Twitch viewership numbers have become one of the core elements in esports sponsor proposals over the past few years. Some teams and events present numbers around total minutes or hours watched. Others look at the number of people who have viewed individual streams or rolled up numbers for the streamers they have on their books.
The challenge with these top-level numbers is that they don’t provide a real picture of what is happening. If you sign a sponsor who then asks “how many times was my logo seen and by how many people” or “what is the ROI for the money I’ve given you” it can be difficult to answer.
If you want to focus on the top-level numbers then Waypoint is a useful tool for doing that but for anything else, you need to think like traditional sports.
Traditional Sports have a tried and tested method for calculating media value and ROI. A 30-second ad during the 2017 Superbowl sold for roughly $5M USD. That’s about $166K USD for every second of the advert that is shown. So how does this relate to Twitch viewership and sponsor proposals?
If we walk through the numbers we will start to see why Twitch viewership should be calculated differently and how it can support your sponsor conversations.
The advertiser will already have a figure for what an eyeball costs and the value of that eyeball to their business. Remember for this scenario value doesn’t equal sales as value can be measured in different ways. Let us say every eyeball is worth $1 USD to this advertiser. For them to breakeven from their Superbowl ad spend they would need 5M viewers:
- $5M USD divided by $1 USD = 5M
The Superbowl in 2017, on average, generated 111M viewers. That is a big difference from the breakeven point for this advertiser.
Taking 111M viewers as the average across the duration of the match and $166K per second cost of the advert we can start to calculate the return.
- 166,000 USD divided by 111M = a cost of less than 1 cent per eyeball per second
Let us take it as 1 cent per second which means for a 30-second advert the cost of 30 cents per eyeball.
- Cost of 30 cents per eyeball vs. a value of $1 USD per eyeball
Again, this is a sizeable difference and means the advertiser is generating 70 cents for every eyeball they pay for. If we now take a look at value generated (ROI) we get the following.
- 111M viewers multiplied by 1 USD = total possible value of 111M USD
- 111M USD – 5M USD ad spend = 106M USD value
- 106M USD value divided by 5M USD ad spend = 21X ROI
A League of Legends example
For Twitch viewership think about the number of times a sponsor logo is seen on a screen – it could be a total of 10 seconds per tournament. That 10 seconds has a value to an advertiser or sponsor and you can start basing calculations around it. You do 1 tournament a month and get 10 seconds of logo placement / advertising per tournament. The advertiser pays you $10K a month so that is $1000 cost per second.
If you agree with the advertiser a value for each second viewed (per viewer) you can start calculating the ROI on the money spent. You can also work the other way to get an idea of how much you may be able to charge for this logo placement.
Say the advertiser is paying 10K per month and they know that every view is 10 cent in value to their business.
The NA LCS generates on average 140K viewers per match day and a team plays 1 match. So that could be 140K viewers seeing 10 seconds of logo placement.
- 140K viewers multiplied by 10 cent of value = 14K USD of value to the advertiser per match day
Let us say there are 4 match days in a month so we have
- 14K USD of value multiplied by 4 match days = 56K USD of value
This means the advertiser has generated 46K USD of value per month from advertising with you / sponsoring your team.
It is time to move away from metrics like total hours watched and instead focus on the value you can generate.