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Twitter backs video and live-broadcasting for future ad growth

Mobile video content apps edge

Twitter has stated it will prioritize video and live-broadcasting in an effort to achieve re-acceleration in the advertising business.

While team demonstrated healthy year-on-year growth for advertising revenues, totalling $535 million, an increase of 18% across the quarter, demand for the solutions has slowed. This is due in part to the success of the company over recent years, as the team believe it has “penetrated the largest spenders”. The advertising model has now transitioned to revenue being driven by average revenue per advertiser predominantly, as opposed to growth the number of advertisers. Moving from two growth factors to one has seemingly had an impact on the business, as forecasts for the next quarter are in the region of $590 to 610 million, considerably short of the analyst estimates of $680 million.

The video and live-streaming offerings are where the team see growth opportunities and a means to re-engage advertisers. There is already a NFL live-streaming deal in place, which has paid dividends already, though as there are only two games which will be featured on the Twitter platform, the impact will be minor. A more considered live-streaming product will be launched in September, though video is already the number-one ad format in terms of revenue on Twitter.

“Seeing and sharing what’s happening also includes live video,” said CEO Jack Dorsey during the quarterly earnings call. “We have some exciting momentum here with Periscope as well as with live-streaming video on Twitter. People can now watch an event like the Republican or Democratic National Conventions directly on Twitter and talk about it in the same experience.

“We’re partnering with the providers of the world’s most popular live content to bring more and more of those events on to Twitter together with the conversation. All this work is planting seeds for meaningful contributions to our continued growth.”

Video is one of the fastest growing sub-sectors in the advertising market, with the Twitter team believing it already accounts for $10 billion in the US alone. Video and live-streaming have now been pushed to the front of the Twitter business, though in the NFL deal it already has witnessed wins with the likes of Anheuser-Busch, Verizon, Sony and Nestlé.

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The recent Magic Pony acquisition, believed to be in the region of $150 million, is another area which will support the growth of video and live-broadcasting. Magic Pony’s machine learning and visual processing technology will help deliver high-quality streaming video at lower bandwidth, improving the watch experience on mobile devices, the company claims.

Another area within the business which has been prioritized is that of direct response, which the team believe to be a $130 billion market. This is a burgeoning market, but one in which Twitter has a low market share currently, and has been considered an area for growth.

From a revenue perspective, over the course of the quarter the business brought in $602 million, an increase of 20% year-over-year. Advertising accounted for $535 million, mobile taking 89% of the share, with data licensing and other revenue totalled $67 million, an increase of 35% year-over-year. The US continued to be the company’s largest market, taking $361 million, an increase of 12% year-on-year, with the international markets growing by 33% to $241 million.

Alongside the focus on video and live-broadcasting, the team also outlined a three-point plan to drive value for advertisers, who are now seeing more diversification in the social media marketing space.

“To achieve re-acceleration in our ads business, we need to continue to win our share of social marketing budgets and continue to deliver advertising solutions that extend beyond social marketing – into performance and premium mobile video budgets,” the team stated in a letter to shareholders. “These are large incremental market opportunities with strong growth that we believe Twitter is well positioned to capture over time.

“To do this, we’re focused on three main initiatives: building a rich canvas for marketers; driving increased ROI with improved measurement, bidding, and relevance; and increasing scale by leveraging Twitter’s unique total audience.”

Firstly, the team are backing a long-term shift away from desktop video to premium mobile environments, by incorporating new features into the video advertising capabilities. The reach and frequency buying campaigns allow advertisers greater control over activities to allow them to select an audience and control the number of times that their ads will be shown. Other new features include Twitter pre-roll, an easier way to serve skippable, pre-roll ads of any length in front of the premium mobile videos.

Secondly, acquisitions such as that of TellApart, will enter Twitter into new markets to build performance and management tools for advertisers. This is another area where the company is backing the shift from desk-top to mobile, as most solutions are geared towards the more traditional online advertising format, contradicting consumer trends towards mobile. The team believe this is an underserved market and could present a good opportunity to build value for advertisers, offering greater levels of transparency.

Finally, Twitter’s audience accounts for more than 800 million visitors, which the team feel is currently undervalued. The next few months will focus on delivering new features which will are designed to simplify the way advertisers use the platform.

Although this isn’t a monumental move for the business, it does represent a more proactive effort to attract advertising revenues. Part of the success will be down to the manner in which the company communicates the new features to the audience, both end-users and advertisers, an effort which has already begun with the launch of a new marketing campaign.

“Continued growth also involves educating people about why to use Twitter, for the fastest way to see and share what’s happening and comment on it. That drives everything on our service, especially news and social commentary.”

 

  • TV Connect MENA


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