Twitter Stock: Twitter Inc Takes A Step In The Right Direction

Twitter Inc is reportedly starting to offer guarantees on video ads. With third party verification in place, that's a step in the right direction.

Twitter Inc Makes A Step In The Right Direction
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San Francisco, California based Twitter Inc (NYSE:TWTR) is reportedly offering guarantees on video ads, much like advertisers get with ads on TV. And with third party verification in place, the micro-blogging site seems to be headed in the right direction with its pre-roll ads, a variety of video ads that aren't found on too many competing platforms (Not even on Facebook). While this doesn't necessarily guarantee that incremental ad-Dollars will start flowing in, it's a good move, and could complement the company's other efforts, like live video streaming, for instance.

Twitter's latest attempt to grab TV ad-Dollars.

Reportedly, Twitter is working with Dentsu Aegis Network, to develop this guaranteed ad product. Twitter's aim is to offer a product that's similar to a "TV-style buy", which allows advertisers to buy a specific number of video ads, with the certainty that these ads are seen by the specified target audience. Quoting Michael Law, exec VP of video investment at Dentsu:

"We kept saying we want to buy with them like we do TV," Law also added an interesting point, saying "If we want to replace a TV [rating point] with online video inventory, and want them to be equal, we have to think about the environment they're running in. That's why we worked with Twitter."

According to AdvertisingAge, Dentsu, which has worked with Twitter to test the product with about a dozen advertisers estimates that such guaranteed ads could command a "low six figures" cost. All of this pertains at large to Twitter's pre-roll video ads, which are displayed before premium video content.

Why advertisers should care about Twitter's new product.

For starters, not a lot of Twitter's competitors serve pre-roll video ads - not even Facebook, for that matter, which has abstained from pre-roll video ads by design. And as Peter Kafka of Recode points out, the approach hasn't necessarily helped Facebook, or video content publishers on platform:

"But unlike almost everyone else in the ad business, CEO Mark Zuckerberg has forbidden “pre-roll” video ads, which run before a clip starts. That means that most publishers have seen little or no ad revenue from the clips they show on Facebook, even though many are spending considerable resources trying to build up a video presence there. That stance has also discouraged some Facebook publishers, like sports leagues, from putting valuable content on the network."

To attract publishers, Facebook recently decided to put in place mid-roll ads. It's debatable how much attention viewers pay to ads that are being forced down their throats mid-way through the content they're there to see.

Secondly, advertisers on Facebook still don't get to choose the kind of content their ads appear on. For advertisers who are conscious about the kind of content their brands get associated with, that's not very encouraging. More so in the case of live video streams, because there's absolutely no way to predict the nature of live video content. In contrast, Twitter will allow brands to approve the content their ads run alongside.

What's more, Twitter is going the distance in its effort to add credibility to its ad platform, operating in line with widely accepted industry standards and incorporating third party verification:

"The pre-roll video ads are counted according to Media Ratings Council standards and the results are confirmed by third parties like Integral Ad Science. Integral is among the third-party measurement companies used by advertisers to independently verify data from platforms like Twitter, Facebook and YouTube. Twitter also works with Moat."

Media Ratings Council (MRC) is digital advertising's de facto measurement watchdog, which has given ad platforms some stick in the past - even to the likes of Google's DoubleClick for Publishers or DfP platform. Be it Nielsen, who recently received its stamp of approval from MRC, or Facebook, who was in talks with the body to audit its metrics following last year's ad metrics fiasco, everybody wants to comply with MRC's norms. And the fact that Twitter is incorporating these standards should inspire confidence among advertisers.

Twitter hasn't confirmed when this product will be made available to its broader base of advertisers beyond Detsu. However, what's clear is that this is a step in the right direction for Twitter, which is also leading the way in the live video streaming space. Until you see some signs of improvement in Twitter's financials though, you might want to avoid the stock.

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Vikram Nagarkar Vikram Nagarkar   on Amigobulls :

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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