Right About Now with Ryan Alford - eSports Series ft. Itamar Benedy

Episode Date: August 11, 2020

In this episode, Ryan and Itamar talk about the business model of Anzu.io, sponsorships and partnerships, branded content in gaming, and eSports tournaments. To follow along in the series or to check out more episodes, visit our website theradcast.com | @the.rad.cast or @ryanalford on Instagram  If you enjoyed this episode and want to learn more, join Ryan’s newsletter https://ryanalford.com/newsletter/ to get Ferrari level advice daily for FREE.  Learn how to build a 7 figure business from your personal brand by signing up for a FREE introduction to personal branding https://ryanalford.com/personalbranding.  Learn more by visiting our website at www.ryanisright.comSubscribe to our YouTube channel  www.youtube.com/@RightAboutNowwithRyanAlford. 

You're listening to The Radcast. If it's radical, we cover it. Here's your host, Ryan Alford. Hey guys, what's up? It's Ryan Alford and Riley Clark, I might add. Yes. Here on today's episode of The Radcast. We're continuing a multi-part series on esports, all things esports, gaming, and really excited to have Itamar Benedi, the CEO and founder of Anzu.io. What's up?

How are you? Yeah, I'm good. I'm great. Thank you for having me here. Excited to have you on. So, you know, being a quasi-marketing and business podcast, as we talked a little pre-episode in Amar, it's nice to have something a little maybe mainstream down the line on the marketing and advertising side for esports with, you know, your ad platform, which I know we'll get into. So we're excited to maybe talk a little more marketing shop than we've been from. We've been talking real broad esports and the opportunity and really

the growth of esports, but excited to kind of get into it and hear what all you've been up to. Yeah. And, you know, I mean, esports is getting tremendous, you know, attraction in the last years from brands and even brands investing in esports teams, investing in leagues, but someone needs to deal with the business model, right? That's right. Well, let's start there. Itamar, let's start. Maybe give us a little bit about your career journey, your experience in esports, and then

maybe that'll build us up to kind of where you're at today. Sure. Sounds good. So, hi, everyone. esports and then maybe that'll build us up to kind of where you're at today sure sounds good so hi everyone i'm amitamar the founder and industry of anzu and long love hate relationship with the advertising and landscape and started basically on the early days of when the app store was launched we were building advertising and monetization solutions dedicated for mobile. We saw that mobile was a new platform that the rules from web and from cookies could not really apply. So we took advantage of that very fast growing market in the last years. And something like four years ago, we spotted that there is a need for something new, a new business model for game developers.

Esports was just starting to rise, but there were some questions about how exactly will that work. And then brands on the other side were looking at new ways to engage with audiences because a lot of the eyeballs from from audiences move to platforms like Netflix where there's no advertising model and people started to watch less and less tv so that was like really like how we took our previous experience and really connected it with this opportunity in the market and basically founded Anzu. Love it. So let's talk about exactly what Anzu is and what you're both already accomplished

and where you're kind of headed with the platform. It's all about, I guess there's multiple layers, but at its core, it's going to be like a programmatic type ad solution within the gaming environment of different games? So you work with both the developers and then the marketers that want to run ads. Am I summarizing correctly or fill in the blanks a little? I mean, this is perfect. If you want to join us to pitch to clients, we would be honored.

bonus to a pitch to clients would be honored. So, I mean, the way we look at Anzu is that for game developers, this is a new business model. So bringing authentic native advertising, the way we see this, that advertising should not be a trade-off with bad user experience. People don't hate ads. People hate bad ads. And if you can

bring in like an ad experience that respects the gamer, respects the gameplay, basically exactly how we consume content in real world. So for example, think about a billboard inside the game, a logo on a t-shirt, a poster on a wall. The outcome of it will be number one, the community will accept it and will prefer it number two bigger games that didn't monetize and put ads until now for the first time will be happy to do that and number three we're the first company in the world to bring those monetization and programmatic capabilities also for the console games and not only for mobile games so that's like from a game developer how we look at this and and you know like we saw cases of games that put its fake ads

to make the game more realistic. We tell them, hey, earn money from it. Or like if there's a billboard with a sign Hilton left, sorry, like a hotel left, put Hilton there, right? And from a marketer perspective, it's a new advertising category. So it's a way to reach hard-to-reach audiences in scale. Because when we look to the gaming landscape, which is a really good environment for brands, the scale of how many people play games, and of course, the esports rise, how brands safe and authentic in the environments look like.

