Thread by @TheMilliebug

#Twitch ads PART 2.

So I was doing some reading, and I have a hypothesis of why Twitch has decided to introduce mid-rolls.

Yesterday, I shared some insight with you all on why as revenue is integral to many companies.

Today, we're going to talk about programmatic advertising.

So what IS programmatic advertising?

In short, it's the buying and selling digital advertising space automatically. Prior to this, companies had to manually set up ads - recall the ad pool for Twitch is super small.

This new process is streamlined, smarter and more efficient.

Programmatic advertising connects publishers (in this case, Twitch) and advertisers. Advertisers use demand-side platforms (DSP) to automate the process of buying ads.

A DSP makes the process easier for advertisers, because they can purchase their ads from multiple publishers.

The DSP also makes use of audience data to ensure that the ads target the right audience 👀

Now here's where it gets complicated, stick with me guys.

When a person who is in this target audience lands on a publishers website, the website will send an ad request to the SSP.

SSP stands for supply-side platform. This is used by the publisher (e.g. Twitch) to sell ads. The SSP runs an auction (takes place in miliseconds!) with the DSP connected in. In short, usually the highest bidder with the most appropriate ad gets the publisher's ad space.

This happens every time a user lands on a new page of a website, or refreshes.

So, what does this have to do with midrolls? Twitch isn't connected with a DSP right? Otherwise their ad pool wouldn't suck so much.

Well, it turns out that Amazon have their own DSP - Amazon Advertising, and as of the blog post on the 8th September, they are "combining Twitch’s hard-to-reach and highly engaged audiences with Amazon Advertising’s integrated full-funnel advertising offering,”

Interesting.

Remember I said that Google's ads make around 85% of their revenue? And Facebook is 100% ad revenue? Amazon has been making strides to catch up with them - combined, it is estimated that the three companies control 62.3% of the ad market. That's INSANE money.

This new partnership means, instead of approaching Twitch, advertisers can use Amazon's DSP to connect directly with Twitch audiences.

And this is great right? Twitch gets a bigger ad pool, and suddenly is much sexier to advertisers because of the 'untapped market'

In short, advertisers bid to Amazon's DSP. When people who fit the target audience land on Twitch, the auction runs and the DSP makes the decision about which ad to serve.

Advertisers benefit from accurate ad placing, and Twitch benefits from the highest bidder winning.

In terms of money, it means the CMP (cost per thousand impressions) goes down, but the number of impressions goes up so it is more profitable.

Therefore, Twitch wants to bulk up it's inventory. Easiest way to do that? Mid rolls. This means Twitch has more ad space to sell.

I share this with you again: twitch.uservoice.com/forums/310237-…

Lets help Twitch create more ad space, but in a way that supports streamers. Banners, chat & overlays.

Lets be professional, respectful and work together to make Twitch better, while earning ourselves some sweet ad coin!

Also, I am looking for my next tech job, my skill set is predominantly front-end JS & React - please reach out if you'd like to see my CV!

Amazon's blog post for reference: advertising.amazon.com/blog/reach-new…

And if you'd like to learn more about Programmatic Advertising: publift.com/what-is-progra….