Twitch announced an Ad Revenue Upgrade. It is intended to give bigger ad payouts to more creators through the Ads Incentive Program.
The premise of the Ads Incentive Program (AIP) is simple: each month a creator gets an offer. If they stream for a specific amount of hours in that month with a specific ad-density, they’ll receive a predetermined payout. Let the Ads Manager handle the ads and at the end of the month you get paid.
Right now, this offer is only for Twitch Partners. However, Twitch says that they will have some good news for Affiliates coming in August. More specifically, in August, qualifying Affiliates will be able to set Ads Manager to three minutes (or more) per hour. Twitch says this will result in a 55% ad revenue split on the Affiliates payout.
According to Twitch, they calculated Creator earnings from ads through a fixed CPM – a flat rate for every 1,000 ad views on their channel. To increase ad payouts and ensure they can pass price increased through to Creators, Twitch is moving away from their fixed CPM structure to a percentage-based revenue share model. The new model pays creators 55% of the revenue for each ad that runs on their stream. This change represents a 50-150% ad pay rate increase for the vast majority of Creators on Twitch.
There are some things to know about that. First, Twitch took CPM values and average CPMs during 2021 to estimate rates on an equivalent revenue share model. Ad revenue depends on a variety of factors, such as audience size, ad availability, language and geography, time of year, etc.
Also worth knowing: Payment will be made on a net basis, meaning revenue less (a) billing and other costs and fees paid to provide the Twitch Services; and (b) taxes, refunds, chargebacks, discounts and credits.
In addition, Twitch explained that AIP is optional. Creators (and later, affiliates) will be able to opt-in and opt-out at any time. Twitch also reassures that they won’t pay a Creator less ad money for opting into the Ads Incentive Program. If it turns out your AIP offer payout is lower than what you would have earned running ads outside of the program, Twitch will pay you the higher amount.
The Verge reported that Twitch will disable the highly annoying pre-roll ads for users who run ads for that same amount of time. According to Twitch, the 55 / 45 split of ad revenue will “ensure [Twitch] can pass price increases through to creators.”
Mike Minton, vice president of monetization at Twitch, sent an email to The Verge, in which he wrote the following: “We found that a fixed CPM model wasn’t the most straightforward way to share revenue with creators. So we’re now launching a new model that’s not only easier to understand but also increases ad payouts by paying creators 55 percent of the revenue for each ad that runs on their stream.”
To me, it sounds like Twitch Creators (and later, Twitch Affiliates) could make some money simply by allowing ads to clutter up their stream. I’m not sure that all the people who watch the streamers will want to see more ads than usual.