How Twitter Can Benefit From The Launch Of In-Stream Video Ads
Twitter (NYSE:TWTR) recently announced that it is launching in-Stream video ads both pre-roll and mid-roll, which will allow brands to reach out a wider audience via videos on Twitter. The company has been increasing its focus on video content on its platform, including deals with top TV networks and gaining rights to broadcast live sports events. Through in-stream ads, Twitter can monetize this content better by allowing advertisers to use its platform for marketing. The company stated that video impressions on its platform increased significantly from Q3 2016 to Q4 2016, and people who saw a video ad on Twitter are 50% more likely to be aware of the advertiser’s brand (according to 406 Nielsen Brand Effect studies). As Twitter establishes that video advertising on its platform has a significant impact for marketers, we believe in-stream ads can become a significant source of revenue for the company, especially as it continues to invest in high-quality video content for its platform.
Tapping Into the Growth Of Digital Video Ad Spend
According to eMarketer, U.S. digital video ad spend will grow at double digit rates annually and is likely to reach nearly $18 billion by 2020. Twitter is looking to tap into this growth and attract marketers to its platform. Advertising revenues account for around 90% of Twitter’s total revenues, and we expect the company’s average revenue per U.S. user to grow moderately over our forecast period.
Twitter is looking to become the go-to place for users to watch live videos of major sports leagues and other important events. The company is focusing on news and live videos to differentiate itself from other players. Bloomberg already streams two of its weekly live TV shows on Twitter, and is likely to bring more shows to its platform in the future. Twitter can enter into similar arrangements with other players to bring more live content to its platform, which is news-based or covers popular events. While its user base is not growing rapidly, the company has established that video views on its platform are growing and are effective in brand recall. In-stream ads can monetize these videos better and drive revenues for the company in the long term.
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