The good news - Twitter now has 310 million active users, a reversal of fortune from February when the user numbers went down from 307 million to 305 million.
The bad news - just about everything else.
The biggest pain point yesterday came with a revenue shortfall of $595 million, missing Wall Street expectations of $607.8 million. Chief Operating Officer Adam Bain attributes this to:
Brand spend didn’t grow as quickly as we expected. In the quarter, video was strong, but that was partially offset by some softness that we saw in older legacy brand products. So, these are promoted products, for example, without video.
We look internationally and we saw across Europe some marketers who held back spend in the first half, holding it back for the Olympics and things like the Champions League. There were some other areas like Brazil and some other major categories. Tech, QSR and retail is good examples of big categories that were little bit softer than we expected.
Video is seen as a potential upside, says Bain:
In terms of the opportunity ahead, we see a clear opportunity ahead to increase our share of the brand advertising market, especially around video. Some of these new video opportunities will, we believe, grow budgets that we have access to.
We also hear from marketers that there is nothing in the world like Twitter in terms of as a marketing platform. Twitter is that live connection to culture for marketers and that’s both unique and special in the brand universe. Live is what’s most valuable in the ad business. So, to make us even more powerful, we are working on some video tools. These are things like reach and frequency planning, demographic targeting and verification, which will roll out this coming Fall to coincide with our NFL deal of our live streaming strategy.
The trick now is to move ‘legacy’ advertisers across to video as a channel. Bain says:
We are going to continue to move our marketers from legacy promoted tweets into promoted video. Promoted video performs incredibly well. We just recently gotten back a return on ad spend study for video during this past fall season. We saw a $6 return on ad spend for a major beverage manufacturer. So for every dollar that they put in Twitter, it returns $6 back to the register. They told us it was best in category. And so with that type of ROI, we are going to continue to move people to video.
That NFL deal is going to be important, Bain explains:
We know that on Thursday nights during the 3-hour telecast of Thursday Night Football, we have millions of users looking at tweets about that game. They are creating tens of millions of impressions that we know are very valuable to them and very valuable to our partners, both the NFL and of course our advertisers.
So being able to bring the live streaming game into the product with that live commentary those live conversations is a complete solution. It’s a complete solution for those tens of millions that are already on our platform and care about the NFL and the tens of millions of NFL fans that are not on the platform. We see it as the product that will be the same for logged in, logged out and syndicated users. It’s the same video, the same ads, the same analytics and we can deliver in an instant a very transparent way to tell people to come to Twitter and deliver on that instantly.
This also plays to a wider mission:
We have talked about the importance of us clearly communicating our value and delivering on it instantly. Live sports, live premium content is a way to communicate them, that’s very familiar to people, something we know they want based on their interest on Twitter, and to deliver on an instant, not just with that live video, but all the great conversation and tweets that are attached to it.
This watching with Twitter, watching a live event has been something we have seen for 9 years now. It’s pretty phenomenal. And this is really about making sure that make it even easier for people to see these games and to see these events and actually tweet about them. But more importantly, they get to see all the content on Twitter right away. So very easy way to get in, but they could see all the individual produced content, including the premium content as well.
Monetising the likes of Periscope and Vine is a priority, adds Bain:
We actually are monetizing Periscope and Vine by bringing that creative canvas into Twitter and allowing marketers to bring that canvas into Twitter and do targeting campaigns and measurement through the tools that we have available on the platform. We plan to expand the promoted video with Periscope option for marketers this quarter by bringing in the Android platform as well as up until now it’s just been available on iPhone. We have seen incredible creativity as well recently with marketers taking advantage of the Periscope option in Twitter. Two great examples of this were Doritos that went live during the Super Bowl and promoted the Periscope on Twitter and also Kohl’s, the department store who went live during the Oscars and brought a behind the scenes red carpet live on Twitter through the promoted tweets in Periscope.
In terms of pricing, Bain says:
In terms of how we price our video products, they are priced on a cost per video view basis versus these older legacy brand promoted tweets are priced on a cost per engagement. We have seen video be a more effective ad unit for marketers, especially when measuring either the mind or the wallet. We have seen video now is a doubling of ad recall versus traditional promoted tweets. Marketers that moved into video also saw almost a 30% lift in message association or ad association versus traditional promoted tweets and then lastly an 18% lift in awareness. So, ultimately, it’s helping drive all aspects of a marketer’s campaign and objectives and video is just performing much better.
Twitter CEO Jack Dorsey sees big sporting events as major enablers for growth:
Whether it’s the Olympics or the elections or things like the Euro League championship, there is a huge opportunity for consumers on Twitter to see really relevant content now and certainly marketers and content partners to have access to new products and features they didn’t have the last time each one of these events happened. During these events, it’s really when Twitter shines for marketers. These live audiences and the connection that marketers can have to them are rare in the online ad space.
We stand out from the rest of the market around these events. When we think about the elections, direct response part of election cycle, which is around fund raising, marketers can now bring tailored audiences to bear. In the Olympics, we are going to see a lot more video and video advertising being used. So we think there is going to be great opportunities to showcase how far we have come last time around.
The elephant in the room here of course is Facebook, which has its own Live ambitions. Dorsey says:
We have been doing live for 10 years and we believe we have a leadership position in it. But it’s not just about showing a live event, it’s also about hosting a conversation around the live event. Twitter has always been the best place to see what’s happening immediately to see what’s happening instantly and to bring people together around a particular shared experience.
We think the easiest way to get what Twitter is, is really to show a live event, show people the great accounts who are providing insights that you can’t find anywhere else, you can’t find in your address, but you actually meet on Twitter through that experience, to connect them through a follow and also to encourage them in a conversation.
Dorsey made an interesting slip of the tongue when talking that was rather more telling, when he referred to Twitter having “leadership potential” in live video, instead of leadership position.
Facebook’s video ambitions can’t be dismissed as simply as Dorsey would like.Facebook has more users than Twitter and its own video offering is unashamedly embedded front and center in its core app, whereas Periscope still seems like a secondary brand.
There’s much sense around the idea that live is a way to re-ignite advertisers interest in Twitter and the sporting events tie-ups are a sound move. But the battle for live hearts and minds is only just beginning.
Meanwhile Twitter's stock price crashed on the news of the revenue shortfall.