Now, Twitter Needs to Be the One to Reinvent Device-based Advertising
Early Thursday morning Twitter released their Q3 Earnings Report, confirming the expected layoffs along with announcing a few surprises, including their six-second video Vine app getting the end-of-life pink slip.
Twitter’s earning statement included a quote from Anthony Noto, Twitter’s CFO, “We intend to fully invest in our highest priorities and are de-prioritizing certain initiatives and simplifying how we operate in other areas.”
This hits on both the reduction of staff, which is expected to amount to 350 employees across sales, partnerships and marketing efforts, and pulling the plug on Vine.
“Double down on the product, focus on that engineering talent that you’ve got, shore up the core services and ad products. That sounds like the right way to go to me,” said Melissa Parrish, Forrester analyst, during her interview with Bloomberg’s Emily Chang.
When Chang asked about Twitter’s live broadcasting strategy – including the NFL Games and even Bloomberg Television where the show and their conversation was live streaming on Twitter – was enough to sustain the company, Parrish replied, “I think it’s a step in the right direction.”
“It is the social network of record for all of those live events that you just mentioned. And because of that, there’s something special about the audience that flocks to Twitter to talk about the presidential debates, or to view live events in a way that they don’t flock to Twitter’s competitors.”
Chang pulled in a clip of an earlier-in-the-day Bloomberg interview with Noto, who commented on the use of Twitter during the live streamed presidential debates, “It had a young audience with 70% of the audience less than 35 years old. We saw an incredible reach, over 3 million on a number of the debates.”
That’s the key demographic that advertisers pay more for on ad network deals, and the same audience that’s been moving away from or will never think about becoming a new cable subscriber where those networks have lived for decades.
The Old Ad Chat Arises Again
During her conversation with Chang, Parrish reiterated the question that’s come up countless times: how can Twitter monetize their flock of devotees?
Advertising is the knee jerk answer but not one that’s the end-all savior for Twitter; not without some re-tooling and reimagining of the ad creative experience and approach.
“Can they figure out advertising products that are specific to both the medium, the device, the network, and the audience? Specific to all of those things that will generate enough revenue?” Parrish asked.
She continues with a point I’ve made numerous times before, “What I DON’T think makes sense is to sort of rest their hat on advertising that looks exactly like television. Twitter’s not television. The audience is not the television audience. The device is not a television device. I think it’s going to take some real ingenuity to figure out how to take advantage of that live streaming and that kind of functionality.”
I haven’t yet watched a Twitter live stream side by side with linear TV viewing because I no longer have cable. I imagine that whatever commercial spot that’s running on TV is also running on Twitter’s stream. That contributes to the challenge of creating unique ad content for a captive Twitter live streaming audience on their mobile versus someone watching traditional television, who uses the commercial break to get off the couch to hit the can or get a snack.
This is the same challenge that others in the SVOD space are contending with (and hopefully, not ignoring), is the fact that the ad creative model needs to changes for a device-based audience. Period. If I’m not having to endure a Viagra Single Pack commercial in between news clips on CNN.com, it’s the music streaming services like Spotify, who in the past few weeks, have been running the same annoying, “HEFTY! HEFTY! HEFTY!” garbage bag commercial every few songs.
Said it before. Saying again. This. Is. Not. Sustainable.
Twitter Chooses Quality Over Quantity to Gain Ad Traction
While the ad revenue from Twitter’s non-native inventory, meaning, those Twitter ads that run on other publisher’s networks, was down by 12 percent versus Q3 of 2015, they have made some moves to improve the targeting of ads on their own platform.
With a slight 7 percent increase of daily users in the third quarter, which followed similar inching-up from the previous quarters, that meant that “Twitter didn’t have to try to stuff more ads onto people’s screens in order to boost its ad revenue,” stated Marketing Land’s Tim Peterson. “Since Twitter wasn’t as pressured to shove more ads in individual users’ faces, it could be more selective with the ones it did show them, making those ads more targeted, or relevant, to someone’s interests. Turns out that fewer tailored ads are better than more general ads.”
Notice the benefit of ‘tailored ads.’ Who knew.
Twitter’s Next Two Quarters Could Position Them Further Into Live Streaming and OTT
A week ago, Kara Swisher interviewed her long-time friend and colleague, early AOL executive, and current partner at Revolution Growth, Ted Leonsis, on her podcast Recode Decode. That got into the topic of Twitter, and in particular, the social network’s deal with the NFL. As a start to Twitter’s entry into streaming sports, he sees it as a “good experiment” while acknowledging that as compared to a cable subscription, the content choices are severely limited. But again, it’s just the beginning. There’s also the TV viewing experience Leonsis wants replicated, “There’s something about the magic of watching the game on a big screen and then using your device or your iPad or your laptop and interacting.” For example, “I’ll watch a game and I’m on my iPhone, Twittering. I don’t know how it’s going to work on…rather than looking up and then typing, that I’m looking down and watching the game.”
Well…you CAN actually look up and watch the game on Twitter if you have Chromecast. Through the Chrome browser, I cast the last Presidential debate Twitter live stream from my laptop after having issues with MSNBC’s stream, and if there was ever an experiment for watching and interacting, that was it. I will be so excited for the day when they announce a deal with EPL, so I won’t have to look up AND down during an Arsenal match.
To further extend that big screen experience, I would hope and expect that Twitter is working on in-app support of OTT and digital media devices that would enable users to stream to the big screen from the Twitter app on their iPhone or iPad.
Twitter is in the super, duper early stages of their live streaming model, stating in their letter to shareholders that the company has closed, “More than a dozen live streaming video partnerships since June, many of which have already started streaming content on a daily or weekly basis. The feedback has been overwhelmingly positive.” They report week-over-week audience growth for the first five NFL Thursday Night Football games “with the most recent three #TNF games reaching more than 3 million viewers, up more than 28% from Twitter’s inaugural game with 2.35M viewers.” This is particularly interesting, given the NFL’s noticeable drop in its cable viewership this season.
Imagine what could be not only for more sports content partnerships, but for awards shows like the Oscars, for watching Mr. Robot, or the last season of Orphan Black, or even venturing into live streaming festivals and concerts to gain ground in YouTube’s territory. The latter would not only bring in unique ad revenue, but brand sponsorship deals, similar to what Twitter started back in 2012 with Pepsi and Nicki Minaj campaign, but with the live stream coming from Twitter and not the brand’s website.
There’s lots of room to grow and improve in key content and advertising targeting, in the machine learning and algorithm developments, and in one very critical area for Twitter. “Next month, we will be sharing meaningful updates to our safety policy, our product and enforcement strategy.” One wonders if Conversation AI or a similar AI player will be part of that mix or if Twitter will develop its own way to curb online trolls. Time will tell.
“Our live strategy is showing great progress,” said Noto. “We’ve received very positive feedback from partners, advertisers and people using the service, and we’re pleased with the strong audience and engagement results.”
Ending her interview with Bloomberg’s Chang, Forrest analyst stated, “I think it’s a smart move.”
[This article originally appeared on Kaffeine Buzz on Medium.com]
Side note: I have some live streaming appearances coming up in the months ahead, including the moderation of the XLIVE session on December 6, “We’ll Do It Live — Challenges and Opportunities in Festival Live Streaming,” and a SXSW 2017 “Livetreaming Music and Amplification Workshop” (dates, times TBA) with John Petrocelli of Bulldog Digital Media. If you’d like more information on what to expect from these events, get in touch at kowens-at-kaffeinebuzz-dot-com, or find me on Twitter @Kaffeinebuzz.