Twitter To Share Ad Revenues With Creators In 30:70 Split?

Twitter Inc (NYSE:TWTR) has revised its content monetization practices and will now be sharing ad revenues with creators. By bringing more creators to churn out additional content for its platform, the micro blogging site is trying to boost its user base and improve engagement levels.

In a blog post, Twitter said, “the Amplify Publisher Program provides approved creators in the US with the ability to monetize their videos, which is as simple as "checking a box" prior to Tweeting. Pre-roll ads will then run against the content and a portion of the ad revenue is then shared back with creator.”

Moreover per CNBC’s Julia Boorstin, who first reported the development, Twitter will share revenues with creators at very competitive prices. Instead of a 50:50 share model employed by Facebook (NASDAQ:FB) and Alphabet’s (NASDAQ:GOOGL) YouTube, Twitter will be paying creators as much as 70% share of ad revenues.

Twitter is trying to lure 35,000 creators who are a part of Niche, a small company acquired by it in 2015. Niche acts as a platform for creators to grow and monetize their presence on social networks.

Moreover, creators will now have a number of options to “upload, manage and publish media” on both Twitter’s desktop and mobile sites. Creators can add videos, GIFs, and images and at the same time enable tweet scheduling. Twitter has also provided tools to better manage multi accounts and improve upload performance.

Twitter has been in trouble for a very long time now. Sluggish user growth remains investors’ key area of concern. Twitter did manage to record user growth in the second-quarter of 2016, although it wasn’t an impressive number. Twitter’s users grew from 310 million monthly average users (MAUs) to 313 million MAUs, a jump of 1% sequentially.

The performance of Twitter’s brand advertising businesses hasn’t been as expected in the last two reported quarters. Brand marketing is one of the primary contributors to the company’s revenues. In the last reported quarter, the company said that brand advertising demand was again lower than expected due to increasing competition.

Twitter’s growth is dependent on its ability to attract revenues amid intensifying competition, something we have stressed upon for a long time. With expansion of the Amplify Program and a 30:70 revenue split, the company seems to be on the right track. Online video is the most lucrative component of digital advertising. Facebook, YouTube and others are trying to grab a pie of this lucrative market.

As per an e-marketer report, which has cited data survey by Cowen and Company, US digital video ad spending is estimated to be $28.08 billion in 2020, up from $9.90 billion projected for 2016. Video as a percentage of US ad buyers’ digital budget allocations will increase to 19.7% of spending in 2016, compared with 17.7% in 2015.

At present Twitter carries a Zacks Rank #3 (Hold). A better-ranked stock is Asure Software (NASDAQ:ASUR) , which sports a Zacks Rank #1 (Strong Buy).

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