But it was about how do we make it easy for brands to work with us? And that's where programmatic helps. And second, how do we help brands to get confidence around the media value and the effectiveness of that? Yeah, that's great. So does it start with, it seems like then it starts with the games. I'm curious about the mechanics, you know, owning a digital agency and doing a lot of programmatic, you know, on the internet and things like that. Trying to wrap my head, and I'm sure our listeners would love to understand without getting into any proprietary nature of anything, but the mechanics of, are you working with, I would imagine, the consoles? And I'm going to focus just on console gaming right now.

and I'm going to focus just on console gaming right now. The console versus the game developer, because I imagine there's got to be two parts there, because you probably, if you're serving programmatic, you've got the internet feeding the game, but the game has to be developed in a way to accept that, right? Yes. So, I mean, there's three layers of how we look at that.

First, there is the layer of the platform, Xbox, PlayStation, PC, mobile, VR, cloud gaming, and we support all the platforms. And then there is the layer of the engine. So, like the game engine of the platform, if it's Unreal or Unity or a company, there is their own game engine. And then third, there is the actual content owner, the game developer or the publisher, depends on the structure. And basically, so we partner with the game developers, but we have business deals and we support all the layers of the engines

and the platforms. Got it. Are there only certain games right now that are able to display this type of advertising like in-game on the console level? Is it a certain game? Yeah. So, I mean, there's two ways to look at this. Number one, from a platform perspective. So, for example, Nintendo don't allow advertising on the platform, like in terms of their terms and condition.

But it's funny because they allow porn content on their platform, right? But I guess that will change over time as more and more games move to free-to-play and are looking for new business models. So there are some blockers from the platforms. That's number one. Number two, there are some games that may be very fantasy games that ad experiences are not very blended, authentic. So there's not really a lot of good ways of how to put the ads to make sense from a game or from a community perspective. So that's number two.

And number three, there is very violent games that maybe the brands will be a bit concerned about advertising those games. But removing those three limitations, there's a quite big business here. We predict the addressable market for all platforms like console, mobile and e-sports combined 25 billion a year. So a lot of opportunities. Yeah. So is, So a lot of opportunities. Yeah.

So is, for instance, I have four boys under the age of 11. And so they all play Fortnite amongst other things. Now, is that kind of a walled garden as big of the franchise as Fortnite is? Like, is it, or should we expect to see programmatic ads within fortnight yeah so i mean you know every second marketer i meet tells me hey this is really cool can i put can i start with fortnight and and and and and of course with fortnight it will take time i mean it's a it's a big company and and and that's maybe not the first company to adapt new technologies yeah and but but the way we see it is that before our solution the only way to advertise and consult again with what we call hard-coded deals so for example if you play the

fifa game you see some brands in the environment but the thing is that first, it's very expensive to do these campaigns. Very few games and very few brands can do these deals. Once you launch the version of the game, the content cannot change. So there's no programmatic, no analytics, no personalization. And the joke about those deals is that the only data the brand gets for the game is the invoice. And what we are here to do is to make it very affordable, to make it very accessible. So with small campaign

spend and with a connection to Google and to all the media bank platforms so no integration needed, no special creation of creatives. We can start campaigns and get really good media value in the sense of what's exactly the opportunity and should the brand invest more? How can the brand compare advertising in our environment versus other environments?

