If Amazon-owned Twitch reaches its goal this year of – according to Bloomberg – doubling its ad sales revenue to $1 billion, it has quite a lot to offer but a lot it must still do.
On the plus side, Twitch, the popular video streaming platform that boasts more than 15 million daily active users, has an audience of gamers: the advertiser’s unicorn.
Research from the IAB Tech Lab found that US men 18-34 were the most likely demographic to use ad blockers. This was largely attributed to young men in tech and gaming communities.
Millennial gamers know how to avoid ads, which is why many agencies are choosing to buy inventory on Twitch. The most popular Twitch influencer, Ninja, has almost 11.8 million followers.
“We attribute our success to being hyperfocused on community, not competitors, and will continue to scale our ad business in a manner that most benefits our creators,” Andrea Garabedian, VP of advertiser marketing at Twitch, told AdExchanger in an email.
Twitch’s influencers help market products relevant to gamers and the key is making an ad look and feel, well, not like an ad.
“In the past, we did a campaign with a quick-service restaurant brand on Twitch,” Digitas associate director Cody Creelman told AdExchanger. “We worked with Twitch to do a custom program to reward engaging with a live streamer’s event. People could call in or go through the live stream game against the influencers for a chance to win said product.”
Creelman declined to name the influencer and brand Digitas worked with on the campaign.
After “maxing out” among football and basketball enthusiasts, Brittany Rollheiser, director of digital investment at Mindshare, said she and her CPG client wanted to try a campaign on Twitch. Since the product’s audience is predominantly young and male, targeting esports fans felt like the next logical step.
“We utilized influencers on Twitch’s platform, with their devoted and loyal followings, to sponsor snack breaks,” Rollheiser told AdExchanger. “According to Twitch, 90% of gamers are snacking while on the platform, so we used live influencer streams to carry out this product integration. These were products the influencers already liked and ate, and so taking these snack breaks felt organic.”
Building interactive ads is another way brands can reach the elusive Twitch gamer. True[X], an ad tech subsidiary owned by Fox, builds immersive ad experiences for Twitch in order to drive engagement.
“We provide Twitch with highly interactive microsites,” Patrick Gales, true[X]’s director of global business development, told AdExchanger. For example, a Twitch user might see a trailer for a Fox movie on their screen. The user can then explore the character and read a short bio on them, with the option to purchase tickets and find the closest theater.
True[X]’s ads on Twitch, while not influencer-based, are enormously effective on a site with ad-averse users. This is because true[X] uses Bit, a currency Twitch users buy to donate to their favorite gamers, to incentivize gamers to watch ads. For context, $1.40 buys a Twitch user about 100 Bit.
“We thought to ourselves, what if true[X] could provide an alternative to the credit card, where the user would watch one of our ads and then be compensated with Bit for their time?” Gales said. The “ads per Bit” model – still true[X]’s ad model on Twitch – became so popular Twitch users were posting on Reddit about their efforts to try and reverse engineer when the ads would appear.
The ad sales model here is a bit unorthodox. Gales said True[X] gets a percentage of whatever the advertiser is willing to send to the publisher. A percentage of that amount is carved off to the user, allowing the user to make a little money to donate to their favorite streamer. True[X] retains some margins on that donation.
But a lot of advertisements on Twitch are customizable, high-touch projects, and if Twitch ever competes with YouTube, it will have to figure out how to become more scalable.
And Twitch, despite being part of Amazon, has limitations. Advertisers can’t use Amazon first-party data on the gaming video platform, nor can advertisers use the Amazon DSP to place ads on Twitch.
Not everyone is convinced Twitch will meet its $1 billion ad sales goal with its current strategy of influencer marketing and interactive microsites completely divorced from Amazon’s first-party data. (Twitch told AdExchanger it does not comment on revenue projections.)
“Twitch doesn’t provide a way for streamers to bring together their audience with the wealth of customer data Amazon has, even though Twitch Prime users have their Twitch and Amazon accounts linked already,” said David Pucik, VP of gaming and digital strategy at Magid.
Twitch might be limiting its sales business if it can’t plug into Amazon data eventually.
“There is the potential for Amazon to serve ads to Twitch users based on their gaming [and] related purchase history on Twitch,” Pucik said. “Or for Twitch streamers to serve different in-feed sponsorship ads to individual viewers who are part of different audience breaks.”
There’s also the question of how much certain streamers are willing to cooperate with advertisers. Some popular streamers might turn down lucrative brand integration deals because it would be sacrificing credibility and authenticity to their users, who would be donating to them directly anyway.
“An entertainment streamer, like Dr. Disrespect, has viewers that specifically watch to be entertained by him,” Pucik said. “They’re not leaving to take advantage of an offer, and entertainment streamers are going to be deeply protective of the experience of the stream.”
If Twitch can work with its parent company to add a layer of Amazon data plus the new Amazon Attribution pixel for Amazon stores, it could “leave YouTube in the dust,” said Jeff Greenfield, COO and co-founder at C3 Metrics.
“We expect Twitch no later than Q2 to offer direct buys and retargeting which leverage this data set,” Greenfield told AdExchanger in an email. “Amazon marketers represent a large, growing segment where Google cannot compete.”
To hit its $1 billion benchmark, Twitch might have to tap into the well of Amazon’s data.
View the original post on AdExchanger.