Twitter Inc (NYSE:TWTR) may be worrying some investors because of its falling user numbers, but others are concentrated on the company’s advertising strategy. Those looking at the firm’s numbers in its most recent earnings report saw an apparent improvement in the company’s advertising business. Despite that, recent rumblings about the social network’s unusual advertising strategy are starting to impact the company’s growth.
A report from Pivotal Research Group on the future of Twitter Inc (NYSE:TWTR) defends the company from recent attacks on its tactics regarding television. The report, titled “Twitter + TV Still Complements, If Not Compliments,” was authored by analyst Brian Weiser, and argues in favor of the company as a second screen advertiser.
Market questions Twitter ad strategy
Weiser begins the report with reference to recent comments made by NBC Universal’s head of research Alan Wurtzel’s comments about the Twitter Inc (NYSE:TWTR) strategy in television. the executive said that Twitter is not game-changing in its effect on television and widely discounted the impact of the social network on the future of the television industry.
Mr Weiser reckons the Wutzel is wrong about Twitter Inc (NYSE:TWTR), and he’s got some support behind those claims. He reckons that there are four important Twitter efforts in the television space. The first is Twitter TV ratings, the second is it Amplify project, the third is tracking keywords on broadcasts and the fourth is sales to networks looking to drive engagement themselves.
Twitter’s four pronged television influence works together to produce a compelling product according to Weiser. The company is able to show how many Twitter users are watching a particular program and leverage that to sell ads through the network with Amplify. The selling of Twitter ads as part of a TV package is important, particularly for companies with a strong social presence, and central social strategy.
Twitter Inc (NYSE:TWTR) may have trouble growing out of it current shell, however. There remains “much work-to-be-done for TV networks-as-marketers figuring out how to use Twitter,” according to Weiser, and he reckons that stance extends to many other kinds of marketers.
Twitter attempts to change the TV world
Twitter Inc (NYSE:TWTR) is not just trying to sell display ads, it’s trying to change the way that TV advertising works. The company is trying to promote the use of TV and social advertising as a single unit, and it’s clearly going to have to change a lot of minds before that dream comes to fruition.
Though the company’s narrative is compelling, and it appears to be the only company with the capacity to pull it off, the Twitter Inc (NYSE:TWTR) outline of the future is not necessarily the right one. The company’s future is being carried by a story it has written for the advertising industry and its own shareholders, and that’s risky.
If Twitter Inc (NYSE:TWTR) manages to change television the rewards will be fantastic, if it doesn’t shareholders may see a huge chunk of the value of their holdings eroded. The company’s success, at least in the medium term, relies on its ability to sell its vision to the networks. By the end of 2014, it’ll be clear how successful that endeavour has been.