That's basically what we're bringing here from a marketer perspective. With the I'm curious with the growth of the company, are there any partnerships that like you're particularly proud of that you're able to like talk about on the podcast with us? Of course. So we recently launched with Ubisoft, Truckmania, a big partnership. And, you know, Truckmania is a very known franchise and like a very, you know, like a high end game, a AAA game,

which has a lot of, you know, really good placement for brands to advertise. So from a game developer perspective, that's indeed what we're very happy about. And there's tremendous excitement for marketers. Oh, absolutely. In general, we signed 14 exclusive deals with console game developers for two or three years to basically be able to sell their media. So game developers like Lion Castle and ABP Reloaded and Toplitz and Vivid and Ubisoft, Trackmania. So this makes the volume and the inventory ready for marketers.

And then from a brand perspective, we announced big deals with Vodafone, with PepsiCo, with American Eagle, with Samsung. So big brands and big games are already part of the platform. Oh, yeah. with samsung so bigger brands and big games are already part of the platform oh yeah is um what would be like the most popular u.s played game that your platform is doing program at in-game ads on what would be a game like that you know our audience is probably getting worldwide now but it's probably 90 the u. us what would be a game title that maybe we could see the that's played here that the platform's hitting on so from the games i'm allowed to say you know there's a big companies and like like i signed like you know dozens of

nta's with each company and ubisoft truckmania will be the most popular game. That's Truckmania? Yeah. Yeah. That's awesome. Cool. Are brands coming? You mentioned this. And so I guess, are you guys developing kind of a platform that might be self-serve for agencies?

Or is it always going to be brand direct? Are you kind of opening, you know, what's the kind of avenues there for where you see it going for marketers kind of coming to you guys? Sure. So, I mean, you know, brands love innovation and hate to change the way they work, right? Yeah, yeah. Well said. Hey, you've been around the agency world. This is what I love. Hey, you've been around the agency world. This is what I love. Bring us big ideas. And we don't want to do... Let's go back to that one.

So, I mean, we try to make it as easy as possible for them to choose how they want to work with us. Some brands want us to run the campaign from our own DSP and our own platform, of course, with full transparency and some brands want to run the campaign from like the media bank platform they're already using. If it's a Google or the trade desk or all the, you know, like,

like the popular DSPs. So, um, yeah, so, so basically we, we made sure to support all the media bank platforms, all the ad units, all the creatives. Basically, everything that we know from a technical perspective, from a buying mechanism, can work different between the buyers to support all of those options.

So we support 45 different creative formats. Because we know that a brand can be really excited to work with us but if it's that if he has two creative formats and we don't support them unfortunately it will take two years to make a campaign happen yeah is um where is uh you know esports and the growth of it you know is just so enormous and you know we've been talking a lot about just general in-game but on the esports side the competitive side within the leagues and all of that does the mechanism for marketing within your platform work the same or is that a different kind of more like event one-off structure yeah so i mean there's two ways of how we have basically touch

points with esport i mean first let's differentiate esport tournaments and game streaming content right but it starts from the fact that when we integrate into a game like trackmania trackmania has esport tournaments and trackmania has people who broadcast themselves playing the game on Twitch, on YouTube, on the streaming platforms. And because what we do, we change the texture of the game object with the branded content, now making the branded content part of the game. So if we do a campaign with American Eagle, American Eagle is part of the content of the game. So everywhere the game is, the branded content is going to be. So this opens for us opportunities to offer brands to sponsor esport tournaments

in a very authentic way instead of putting the logo of the brand in the stadium to putting it inside the game while the game is played in the tournament. And that's not only the people who see the game in the physical tournament. It also will be broadcasted on TV channels and streaming platforms. It will increase the media rights value. So that's one touch point. And so now we can offer esports leagues and esports teams

