The COVID-19 outbreak has sparked a number of new challenges for today’s businesses, everything from an urgent need to engage remotely with audiences, to having to adapt processes to become COVID compliant. But there’s one major challenge that’s not discussed particularly often, and that’s brand new competition.
Digitalisation has been taking place gradually over the past few years, with businesses adapting slowly but surely to new digital ways of working. Until March. When lockdown regulations and stay-at-home orders were given across the world, widespread digitalisation occurred pretty much overnight. Suddenly, almost every business was online – in one way or another – creating more fierce competition than ever before.
And now, Amazon is lending a helping hand, especially when it comes to reaching new audiences. Amazon’s advertising platform has been integrating video ad sales across its owned platforms – such as Amazon Fire TV and IMDb – for quite some time, and it’s now extending its programmatic capabilities to include live streaming channel Twitch.
While Twitch has previously managed its own independent advertising channel, parts of it are now being absorbed into the Amazon Demand Side Platform (DSP), sharing some functionality between the two and giving today’s advertisers more opportunities to utilise the best of both platforms to really engage with new audiences.
In September, Amazon announced that it was launching changes across both Twitch and the Amazon DSP that would allow some advertising features of Twitch to be accessible through the Amazon DSP, and vice versa. In total, 3 changes were made:
1. Video & Digital Display
Under the recent changes, advertisers that purchase ads programmatically through the Amazon DSP will be able to show content through the Twitch video and digital display, increasing the number of channels Amazon advertisers can push their content across.
2. Twitch Audiences
The integrated Twitch Audiences feature – a powerful audience builder utilised by existing Twitch advertisers – is now accessible to advertisers using the Amazon DSP. This allows Amazon advertisers to target audiences more closely using Twitch user behaviour
3. Amazon Audiences
Perhaps the most interesting change of all is that advertisers already pushing campaigns through Twitch now have access to Amazon’s unrivalled first party user data, which includes browsing, purchasing, search, and viewing behaviours.
Together, the three changes mean that advertisers using the Amazon DSP can programmatically buy video and display ads on Twitch as part of their campaign efforts, while advertisers using Twitch can link their video content to direct sales opportunities through the Amazon ecommerce platform. Amazon’s announcement confirms that the firm is ‘excited to offer these new capabilities and the opportunity to better serve brands with Twitch and Amazon advertising’, and it appears to be clear that there are a number of potential benefits that advertisers may see from the merger.
Combining Twitch & Amazon to Reach New Audiences
Through the three changes, what advertisers now have is a blend of what Amazon itself calls the ‘hard-to-reach and highly engaged audiences’ of Twitch, and Amazon’s comprehensive demand side platform. No matter where advertisers have formed their base – Amazon Ads or Twitch – the opportunities for growth are huge and exciting.
Benefits for Amazon Advertisers
Digital market research company eMarketer suggests that, throughout 2020, Twitch has brought in an average of 37.5 million viewers per month, putting it on track to be bringing in upwards of 40 million per month by 2021. And this figure could rise as Twitch took control of the live video game streaming market in Q3 following the demise of Microsoft’s direct competitor, Mixer, in June. Reports suggest that Twitch now controls more than 90% of the market, making it what eMarketer calls a ‘pioneer in this space’.
Why is this exciting to Amazon advertisers? Because Twitch’s growing user base isn’t made up of the everyday audiences. In fact, Twitch has become known for helping advertisers to reach audiences that are infamous for being elusive and hard to reach.
While the Twitch of today covers everything from live sporting events to live streamed socially distanced fashion shows, the platform started life as a channel for gamers to live stream their games and communicate with others through a strong online community. And even with the expansion to other interests, the Twitch audience base remains dominated by gaming demographics. In 2017, Twitch reported that more than 80% of its users were men, and 55% were aged 18-34. There’s a bit more balance today – estimated at a 65/35 male/female split, of which three quarters are aged under 35.
This younger demographic has long proven to be challenging for advertisers to engage with, with research from the IAB Tech Lab noting that men aged between 18-34 are statistically most likely to use ad blockers. This has made it very difficult for advertisers to get their ads in front of this particular demographic, resulting in a huge untouched pool.
With the integration of Twitch Audiences into the Amazon DSP, Amazon advertisers can learn more about the behaviours of these demographics from their interactions with the Twitch platform to gain greater insight into a group that has previously been hard to read. Through the ability to programmatically purchase ads for Twitch video and display, advertisers can push their content to audiences through the preferred channel.
Benefits for Twitch Advertisers
It’s clear to see that Twitch does have its advantages. It boasts a massively niche audience pool made up of those who have been notoriously difficult to reach in the past through older methods such as linear TV and pop ups. And yet, Twitch’s advertising arm has been failing to achieve its goals and hit the targets that were initially hoped for.
In 2018, it was reported that revenue from Twitch advertising stood at $230 million, suggesting an estimated $300 million forecast for 2019; significantly lower than the $500 million – $600 million target. Something has been missing, and that something is data.
Two years ago, a post published on the AdExchanger news platform noted that ‘if Twitch can work with its parent company to add a layer of Amazon data… it could leave YouTube in the dust’. And that’s exactly what’s expected to take place with the recent merger, which ties Twitch brand campaigns to Amazon’s extensive data pool.
It has long been clear that Amazon’s position as a disrupter to the Google/Facebook advertising duopoly has been driven by its data. Amazon’s first party data – collected not only through its ecommerce website but also through its subsidiaries and through its connected TV platforms – remains unrivalled. By giving Twitch advertisers access to the Amazon Audience Builder, these advertisers can utilise highly valuable data to better target audiences and ensure their Twitch content is displayed to the right people, at the right time, attracting high quality leads and ultimately boosting conversion rates.
Of the recent integration between the Twitch and Amazon platforms, a spokesperson for Twitch stated that
“Advertising on Twitch will now have the added benefit of Amazon Advertising’s unique audience insights and measurement for their campaigns”
What’s interesting is that, until now, Amazon has largely kept Twitch at arm’s length. Amazon acquired Twitch in 2014, three years after launch, and has mostly failed at integrating any aspect of its acquisition with its core platform until now. So why now?
While the inability of Twitch’s own independent advertising arm to generate anticipated revenue is certainly one reason, we can’t afford to overlook the role that the pandemic has played in driving the merger. With an increasing number of people working from home, with temporary suspensions under job retention schemes, and with an increase in redundancies due to the economic uncertainty created by the virus, people have been using platforms such as Twitch much more, and they’ve naturally been absorbing more online content. It’s estimated that Twitch now has 26.6 million visitors per day, and while the number of hours watched dropped 8% from Q2 to Q3, viewers still enjoyed 4.7 billion hours of content in total between July and September.
Both Twitch and Amazon Ads have had their own performance gaps highlighted by the COVID-19 outbreak – Twitch lacked data, and Amazon lacked an ability to connect with a notoriously hard-to-reach audience pool. By sharing functionality between them, and making the best features of both accessible to all, Amazon is taking a highly strategic step towards really throwing off the duopoly and dominating the landscape.
The Next Steps
For advertisers who are already using either the Amazon DSP or Twitch to run their campaigns, the logical next step is to connect accounts and merge efforts. The opportunity to combine Amazon’s extensive first party data with Twitch’s niche audience pool is one that’s not to be missed, especially at a time such as this when competition to attract and engage with online audiences is more fierce than ever.
More businesses than ever before are building an online presence. Tried-and-tested methods are no longer enough to stand out from the crowd; advertisers need to embrace new ways to reach out to audiences and ensure their message is heard.