Facebook Inc (NASDAQ:FB) has had an incredible 2013, but things may get a little less stable over the Winter. The company’s biggest rival—in social media rather than advertising—is set to go public sometime in the months ahead. Twitter has filed an initial application to go public with regulators. The Twitter IPO, and the company’s form after it goes public, could be incredibly important for Facebook Inc (NASDAQ:FB) going forward.
A new report form Topeka Capital Markets takes a look at the relationship between Facebook Inc (NASDAQ:FB) and Twitter. The report suggests that Twitter could be much better than Facebook in certain businesses, and it might be able to make a huge amount of money in that business.
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TV is still Goliath
TV is still the most important player in the advertising industry. The format has an important cultural importance, and it still brings in far more money than Internet video. That is not going to change any time soon according to research, and that will negatively effect Facebook Inc (NASDAQ:FB) as it tries to move into video ads. Twitter has a way around the trend, however.
Twitter is what is called a “second screen strategy.” The company is becoming a more important part of the TV watching experience. Users talk about what they’re watching, including advertisements, on the social network. This creates an amazing way to gauge response to adverts and create word of mouth buzz about a product.
This is what the Topeka analysts call Social TV, and Twitter is king in the sector. Because of the differences in design at Facebook Inc. (NASDAQ:FB), it is less usable as a second screen while watching television. Twitter is going to bring this strategy further, and develop itself into a real companion for television.
TV changes Twitter, Twitter changes TV
When a really popular show is on television, the buzz is palpable on the social network. Twitter has noticed and it has begun to push some of its advertising in that direction. The company is planning on launching a TV recommendation service in the months ahead that will add to the perceived relationship between the social network and television in the mind of consumers.
Facebook Inc (NASDAQ:FB) is not operating on the same level as Twitter when it comes to television. Twitter will be able to leverage a pre-existing advertising business in television, and force a partnership with the companies operating in the space. Facebook Inc (NASDAQ:FB) needs to take business from Google Inc (NASDAQ:GOOG) in order to demonstrate its worth.
Facebook Inc (NASDAQ:FB) and twitter are not really direct competitors right now—at least not in format. The two companies are, however, constantly looking for the same ad dollars. Facebook is going to have to do something radical to shake the television business. Twitter merely has to get television advertising to recognize the value of the Internet.