Twitter is certainly one of the hottest topics in the past week, having just completed a very successful IPO that valued the company at almost $25 billion on the first day of trading.

So we thought it would be a good time to review Twitter’s activities in the area of mobile advertising, where much of its revenue is expected to come from.

This article also takes a look at Amplify, a special advertising program that Twitter has created to monetize the second screen TV experience. Amplify has recently been adopted by the major brands such as NFL, Verizon, and McDonalds.

Fortunately for Twitter, it was designed to work over mobile from the very beginning. In fact the 140 character length of a tweet was designed so that it would fit well within a standard SMS message (160 characters). Due to the fact that Twitter has always been mobile-friendly, a very large portion of twitter users have always accessed the service over mobile.

Twitter implemented a full advertising service on mobile in the first half of 2012. According to Adam Bain, Twitter’s Chief Revenue Officer, by mid-2012 mobile advertising was outpacing revenue from desktop-based ads on most days.

This year Twitter’s overall advertising revenue should be around $580 million, according to estimates by E-marketer. More than half of this revenue, over $300 million, is expected to come from mobile.

Mobile advertising acquisitions

Twitter has also improved its mobile offer through strategic acquisitions, such as purchasing mobile ad platform MoPub. MoPub is a tool that helps publishers monetize their ad inventory by connecting them with potential advertisers and providing targeted ad serving.

Essentially, this acquisition will let Twitter’s mobile advertising customers more easily put ads onto Twitter.

Plus there is the further possibility of combining Twitter’s extensive knowledge of a person’s interests and activities with MoPub’s targeting capabilities. This could potentially provide more highly targeted, and therefore more valuable, advertising across all the publisher’s sites powered by MoPub.

The competitors

By contrast, some other major companies have not always had as good a fit with the mobile market.

For example Google initially grew very quickly due to its success on desktop internet advertising. However, as the mobile channel developed, it has had some difficulties in successfully making the move to mobile. This despite the fact that all the way back in 2008 Google chairman Eric Schmidt was quoted as saying “We can make more money in mobile than we do in the desktop eventually… and the reason is the mobile computer is more targeted.”

Since then Google has of course developed a very large mobile advertising business, but even today their mobile ads are priced below the standard ads due to perceived lower effectiveness.

Facebook, arguably the leader in social media, was much slower than Twitter to embrace mobile.

Again, Facebook’s initial success was based on desktop usage, as was their original advertising model. As an ever increasing proportion of Facebook users began to access the service via mobile, the company had to work hard to evolve the advertising proposition and to convince investors that it would be able to duplicate its desktop advertising success in this new channel.

Now mobile makes up almost 50% of advertising revenues at Facebook, and the mobile porportion is still expanding.

Twitter’s Amplify program

To continue to build on their strength in mobile, Twitter has recently launched a new advertising program, Amplify. Amplify is a way for Twitter to monetize the growing popularity of “social TV conversations”.

These are the conversations that take place, primarily on social networks, during TV programs when viewers want to voice opinions, ask questions, or make get additional information about the TV program. Twitter claims that 95% of these conversations happen over Twitter, making it an ideal location to run targeted advertising.

Here is how the Amplify program works, using as an the example the Twitter-NFL-Verizon partnership that has been running this autumn.

• Custom Content The NFL has a team of writers that tweet throughout major NFL games (as well as less frequently in between games). These tweets contain links to customized video content, created specifically for the Twitter platform.
• Promoted Tweets Twitter displays these tweets using their “Promoted Tweet” platform. This means that the tweets appear not only in the twitter feed of people who follow the NFL, but also in the twitter feed of anyone that Twitter believes would be interested in this content.
• Social TV conversations For example, during an NFL game, there are many “social conversations” using hashtags which would let Twitter identify these people as football fans. Twitter can insert these promoted tweets into these twitter feeds to reach additional relevant consumers.
• Pre-roll ads Twitter then sells an ad placement on this content to a major brand, in this case Verizon. The ad is typically a very short pre-roll video, perhaps 7 seconds, that plays just before the customized content.

“Having access to this type of highly coveted content on Twitter will not only offer our users a unique programming schedule which will deepen their engagement with our platform but will also provide our sponsors with a value proposition that few other partners can bring to the table,” commented Bain.

Here is an example of what an Amplify tweet might look like:

And check here to see the Verizon pre-roll ad inserted before the video (note: this link is live as this post is published, but eventually may be removed by Twitter when the material is too outdated).

“Partnering with Twitter provides the NFL with a unique vehicle to reach millions of highly engaged fans in an environment which will allow trusted partners and sponsors to align with our brand,” said Brian Rolapp, Chief Operating Officer for NFL Media.

Read Twitters Amplify announcement on the Twitter blog.