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Can a renewed focus on live-streaming ads and measurement help bring Twitter back from the brink?


By Rebecca Stewart | Trends Editor

July 27, 2016 | 9 min read

The unremarkable results of Twitter’s most recent quarterly earnings update are something investors, and onlookers, have become all too accustomed to, but the social network has a plan. Could premium live streams and updates to the measurement it offers brands help boost the social network's ailing growth?

"See what's happening in the world, right now,” urges Twitter in its latest campaign, positioning itself as the go to place for news, and live events.

Twitter's Q2 earnings report fell below Wall Street estimates

Unveiled by its recently-appointed chief marketing officer, Leslie Berland, earlier this week the latest series of ads appeared to signal that, finally, the platform had figured out what it wants to be.

This refreshed stance will be welcome news to investors, who for several years have been jittery about Twitter’s slow user growth amid growing competition for the likes of Snapchat, Facebook and Instagram. Twitter’s latest quarterly trading update reflect these deep-rooted issues, particularly in terms of ad revenue.

Twitter has admitted it’s suffered a slowdown when it comes to the pennies it generates from advertising, noting just a 20 per cent year-on-year increase to $602m for the most recent quarter– its smallest gain since 2013.

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Demand from advertisers for the social network’s ads are poised to take a dip over the next few months predicted the business, exacerbating a trend it has noticed since the start of the year.

Another major issue is that Twitter is squeezed between greater competition for social media budgets, and the fact that its cost-per-engagement (CPE) pricing is higher than that of its rivals thanks to a growing appetite for performance ads.

If one thing is clear, Twitter isn’t going to take the hit lying down, a renewed focus on the live element of its core product coupled with plans to kick-start an upturn from online video and performance budgets might just bring it back from the edge, and make the next earnings report less tiresome for shareholders.

Going live

Ever since Twitter scored the rights to NFL’s Thursday night games back in April, the social network has been doubling down on its live-streaming plans, inking deals with other major leagues including the NHL and the MLB. Today it announced a partnership with Sky Sports in the UK to showcase real-time clips from the Premier League, marking its commitment to crafting live experiences in a bid to attract more users.

Blueprints on how it plans to monitise these events, which will also include political and financial news content, have been sketchy so far. It was reported last month that it had already sold around 50 per cent of the NFL ad inventory, with meetings at Cannes Lions pencilled in to sell the rest and the business has confirmed that Anheuser-Busch, Verizon, Sony and Nestlé are among those that have already bought ads.

Speaking to analysts yesterday, Twitter’s chief financial officer Anthony Noto confirmed that it’s premium live streams will include “either mid-roll advertising or pre-roll advertising,” noting that live-stream slots would be offered in six, 15 or 30-second pods as opposed to “being driven by ad load”.

This approach will open up revenue streams previously confined to promoted tweets, or sponsored Moments, giving the platform the chance to compete on more equal footing via video with video-focused competitors like Facebook and Snapchat for brand budgets.

In a bid to stop others stomping on Twitter’s turf, it’s also suggested that it could bring prices down for advertisers, with chief operating officer Adam Bain promising the social network was “doing a bunch of work” on this front and improve ROI for advertisers.

Kim Hoeu, paid social lead at digital agency Essence thinks the move to double down on live-streaming has been a smart one for Twitter, but says the question remains whether viewers will “gather round” the platform for live events in the same way that they gather around the TV, and whether they will be able to turn viewers into “engagers.”

“In the case of live sports, ad breaks are something that fans are very well accustomed to so the experience on Twitter may not be hugely different,” she added.

“The advantage with a digital platform is that those ads may well be far more relevant and engaging than something you would see on TV.”

Meanwhile, Haran Ramachandran head of digital at M&C Saatchi sport and entertainment said he thinks that "with the addition of Whatsapp, Instagram and its updated Messenger platform, Facebook is the '800 pound Gorilla' of social media, so Twitter needs to find a USP none of them have – and live streaming could be it. "

Periscope, Twitter’s amateur real-time video app, was also another focus of yesterday’s update with reinstated chief executive Dorsey noting that Twitter has been focusing “a lot of energy” on it in a bid to improve his company’s overall video experience. For Twitter though, this aspect of its real-time division is more focused on news and social commentary than it is brands.

Cost per-engagement

On the CPE front, the business has already made moves in the US to get more competitive, changing the Media Rating Council’s (MRC) viewability definition from three seconds to two seconds and 100 per cent view to 50 per cent.

“That was done to make our product more competitive with our industry peers that are driving lower prices at greater scale,” explained Noto.

Despite growing apathy from brands, ad engagement on Twitter has actually increased by 226 per cent year-on-year, with the average cost-per-engagement dropping by 64 per cent, due to the increasing mix of video, autoplay video and declines in like-for-like CPE for certain ad products according to Noto.

Robin Grant, global managing director at We Are Social pointed out that while the tide is turning away from public social broadcasting and toward personal messaging services like WhatsApp and Facebook Messenger, the social network is still a beehive of conversation and engagement.

"Twitter needs to remember why it became such a phenomenon in the first place and innovate into that space, taking current trends into account, but without simply copying other platforms," noted Grant.

"Yes, there has been a very real shift towards private messaging apps, but there is still a need for real-time, immediate mass broadcasting, and Twitter is still the platform for discussing and sharing immediate, big events."

His advice to Twitter? "Work harder to own the occasions best suited for that kind of content." This was indeed something Dorsey was keen to make a song and dance about while updating investors yesterday.

"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," said the chief, adding: "That drives everything on our service, especially news and social commentary."

Measuring up

Twitter is projected to grab just 7.9 per cent of global social network ad spend this year, according to eMarketer, a tiny slice compared to Facebook's lion's share of 67.9 per cent.

If Twitter wants to compete with this, then it has to improve it's measurement for brands. Its operating head Bain conceded that the business still has work to do in this area to scale it.

On the performance side, Twitter already works with Google's DoubleClick to give advertisers the independent verification they crave in order to part with their cash. Noto revealed it now runs 65 advertisers through the Alphabet-owned platform and that revenue from those advertisers outpaced Twitter's overall ad growth.

"What we've seen is that when we're measuring desktop impressions on Twitter to desktop conversions, that the data look for Twitter looks accurate and strong," he asserted. He did however note that 90 per cent of Twitter's impressions are on mobile, and so cross-device measurement, within the overall industry, "needs more work to look more accurate" to what Twitter knows to be true.

Going forward, this is what Twitter, along with Google, will be honing in on to help improve this cross-device figures for marketers.

Essence's Hoeu said she believes this is "definitely an area where social has some catching up to do," but adds that integrations between the likes of Google and Twitter will eventually help shift spend towards social networks.

"If you can effectively measure all of your digital spend on a like-for-like basis, it makes the question of where your budget should go much more straightforward," she continued.

Whether Twitter's next earnings call will be as disappointing remains to be seen, if it sticks to its live and kicking streaming promises and doubles down on improving measurement for brands then it could mean that the social network has something worth crowing about in three months' time.

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