While it doesn't benefit Geno in any way, I don't think the fact that Square Enix has properties that would make more sense from a promotional standpoint is necessarily a dealbreaker for the puppet. Both Microsoft and Nintendo would've benefitted far more from including a more mainstream and active series like Halo or Minecraft in Smash, but opted to go for the longtime fan-favourite in Banjo-Kazooie instead.
Sometimes, fulfilling a popular request with the core fanbase is the better move than following conventional wisdom. Sakurai has publicly affiliated with the character before and there's no denying there's a demand for Geno. Square has also been relatively liberal about Geno when it comes to Smash, seeing how they were willing to let Geno be a Mii costume and spirit in the past. Plus, they already have their two key franchises in Smash, so it's not like Square Enix hasn't gotten increased visibility from Smash. The biggest remaining factor at this point is if Nintendo thinks it's worthwhile to pursue Geno as a full pack. Geno's far from guaranteed, but he's in the best position he's ever been in.