to sell to their own sponsorships ads inside the game while they're playing it so that's one and they mentioned and the second one is the streaming platform so we can work with a specific streamer to personalize the content only on his device, only for when he broadcasts, to personalize the brand and content to his viewers, to his audience. So this is basically how we can extend the brand and content to new environments and to partner with the leagues, the teams, the streamers, and all the ecosystem. Have you gone to a tournament i'm curious have you been able to go to esports tournament what was it like if you've gone to one

yeah i mean so like i mean first i mean maybe i'll admit i wasn't a gamer before we started anzu i come from an advertising background for me it was just exciting to work with those big big brands but my two co-founders our chief product and cto are both gamers so for them it was like you know exciting to partner with games that they are playing themselves and like i mean i mean there's two different layers of excitement in my opinion around these four tournaments number one the first time you go to a tournament this is like something that you never experience you know like the audience and excitement and how much

they're into it and it's like it's a phenomena right and the second thing is when you go to games that are maybe harder to understand so there is games like Rocket League that even if

you didn't play the game a lot you'll pretty quickly understand the like what the game is about oh i know i'll kick your ass in some rocket league don't mess with me that's the only game that uh that i could actually play uh worth any uh worth worth anything on the platform. But, you know, there are games, you know, CSGO, that are really hard to understand how to play. And for someone coming to an esports tournament and seeing one of these games, if he doesn't really know exactly what it's about,

it will just feel like a random connection between what's happening in the game and the audience getting excited right yeah yeah i think it really depends on on the genre of the game yeah we hear so much about the tournaments it makes me like really want to go they just seem like when we were able to actually congregate. Right, before we had to stay six feet apart. We try not to go down that path too much on the podcast, but has COVID impacted you guys' business? I mean, it seems to be blowing up esports more than, obviously it's removed the in-person tournaments,

which I'm sure is a drag on a lot of the sponsorships and things like that. But at the same time, the growth of playing and the exposure of it in general, I think, is just growing. But how have you guys been impacted, if you have? So, yeah, so three impacts, two positive and one negative. So let's start with the negative, right? So we can finish positive. I like you already. Yeah, good perspective.

A lot of the game developers postponed their releases of the game because of COVID. So for example, we finished integration with really big games and I would be very much excited to give you those names, but because of COVID they postponed when they will launch the games. We need to wait for half a year for one year to actually be able to, to, to, to make that happen. And that's, that's a pity because there is like, you know, like brands waiting in line for those games and we just need to wait until we can make it happen.

So that's something right here on the rad cast and we won't tell anyone. We promise we'll keep it a secret. So I have a deal to offer you. When we'll be able to announce it, let's regroup and tell your audience. Okay, so now let's speak about the positives. So number one, people are more at home. People are playing more games. So they're just more advertising eyeballs on the platform.

So we had a huge growth in our platform just because of the usage really growing up. That's number one. But I think more important to the ecosystem is what happened on the marketer side. And there's two layers to that. One, on a practical layer. So sports events are getting canceled.

So on the one side. And second, out-of-home interaction are less happening these days so brands are looking for new ways to engage with audiences in digital and virtual environments or maybe a good way to do that so gaming took like a main like a main seat around that because what people do they or play games or watch catfix right that's basically sums it up so so that's one thing so like we saw like in the last two months or the first two months of covid like uh uh uh growth that we didn't see in 10 years in in the space so brands

spoke for five years about gaming or about even digital. And now for the first time to actually do something. So that's one there. But I think a bigger important point is the perception points. Three years ago, almost every brand or agency I would pitch would tell me, listen, this is really cool. But no gaming is like geeks locked in their basement. It's not really our audience. Versus now, gaming is pop culture. It's pop phenomena. It's a social network, the metaverse world.

