests – products or services are selectively presented to the audience and (positively) evaluated (e.g. the creator is testing a new game or pair of headphones)
Content creator promotion – content creators with reputation, influence and wide reach are used as spokesperson to increase the credibility of the brand message based on the trust of the respective target group in the content creator (e.g. creator uses branded equipment and speaks out as “part of the brand”)
Content creation – content creators not only promote but also bring their personal touch and own ideas into the concepts (e.g. special edition of the brands product which was designed by the creator)

The advantage of content creator marketing lies in leveraging the intangible credibility that creators possess within their communities, resulting in users perceiving recommendations as honest endorsements rather than conventional advertising.

Market Structure and Business Models

In the gaming market’s creator marketing realm, three main business models facilitate interactions between brands and creators:

a) Talent Management Agencies (TMA):

Most creators are exclusively contracted with TMAs. Brands or other agencies wishing to collaborate with specific creators must engage with TMAs for all communication and business arrangements. TMAs represent creators‘ interests, securing lucrative engagements and commissions. They may also provide advisory and support services on personal matters. TMAs receive a commission fee for client referrals and project-based commissions, typically amounting to 20% for exclusively signed creators.

b) Digital Marketing Agencies (DMA):

DMAs offer comprehensive advertising services, consulting and supporting brands in planning, designing, and executing marketing measures. Specialized agencies exist, focusing on specific channels, disciplines, or industries, as well as versatile agencies capable of handling various requirements. DMAs charge an agency fee as a fixed percentage of the total project value, generally around 10%.

c) Creator Marketing and Management Agencies (CMMA):

CMMAs operate as hybrids between TMAs and DMAs, exclusively representing a roster of creators while offering brands the complete service portfolio of a marketing agency. However, if a desired creator is not under contract with the CMMA, engagement through the respective TMAs becomes necessary. CMMAs receive referral fees and project-based commissions as TMAs, as well as an agency fee for their services as DMAs

Key success factors

To remain competitive within the highly fragmented creator marketing market in the gaming sector, five key success factors are crucial:

Content Creator Support – ability to manage, develop, and mentor content creators by empathizing with their concerns.
Content Creator Network – capability to identify and retain promising content creators and maintain a strong network.
Quality of the Content Creator – the agency’s pool of content creators in terms of quality and fit, measured by follower engagement.
Conclusion of Exclusive Contracts – the advantages of securing exclusive contracts include gaining prominence as an agency and exclusively marketing top content creators.
Platform Flexibility – adapting quickly and effectively to new circumstances, such as emerging platforms and trends.

A company’s performance across these criteria forms its track record and reputation, which are paramount for attracting and retaining both customers and content creators in the long run.

Opportunities for Private Equity Investors

The creator marketing market within the gaming sector presents potential opportunities for private equity (PE) investors. The rapid growth and substantial investments in the gaming and e-sports market, combined with the expanding role of content creator marketing within digital advertising, create avenues for PE investors to participate. As this market continues to evolve beyond the pandemic, companies must understand the mechanics, business models, and key success factors to effectively navigate this dynamic landscape.

By identifying and supporting promising creators, investing in talent management agencies or digital marketing agencies, or establishing new creator marketing and management agencies, PE investors can capitalize on the market’s potential and achieve substantial returns.