Last May, Twitter announced a service called Amplify, which allowed broadcasters and advertisers to use tweets to bring in more ad revenue. Specifically, Amplify targets posts and tweets that are shared and talked about during television shows. Remember how everyone was tweeting about the blackout after the Beyonce Super Bowl halftime show? Just imagine how many people will be tweeting during this Sunday's series finale of AMC's
(NASDAQ:AMCX) Breaking Bad.
With Amplify, Twitter allows advertisers to capitalize on all of such tweets, and on the "second screen" phenomenon, wherein viewers pay attention to the screen of their television and their computer or smartphone at the same time.
On Monday, Twitter announced a partnership with CBS
(NYSE:CBS) through Amplify, wherein the broadcast company will post promoted tweets containing video advertisement for shows, sports programs, and news. CSI
, 60 Minutes,
and at least 40 other CBS shows will be a part of the partnership.
With momentum for Amplify mounting, Twitter announced yesterday morning that it had made an agreement with the National Football League to carry instant-replay footage -- along with short ads from marketers -- of course, via sponsored tweets. The primary marketing sponsor for the NFL-Twitter agreement is Verizon
(NYSE:VZ), and come February 2, 2014, that will likely prove to be a very sweet deal: Verizon holds exclusive rights to Twitter's Amplify ads during the Super Bowl.
All the buzz surrounding Twitter has been about its recently announced filing for an IPO
; the Amplify project may serve to add value to the company before the public can buy in. Just as Facebook
(NASDAQ:FB) has found its way, financially speaking, via advertising, it seems that Twitter will seek to monetize its service by allowing marketers to sell products to its base of 200 million regular users. And partnerships with television companies makes sense, as TV is by far the most lucrative medium for advertising. The hope is that Twitter's new service can "amplify" the efficacy of television ads by leaping to the second screen. As Adam Bain, President of Revenue at Twitter, told the Financial Times
, "We have often thought about Twitter plus TV, but now we are thinking about Twitter times TV."
But it is not likely that Twitter will be rolling in cash due to CBS and the NFL. "Some Amplify partnerships will result in TV-related ad revenue flowing to Twitter (albeit modest amounts in total)," wrote Pivotal Research Group analyst Brian Wieser in a note following the announcement of the CBS deal.
That being said, Twitter has a lot of promise in the advertising world. According the the Social TV analytics firm Bluefin, a full 95% of live TV conversation currently happens on Twitter. Additionally, half of all the ads during the Super Bowl earlier this year featured hashtags. Amplify has already had success with advertisers like AT&T
(NYSE:T), the NCAA, and Coke
(NYSE:KO) during this year's March Madness college basketball tournament, with promoted tweets including instant replay videos and brief advertisements. During the NBA Finals, Sony Pictures
(NYSE:S), and Taco Bell
(NYSE:YUM) sponsored tweets with the best replays from the games.
The advertising consultancy firm eMarketer has estimated that Twitter will generate $580 million in revenue from advertising for 2013. For next year, the firm placed that figure at $1 billion, factoring in the NFL, an American institution that broadcasts games watched by 200 million viewers (or 80% of all homes with televisions) each season.
Perhaps Twitter's partnerships with CBS, the NFL, and others will persuade other broadcasters and advertisers to make deals to "amplify" their -- and Twitter's -- ad revenue. Twitter's new partnerships, and particularly its relationship with the Super Bowl, the beating heart of American advertising, should provide consumers, investors, and tweeters a glimpse of Twitter's future as an advertising platform.
For more on Twitter and Facebook as advertising platforms, read Facebook and Twitter Drop 'Social,' Become Commercial Networks by Minyanville's André Mouton.
Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.