Twitter (TWTR) Showing Serious Strength


Twitter Inc. (NYSE:TWTR) is a CML Pro Spotlight Top Pick and news has started to flow from the company that is quite positive.

Here are the facts:

First, Twitter's live streaming is working (to some degree). While the NFL is seeing ratings drop this year, week-to-week, Twitter's little live streaming experiment is going quite well.

For those with a careful eye, you will note that the numbers are changing a little bit every time we post this chart. All I can say is that the data seems to move around a little, and I'll just assume it's different ways of computing the numbers. In any case, the growth is there and further it is in the face of shrinkage from linear TV.

Thursday Night Football (TNF) peaked at 17.5 million viewers earlier this year and dropped all the way down to 12.1 million viewers last week (Source: SMH).

Second, this exact same phenomenon is happening for Twitter with respect to the presidential debates.

Twitter Inc. (NYSE:TWTR) viewership is up 28% while total viewership (mostly TV) is down 33%

And most importantly:

"Ad inventory for all debates has sold out, and Twitter's livestream of the presidential debates is over-delivering on advertiser expectations.

Twitter's mid-roll ads in the pre and post-debate shows over-delivered on impression estimates by 377% with still one debate to go."

Source: PR Newswire

I have no idea what Kara Swisher and the rest of Wall Street are looking at, but the current time, using these metrics, Twitter is not only growing, it's growing in the face of shrinkage everywhere else.

Revenue Impact

The real question is whether or not this will impact revenue, and we really don't know. We do know that about 15% of the NFL viewers are coming from "logged out" users, which is the evidence the world needed to justify Twitter's claim that its reach goes well beyond its reported 313 million monthly active users (MAUs) but also into the large pool of 500 million additional MAUs that are logged out.

We also know this fact that just came out from the firm:

Largest Amplify Deal Ever

Reaching back a few days, we reprise a story we penned surrounding Twitter's recent video deal which is its largest ever through Amplify.

- On October 4th we divulged that Twitter signed its largest video advertising campaign ever through its Amplify ecosystem. To bring that dossier to the forefront, here is a snippet:

"Twitter Inc. (NYSE:TWTR) has had several deals through its Amplify video ad product, but according to Mike Park, the director of content partnerships and Amplify, Twitter has never signed a deal of this size before.

That comment is critical because the NFL deal with Twitter was also through Amplify, and as far as the world has been told, that deal will generate $50 million in video ad revenue."

We also know that ROI is booming for brands that use Twitter Inc. (NYSE:TWTR). From that same CML Pro dossier we get this:


In an official Twitter blog post that went wildly under reported, we found out that Twitter is winning in the ROI game. Check out some of these statistics that the company released based on research done in partnership with Applied Marketing Science:

"When a customer Tweets at a business and receives a response, they are willing to spend 3–20% more on an average priced item from that business in the future."

The two companies did an analysis by vertical to include airlines, US quick service restaurant (QSR) and telecom industries. Here are the results:

Just to make these numbers perfectly clear, the research suggests, with all the bells and whistles removed, that when a company communicates with a customer on Twitter, the company makes more money.

But the Twitter Inc. blog post goes further to show that not only does revenue rise, but "customers who receive service via Twitter will create measurable upper-funnel impact." Here's another image, then the translation into English:

This, translated into English reads, customer service through Twitter boosts a consumers likeliness to share their experience 44%, likeliness to recommend the brand by 30% and yields gigantically higher customer service ratings (+38%).

And for all the naysayers that will point to the risk of negative pubic tweets, Twitter Inc. (NYSE:TWTR) has a response to that as well.

That chart is for telecomm companies and it reads that "conversations that started with a negative Tweet resulted in higher brand favorability as well as 3X higher willingness to pay for their monthly wireless plan, compared to those whose original Tweet was positive." Yes, negative tweets are better likely because problems are seen as resolved quickly.

Finally, for the skeptic, Twitter Inc. shows another powerful result:

This chart demonstrates that between phone, web, email, in person and Twitter based customer service, Twitter is by far the least frustrating facility.

Twitter Inc. (NYSE:TWTR) Conclusion

Twitter Inc. is very quiet about guiding intra-quarter for revenue and EPS -- that's just their thing. But, they do provide data and press releases like those above. We can't say if revenue will meet or beat expectations, nor can we say anything about EPS. But, we can say that:

First, Twitter is showing engagement and usage growth as the very live streaming events it's carrying are showing shrinkage outside the platform for both the live streaming NFL and live streaming debates.

Second, We can also see a video advertising deal larger than any other of its kind.

Third, ad inventory for all debates has sold out, and Twitter's livestream of the presidential debates is over-delivering on advertiser expectations.

Fourth, ROI for brands using Twitter for customer engagement is high as is customer upper-funnel impact.

That's good enough for me to believe the turnaround is working.

The author is long shares of Twitter Inc. (NYSE:TWTR).


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