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  • Twitter’s new video ads are performing extremely well, according to agencies involved in the early tests.
  • In our original article we said that Twitter’s revenue would grow significantly from video ads.
  • Early grades on Twitter’s new video ad product are positive, which confirms our view.

Twitter's (NYSE:TWTR) new Promoted Video ad product, which the micro-blogging company began testing recently across its platform has performed extremely well, according to agencies involved in the early tests. The product, which is aimed at brands looking to upload and distribute their videos to the Twitter network, has been designed to insert video clips into users' feeds. Payments are made when users tap or click to watch them. Various agencies that were involved in the early tests said that the new format has performed extremely well and users have shown a high propensity to watch the ads.

Amy Peterman, Paid Social Practice Lead at digital agency 360i, said, "We're seeing very good engagement rates; the preliminary results are very strong." Jeremy Leon, Senior Social Strategist at social media agency Laundry Service, said, "We're really shocked at how well it's performed." Earlier when Promoted Video was not available, marketers had to embed content from third-party sites like YouTube, a channel of Google (NASDAQ:GOOGL)(NASDAQ:GOOG).

Promoted Video, which expands on the Twitter Amplify program, will allow Twitter to spread its content to a larger audience beyond the logged in users. In our original article, we analyzed Twitter's prospects in video ads. We said that Twitter's acquisition of SnappyTV would allow its users to add videos in tweets in a sophisticated way, which in turn would boost the company's video ad revenue. To learn more, read our original article.

Business relationship disclosure: The update has been written by a BB Research stock analyst. BB Research is not receiving compensation for it (other than from Seeking Alpha). BB Research has no business relationship with any company whose stock is mentioned in this article.