Chips, Beer, Tweets: Why TV Is Key To Twitter's Prospects

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One thing Twitter has that other social networks don't: Users who talk about the world in real time. In practice, this largely means one thing. Millions of people use Twitter while they're watching TV.

Those people often use hashtags to let other fans find their tweets (#BreakingBad, #NFL). More importantly, from Twitter's perspective, this lets advertisers know which users are watching what.

"Twitter is now that public theater where people are yelling, booing, exclaiming, laughing, clapping," says Antonio Garcia-Martinez, who helped build Facebook's ad exchange and now works for a social-advertising company, Nanigans. Getting into that public theater is incredibly valuable for advertisers, he says.

In other words, Twitter could become the key ad space for what marketing people call "the second screen." The first screen — TV — is still a huge source of ad revenue. That's why Twitter wants to become as indispensable as chips and beer for watching TV.

That will let the company sell advertisers on the idea that being on TV is no longer enough — they also need to advertise to all the Twitter users who are talking about the show.

At least, that's part of the pitch the company's making in Thursday's IPO.

Investors will have to weigh that against a pretty obvious downside: Twitter has yet to turn a profit. That's partly because the company has spent millions of dollars in the past year buying up companies to help Twitter sell more ads.

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