With Twitter (NYSE:TWTR) stock's big decline in 2015 continuing into 2016, investors are scrambling to find reasons to remain confident in the company. But as shares continue to fall, investors should keep in mind that one important area in which the company has continued to perform exceptionally well is monetization. And the recently announced integration of its live-streaming app Periscope into Twitter feeds will likely help propel further growth in monetization during 2016.
Periscope's integration into Twitter
"We're bringing live Periscope broadcasts directly into Tweets, beginning with iOS," Twitter announced earlier this month.
The move represents the first major collaboration between Twitter and its 2015-acquired Periscope platform.
In addition to autoplaying live broadcasts directly in Twitter feeds, replays will be viewable as well. Before this move, users had to click on a URL in a Tweet before they could view Periscope broadcasts -- and these broadcasts were not viewable within Twitter.
"Today, we're replacing those links with the broadcast itself, autoplaying right within the Tweet," Periscope explained in a blog post announcing the feature. "And when you tap the video, it goes full-screen and shows Periscope comments and hearts from other viewers. You don't need the Periscope app, or even a Periscope account."
Periscope's popularity has exploded. Since its launch just last year, the platform has generated over 100 million live broadcasts.
The importance of video in monetization
Video is a huge catalyst for monetization for social platforms. By integrating more ads into feeds, it's easier for social platforms to roll out video ads, which are highly engaging and more effective with users. The effectiveness of video ads has been particularly evident at Facebook (NASDAQ:FB), as the company has been a pioneer in integrating video content into its platform and monetizing it.
Facebook management said in its most recent earnings call that Facebook and Instagram have the best-performing mobile ad products and noted that "video is making them even better."
"Marketers have always loved using video to tell stories," Facebook chief operating officer Sheryl Sandberg explained. "As Mark discussed, video is a natural and growing part of our mobile News Feed experience. Video on Facebook gives marketers not just mass reach, but better cross-device targeting and measurement than we believe is available on any other platform."
Twitter is already set to benefit from Periscope integration, as advertisers can promote a tweet with an embedded Periscope broadcast the same way they are used to promoting any other tweets. And, going forward, the company will likely bring other forms of ads to live Periscope broadcasts, such as pre-rolling video ads -- an ad product already available for other videos posted on Twitter.
During Twitter's most recent quarter, revenue soared 58% compared to the year-ago quarter, or 64% when excluding the impact of year-over-year changes in foreign exchange rates. This growth was driven primarily by soaring advertising revenue.
While Twitter's current level of advertising revenue growth is unsustainable, Periscope integration, along with Twitter's other efforts to beef up its video experiences in the platform, will likely play a meaningful role in moderating its deceleration in ad revenue growth.