And everyone gets excited. So I think there is a huge change in perception. I mean, maybe it's a good time to mention WPP, the biggest advertising group in the world, is one of our investors. And I got a lot of rejections from them in the early days because I like, I known them for many years

and eventually even they, you know, saw that this is coming and coming mainstream and this will become a big advertising category. So this perception is really and positive for us that's great interesting about wpp i mean are they are they integrate is there any kind of integration you know obviously own a lot of ad agencies uh is are they integrating with like their media tools like is anzu like is that any integration there are they kind of like letting you guys do your thing yeah i mean you know first i mean you know it it took me some time to

understand their complicated structure yeah and and and that's number one and number two like i mean of course it was not like a plug and play so we signed an investment in the day after so they managed 50 billion dollars a media year the after, budgets are being thrown at us. I remember some of our other investors who know, like Beatcraft, the biggest e-sport fund, maybe you heard about them. It's the guy who founded ESL. He's our other investor, so he doesn't come from out of nothing.

He just told me, listen, we signed the deal with WPP. Let's just allocate 1% or 2% from their $50 billion, and I think it's, it's, it's good. Right. So, so,

so it doesn't work like that. Right. And, but, but we integrate it into their platforms, into Zaxxas, their media bank platform into their like, um,

discovery product. And, and I think now we're in a really strong place knowing their teams and, and, and having the structure to really now growing within the business, of course, with now all the exclusive inventory coming on board. But I think it's also important to mention that the way we structure the deal, we have no limitations. We work with the other holding groups. There is no board seat, no better rights. So it can really help us to be very unbiased and agnostic here.

Hey, they want you to sell more ads. They don't care who you sell them to. Yeah, that would be bad for business. Hey, they want to recoup their investment and make more on top. We got to sell to everybody. I mean, I promised them X20 on the investment. So let's see. There we go.

Where's this all going, man? What's the future looking like for esports and advertising and marketing? What's in your crystal ball or in your kind of, I don't know, magic plan? Yeah. Yeah. yeah yeah you know i mean for 5 10 15 years we saw a lot of movies of people spending time in virtual world right so there was a movie like um a few years ago ready player one and there were other movies and for some reason in real life that didn't happen people didn't spend you know half of their day in a virtual environment but i think esports can be a trigger for that to change and and and we see that with you know with

fortnite and roblox and the metaverse concept and people are starting to consume content inside and games and the game platform becoming up like a social network to chat with the friends, to consume content. So I think the world is going into that direction. And when, you know, the younger audiences were born into the Fortnite world, when they'll become parents, you know, the industry, they will look at it very different. So I think it's going to be a very digital virtual world.

Maybe it's, it's, it's, it's, um, of course it has a lot of, you know, like, um, problems, but I think that's where it's heading in for, for marketers there's really good opportunities of how to engage in that world. Because, you know, for me, part of the power of a brand like McDonald's is that every place in the world and in Zimbabwe, you'll see their sign, right? Now there are younger audiences who don't spend time watching TV,

who don't go a lot, you know, traveling the world and they will be less familiar with those big brands. So, brands will need to adapt and find a way of reaching them in an effective way because those audiences would use ad lockers if they don't like the user experience. So, I think there are some challenges and opportunities for brands here. and opportunities for brands here. So we have a wide range of listeners as far as the size of their companies.

And this strikes me as going down the path that might actually make it attainable for more medium-sized businesses. You know, you mentioned McDonald's and others and obviously Pepsi and, you know, these huge brands with millions of dollars in budget before the Verizon deal with FaZe Clan. I mean, these are millions of dollar agreements. But this strikes me with your platform as potentially an entry point for more medium-sized brands to get in the game.

