Dynamic growth in mobile video internet advertising revenue over the next five years will drive total global video internet advertising revenue to just under $50bn in 2021, opening up key revenue opportunities for social and mobile platform owners. Twitter is one such player banking on video advertising and live content to turn its fortunes around. However, in Ovum’s view, the current TV-like content and monetization strategy adopted by Twitter (and other established tech giants) lacks the innovation required to truly make the most of the mobile video opportunity.
According to Ovum’s latest global forecast, dynamic growth in mobile video over the next five years will drive total global video internet advertising revenue to just under $50bn in 2021. Moreover, mobile video Internet advertising revenue will overtake non-mobile video Internet advertising revenue in 2017, and will continue to dominate and drive growth in the space through 2021 (Figure 1). With more connected consumers accessing greater amounts of video content on their mobile devices, it is naturally the operators of mobile-focused digital media platforms that currently stand to gain the most from this movement.
But this same growth is going to attract a lot of new entrants, making for a much more competitive mobile video environment. Just being mobile, or merely offering ad-supported mobile video, will not be enough to fully maximize this opportunity and stave off competition in the space. Unless the largest platform owners continue to evolve the user experience of their mobile video platforms and services, they risk losing the attention (and associated ad dollars) of increasingly mobile and socially focused consumers to nimbler newcomers. In this context, it is just as important for the types of ads on show to be in tune with the evolving expectations of increasingly social and mobile consumers as it is for the core platform interface and content.
Twitter is one player that has much to gain (and lose) from developments in the mobile video space. It has struggled to grow revenues in recent years, and now – amid the threat of becoming a toxic wasteland populated by post-truth trolls – the company is focusing heavily on live mobile and social video as it seeks a brighter future.
Notably, Twitter has continued to enter into deals and partnerships focusing on premium live content, including deals with Sky Sports in the UK, the NFL, MLBAM, NHL, and the PGA Tour to offer live sports (or sports-related) coverage, and a deal with Dick Clark Productions to provide live coverage of a number of celebrity award show red carpet events.
However, Twitter’s main monetization strategy with such live content is essentially a reversion to TV-style advertising, which doesn’t play to the strengths of Twitter’s social, mainly mobile platform. Furthermore, TV coverage continues to dominate in terms of viewership – as has been the case with Twitter’s live NFL coverage. With this in mind, is there really much benefit to advertising against Twitter’s live streams instead of the main TV broadcast? Given the choice, most consumers would probably prefer to watch premium live content – such as sports – in the comfort of their living room, on the largest screen available.
Twitter is rightly looking to leverage its core social and mobile strengths to differentiate its live platform from the core TV content and viewing experience. However, there is little evidence to suggest that this same train of thought has fed into its ad strategy.
Failure to distinguish itself from the TV ad ecosystem and experience on its platform will limit Twitter’s revenue potential, particularly around mobile viewing. Traditional ads are, after all, a much more jarring experience on the mobile screen, and big advertisers such as P&G are now seeking better returns on their investment in digital ad campaigns. Mobile viewers will be much better served, and engaged, by new exclusive mobile, socially focused video ad formats that play to the strengths of the Twitter platform.
Continued innovation and experimentation with new formats – designed to not only complement the core mobile viewing experience but also enhance it – will be crucial not only for Twitter, but for other established platform owners, including Facebook. Fail to do this, and they are at serious risk of getting left behind in the increasingly competitive race for mobile video ad revenue.
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