Twitter Bird
Source: Twitter

This summer, Twitter (NYSE:TWTR) dove deeper into second screen territory by providing curated timelines for World Cup matches. Now, the "real-time information network" is providing a similar service for every NFL game this season. Football fans can follow #NFL or a game specific hashtag like #PITvsBAL.

This is the next step in the curated timeline experiment at Twitter. On the second-quarter conference call, CEO Dick Costolo mentioned that this summer's World Cup feature didn't drive active user growth that much, but it improved engagement.

The good thing for Twitter is that these kinds of products don't need to drive new registrations if it can use context-based advertising to monetize them. Similar to how Google (NASDAQ:GOOG) (NASDAQ:GOOGL) uses the context of what someone's searching for to advertise to him (logged-in or not), Twitter can do the same thing.

The unregistered Twitter user problem
When Twitter reported second-quarter earnings, Costolo mentioned that its monthly active user base is a minority of its actual audience. "There are hundreds of millions of additional unique visitors who come to Twitter every month, but don't log in," Costolo said. "When you consider the combination of monthly active users and unique visitors, the size of our audience on our owned and operated properties is two to three times that of just our monthly active user base."

Indeed, Twitter is much more accessible to unregistered users than most other social networks. You can view specific user's profiles, search for topics, and follow hashtags, all without registering. The only thing you don't get is the amalgamation of the tweets of everyone you follow in chronological order. For the casual Twitter user, registration might seem like too much of a bother.

Curated timelines are a great feature, but still don't require registration. That's why we saw engagement increase on Twitter even though there was little effect on the number of registered users. Perhaps management believed that increasing engagement would lead to more registrations, but so far that hasn't been the case.

Curating ads for curated timelines
Last week, Twitter CFO Anthony Noto spoke at the Citi 2014 Global Technology Conference. He said there are a couple of things they could have done better with the World Cup.

First, advertise the product to a broader set of users, so they understand the breadth of information available. Second, and more importantly, he believes he could charge a high premium for advertisements on curated timelines -- even for logged-out users -- because they express specific interest. He gave the example of day-time advertising on ESPN compared to ABC.

This is how Google destroyed the banner ad. Instead of using users' recent browser histories to push advertisements -- which is effectively how Twitter monetizes today -- it used the context of what they typed into Google's search engine. This is clearly much more effective, and still doesn't require a user to log in. In fact, Google didn't add user accounts until it began expanding to other web services with GMail driving a large portion of registrations.

Curated timelines are perfect for context-based advertising. If a person is following the #NFL hashtag or a specific game's hashtag, it tells Twitter a lot. It can be used to reinforce television advertisement shown during the game; advertisers could market sports merchandise; or it can advertise food you should get before the Sunday night game.

Just the start
The NFL gets huge ratings in the U.S. It's basically the equivalent of the USA men's soccer team playing Portugal every Sunday ... 13 times ... for four months straight. In other words, the average NFL game attracts about 20 million viewers. So, it's a good place to fully launch curated timelines.

But the NFL is just the start for curated timelines. Twitter could do other sports as well as movies, award shows, political elections, and more. These are all categories that draw large audiences and are easily monetized through context.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and Twitter. The Motley Fool owns shares of Google (A shares), Google (C shares), and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.