Literally. I mean, it's exactly about that because a small brand most chances is buying platform is is buying media from google so take the same platform of where you buy media take the same creatives you have take a small budget and start to advertise in games and and and and it can be localized to what he is looking for so and i think that's the beauty of how we make these environments accessible and affordable for smbs what's the scale of this right now so like you know uh we work with some bigger southeastern companies in the U.S. You know, is the scale there in the U.S., you know, on these platforms to make a legitimate

programmatic buy that has the scale and reach that you need for like a U.S.-based company, besides a McDonald's or Pepsi? Yeah. So, I mean, yes. And there is, you know, the ecosystem in our platform. From an ecosystem play, 2.7 billion people play at least one game a month. That's 86% of the people connected to the internet. So I would say every brand in the world has an overlap with the gaming audience. And the question is, what type of games? Sport games versus shooter games. is what type of games and sport games versus shooter games and what type of platforms Xbox versus mobile are the right games

for that brand. So that's, that's number one. And number two on, on our platform today, we serve ads to 150 million people every month. We serve, you know, billions of impressions. U.S. is, of course, our biggest market. So there's already enough, you know, volumes and skin in the game to be attractive for, on the one side, the big brands want, you know, bigger campaigns, and on the other side, for smarter brands who want a very niche audience, but still to have enough of, of, of, you know, of, of traction coming from.

Is there anything else that you think would be, you know, of interest with, you know, where esports is going, where you guys are going? I mean, anything else we kind of close out here. Yeah. I mean, first, you know, I mean, I can speak a lot about this topic. So of course we can first you know i mean i can speak a lot about this topic so of course we can you know if there's anyone interested to continue these conversations of course we can speak about that but i mean like i think and because of all the changes we see in the advertising landscape so and the cookies are dropping and Fs and mobile are getting out and people are using more ad blockers.

And what's happening with Facebook and the concern around brand safety. And we saw that the same with YouTube. I think there is a need for rethinking of like, what's the best way to use each platform and how to play the mix. I would argue that same, that there is a strategy around audio and out of home and social and search and TV. Gaming should be part of the mix

from an ad category perspective. And it's just about doing it right because gaming is a very fragmented topic from working with teams to working with leagues to working with Switch to working with us. There are just a lot of different ways, and there's not a lot of best practices and experts who really navigate that. So I think that's what we're going to see in the next year. But there are still opportunities for brands to be early adopters and to be innovators

in the space. And it's not too late for that. And yeah, this is basically what we do for a living. I love it. Last question, because you kind of made me go there yeah do the twitches to the the streaming you know companies like twitch and others come with their hands out to you guys eventually because okay i'm playing truck mania and that pepsi billboard runs and it's suddenly on twitch and another 200 000 people see it uh that wouldn't have you know is that factored in yeah yeah i mean the

short answer is it's complicated because because you know like i think what's important to to understand here is is is the perspective of how each player is coming from i mean for me my partner is the game developer yeah for for twitch his partner is the streamer yeah now if you'll ask so like twitch and the streamer are basically building a business on top of what the game is built. In many cases, the game is not really getting money from it. But Twitch will claim, listen, you should thank us. We are bringing a lot of organic.

Yeah, we're promoting you. And then if you ask the game, they'll say, hey, fine. We should get a slice from the revenues as well. So it's a complicated topic. And of course, even between Twitch, YouTube, Facebook, and until recently, Mixer, there were very different opinions of how each one of these companies see it.

And of course, as the game developers are bigger, then they have more control over those relationships versus the smaller ones. And the same with the big streamers and the small streamers. And this adds to make it even more complicated, the companies who are providing extensions for the streamers out of what the platforms like Twitch are doing. Yeah, so I think it's complicated is a good way to answer it.

I bet. Well, It itamar it's been a pleasure uh i know the listeners will appreciate kind of more of the in-depth marketing side um and so sounds like it's got all the potential in the world and if you're a brand out there uh thinking about your marketing mix i think you need to be thinking about gaming. Edamar, we're going to be holding you to that deal too. Yeah, we're going to get the full scoop. Exactly right. The official scoop.

Do noted. You'll get an email from me. You'll get the official breaking news of any of those partnerships. So we'll do it again here as we follow up and thank you so much for your time thank you for having me here hey guys it's brian alford and riley clark we'll see you next time on the radcast follow along at the radcast.com or at rad the dot rad dot cast on instagram see you then.