Why TV will play a big role in Twitter’s IPO

We don’t know much about Twitter’s planned IPO, thanks to the company’s decision to file its papers with the SEC confidentially. But we do know is that the timing is perfect.

The fall TV season is just about to begin. That means that shows like Scandal are returning to the TV screen, ready to once again mobilize thousands of #gladiators (as the show’s fans call themselves on Twitter) to comment on each and every twist and turn with countless tweets and clever hashtags. And as they and other TV fans take to Twitter to celebrate their favorite shows and characters, Twitter’s TV ambitions are going to become a lot more obvious.

Twitter has long worked to strike partnerships with TV networks who are eager to boost ratings and real-time engagement with tweets. Scandal is one of Twitter’s big success stories.

ABC's on-air promotion of hashtags for Scandal.

ABC’s on-air promotion of hashtags for Scandal.

The show made a midseason debut on ABC (s DIS) in April 2012, and cleverly used Twitter to grow a devoted following of fans: ABC not only promoted hashtags on air, but also got the cast involved to live-tweet during each episode’s broadcast airing. Witty hashtags mirrored the show’s writing, and it didn’t exactly hurt that Oprah got in on the action as well, tweeting about how much she loved the show.

“If you can get Oprah to tweet about your show, that’s one of the best practices,” joked Twitter’s Head of TV Fred Graver at the Next TV Summit in San Francisco this week. Graver said that Twitter’s involvement in Scandal’s success was minimal. “This thing just took a life of its own,” he said. Graver went on to say that Twitter’s partnerships with TV networks around the promotion of shows and live events are largely informal, characterizing them as handshake agreements rather than complicated deals.

A $66 billion ad market in the US alone

But this informal approach that doesn’t mean that TV isn’t big business for Twitter. Brands are expected to spend more than $66 billion on TV advertising in the U.S. alone this year, and networks themselves are spending a ton of money to promote their own shows as well. Twitter is strategically positioning itself as an ally to both. Instead of just siphoning ad money away from TV, it promises to make TV advertising more relevant, and at the same time deliver the audiences that make TV the go-to medium for advertisers. In turn, it could get a nice chunk of ad revenue on its own.

TV networks tried to solve these problems by themselves for a while, experimenting with second-screen apps that were meant to keep people watching in real time, and possibly deliver interactive advertising at the same time that ad spots are shown on TV. But most of these so-called second screen experiences didn’t really catch on with consumers, which is why networks like ABC have largely abandoned these efforts. Instead, they’re looking to places where people already talk about their shows, with Twitter being at the forefront.

“Twitter was not built as a second screen device, but every night tens of millions of people use it for that,” said Graver this week.

Twitter has started to cooperate with Nielsen to provide some metrics around these conversations. Beginning with this fall TV season, the Nielsen Twitter TV Ratings will complement Nielsen’s traditional viewership data with numbers on the most-talked-about shows on Twitter. These new Nielsen ratings are based on work from SocialGuide, a startup that Nielsen bought a year ago. New to the offering are impressions, showing not only how many people tweet about a program, but also how many people read these tweets. Graves said that these impressions can be 100 times as much as the number of tweets for a show.

Twitter is also gathering its own numbers, allowing brands to dive in even deeper: The company acquired social TV measurement specialist Bluefin Labs in February, and is now working on using this kind of data for targeted advertising based on a simple but clever idea: If you tweet about a show while it’s airing on TV, chances are that you’re also seeing the ad breaks. So why not target you with sponsored tweets that are related to the ads on your TV?

Check out this twitter-produced video to see how it works:


Taking Twitter TV global

But Twitter doesn’t just want to reach U.S. advertisers. People like to talk about TV all over the world, and brands are expected to spend more than $217 billion on TV advertising by 2017: Twitter clearly wants to tap into both. Graver admitted as much when he revealed that the company acquired Bluefin Labs competitor Trendr last month largely because of its established international relationships.

All the while, Twitter is looking to make TV an even more prominent topic on its service, and add some functionality even for people who don’t tweet themselves. Graves said this week that the service will soon surface its own TV recommendations. This will be less about a person’s own history, and more about social signals — something that Graves called less “Netflixy:” “We will begin to surface things to you that your friends are watching.”

After Twitter revealed its confidential IPO filing this week, viewers aren’t the only ones who is watching — and Twitter’s ambitious TV plans will likely be one of the areas to which potential investors are going to pay close attention.