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  • Jamie O'Donoghue

Twitter’s Changing User Metrics

Will Twitter's new user metrics give us a better idea of the health of the company?

Photo by Sara Kurfeß on Unsplash

Twitter’s (NYSE: TW) quarterly earnings last month garnered a lot of praise and some consternation. The report was intriguing not only for the bright picture it painted of Twitter’s financials, but because it afforded us our first glimpse of the company’s latest user engagement metric in action.

Back in April, the social network told the world that it would no longer be reporting on its monthly active users (MAUs) and would instead measure what it called Monetizable Daily Active Users, or mDAUs. The decision prompted a lot of speculation when it was first announced, but it was only in July that we finally got to see some hard numbers.

Rather than focusing on overall volume, the purpose of the new metric was to show how many of Twitter’s users were encountering ads on the platform, which is more or less the only concern of advertisers, as well as Twitter itself, which makes most of its money from ads. In an age where Facebook (NASDAQ: FB) is deleting literally billions of fake profiles and malevolent bots are running rampant, the knowledge that a social media account belongs to a real person with a real wallet can be invaluable to marketing departments the world over.

Going back to July’s report, Twitter revealed that its mDAU number now stands at 139 million, which is a 14% jump from the year-ago period. Since there is no equivalent number to compare it to, we just have to take Twitter at its word.

This strikes at the heart of the controversy surrounding the decision. A recurring complaint among Twitter’s investors is that the company isn’t particularly transparent about its user numbers. This wasn’t always so. In its early years of unstoppable growth, Twitter made fairly in-depth growth and engagement statistics easily available to anyone who asked, not necessarily because the company had a different ethic back then, but simply because it was more beneficial to do so.

As it expanded from a somewhat niche platform into a social media giant with major cultural and indeed political significance, Twitter was happy to provide data on every new region it conquered, every new language it added, and every user growth milestone it hit. Once that growth began to decline, however, the company became a lot more clandestine about whether it was in the red or in the green.

It’s hard to say if the introduction of mDAUs represents a turn towards greater openness on the part of Twitter or if we’re going to see yet more smoke and mirrors from Dorsey and Co. The new metric has been criticized in some quarters for concealing the true health of the company, especially considering that most of its social media rivals still use more traditional monthly user data.

On the other hand, Twitter might claim that its model is fundamentally different to the likes of YouTube, Facebook, and LinkedIn, among others, and that monthly active users would be tantamount to a vanity metric. Indeed, in last month’s report, the company said mDAUs represented “the best ways to measure our success,” and pointed out that the tool will allow it to separate real and desirable users from abusive accounts and bots.

However, it can be argued that the new metric, at bottom, reflects the actual revenue the platform can expect to derive from its users. After all, some of the world’s most popular social media apps continue to struggle to make any real profits. In that sense, Twitter’s push to provide an accurate look at the relationship between users and the money they bring in may prove invaluable in the long run.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Alphabet (Google), Facebook, Twitter. Read our full disclosure policy here.

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