Social media and internet companies have long searched for stable revenue and earnings beyond the hype of connecting people for free.  Twitter may be on to something big, big enough to bring an initial public offering. They are investigating the latter, not because it is just fashionable, but because it may be able to convince millions of people, including sports fans, to buy stock. Why? Because there may just now be enough tangible evidence of a profitability model destined to work.

It’s called Twitter Amplify. At bottom it is a way to generate advertising revenue through an economic interconnectedness between itself, companies that provide sports content, and their sponsors. Twitter has already done the test market. Twitter first connected with content providers, ESPN and Turner Sports. Twitter provides a robust platform for those content providers to place short video-clips of sporting events in near-contemporaneous fashion.

Somebody must have passed the test. Now, according to the Sports Business Journal, over a dozen other companies are joining the venture, including PGA Tour, Time Inc., and MLB Advanced Media. The key is getting buy-in from advertisers, the source of substantial revenue. If advertisers believe this platform allows them to leverage this cross-collateralized market to reach its target customers, there may be as much access to capital as access to people in Twitter’s future.

There are already exhibits. The NBA and Turner have a partnership to mutually exploit social media.  Twitter is the way the NBA’s growing audience can view video clips of playoffs highlights.  Their sponsors include Sony, Taco Bell and Sprint.  So using social media for advertising campaigns is not built on pure speculation. According to that same Journal source, studies are projecting ad revenue increases of 50% from what existed two years ago.

So if Twitter does go public, the public can buy shares, and we can all view Twitter’s strategic plans, executive compensation, and much more.  If the price rises, Twitter wanna-be companies and fans will join the gold rush.  A proliferation of Twitter-sized highlights could make Sports Center the new normal tortoise. Our newest tech-savvy sports fans are already surface dwellers when it comes to reading or viewing material in depth. A smorgasbord of a la carte highlight offerings could diminish the viewership of full games, especially snail-paced baseball games. Worse yet, the shift in ad revenue from traditional television to digital phone platforms could have unintended consequences. Can you imagine a half-crazed Ohio State fan screaming at hated Michigan and his phone – while driving?

I'm still not sure I get it. What's the return on investment to the advertisers?

I mean, how do advertisers on Twitter know they're getting value for what they're spending?

I liked this comment I found in gigaom while researching answers to your question.  

Arkadiusz Dymalski   Saturday, March 3 2012

1. “What is the (marketing) value of ‘retweet’?” That’s pretty funny to observe how technology made us so exigent. In the environment where everything can be monitored and calculated very precisely, we expect more and more of accuracy. While no one requires THAT level of accuracy for 'traditional’ media: billboards, Super Bowl ads etc. The argument that advertising on social media is like “trying to sell stuff to people while they’re hanging out with their friends at the bar” sounds ridiculous in the context of 3.5M$ expenses for “trying to sell stuff to people while they’re hanging out with their friends on the football stadium”.

Back to the stacks.

That may be true but it's still hard to know what to pay for a Twitter ad if it's impossible to effectively measure the return on that investment.