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The 'Monthly Active User' Metric Should Be Retired. But What Takes Its Place?

The problem: It takes different metrics to best reflect the size and usage of different networks.

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Twitter (unintentionally) took on an interesting challenge last week during its fourth-quarter earnings call: It tried to explain to investors why the company lost four million users during the previous quarter.

These users, who had been counted as “monthly active users” the quarter before, had simply vanished from Twitter’s total user count. Poof.

The simple explanation: The bulk of these four million people were not actually using Twitter. They were counted as part of a feature in the iPhone’s Safari Web browser that automatically pulled Twitter data whether the user was reading it or not. After the iOS 8 update, that automatic data collection was halted, and the people who were originally counted as “active” disappeared from the pot.

This loss of users who probably weren’t really users got me thinking: How accurate are the “monthly active user” metrics shared by companies like Facebook and Twitter? And should we be looking for a different, more meaningful way to measure the size of these social networks?

I’m not the first person to ask this question, or bring up similar debates. Discussions over relevant metrics date back to the early days of the Web — unique visitors versus page views, for example. (Sound familiar?)

MAUs have also been debated before. In fact, Twitter co-founder Ev Williams voiced his concern over this figure to Fortune in December after Instagram announced 300 million MAUs, effectively jumping Twitter in size.

“It’s become so abstract to be meaningless,” he said of the metric. “Something you did caused some data in their servers to be recorded for the month. So I think we’re on the wrong path.”

The monthly active user metric has been the industry standard for some time now. It’s what Wall Street looks for during earnings calls, and it’s what the press uses to compare one network to another. Advertisers, too, depend on the MAU metric as a way to compare all networks and determine where and how much money should be spent.

The problem is, as Williams points out, it’s not a great indicator for how big a social network actually is. Three months ago, for example, we thought these four million people were actively using Twitter. Not so much.

Facebook is guilty, too. The company’s numbers are inflated thanks to tools like Facebook Login, which counts people as “active” users if they use their Facebook credentials to sign into other apps and then share back to Facebook (depending on how you set this up, this sharing can happen automatically). That means, you don’t technically have to visit your Facebook profile to be an “active” Facebook user. That seems odd.

So why do these companies use the MAU metric?

For Facebook, the answer is simple: Their numbers are huge! So long as MAUs remain the industry standard, Facebook will always be the biggest and baddest social network on the block. Why change the rules to a game you are already dominating?

At Twitter, the company has pushed other metrics, liked its “logged out” audience (the number of people who see tweets but don’t have an account). This makes Twitter look a lot bigger than its MAU total. Because of Twitter’s public nature, loads of people without accounts see tweets each month on places like television or embedded in other articles.

The issue is you can’t compare that number to Facebook, which is still mostly a private network (although the company is pushing otherwise). And then how do you compare that to Snapchat or Pinterest? Or Instagram or LinkedIn?

You could try engagement metrics. For example, how often are people refreshing their Timeline or News Feed?

Not so fast. Twitter is already moving away from that metric, arguing that as their product improves to show people what they want right away, users should refresh the Timeline less. Plus, you run into the comparison issue again — how do you use this to compare Twitter to Snapchat, for example, which doesn’t have a stream?

What about sticking to financials? Revenue? Earnings per share? Ebitda profit?

Some analysts have already started to focus on Twitter’s financial targets — which it handily beat last quarter — instead of MAUs, but that also suggests Twitter is more mature than it could or should be. They’ll likely want to focus on metrics more closely akin to established companies like wireless or cable, which often tout their ARPU figure, or average revenue per user.

Well, that eliminates a whole group of social networks that simply aren’t making money yet, like WhatsApp, but which are seen as growth businesses. Snapchat brought in revenue for the first time a few months ago, and the company was already valued at $10 billion. In an environment where users are seen as currency, financials alone can no longer be a baseline.

This is why the MAU problem won’t go away anytime soon. These networks are all different, and as a result have different metrics that best capture their size. The MAU number is simply applicable to all of them, not necessarily relevant.

It’s an interesting predicament, and one that will only get more complicated as social networks are more deeply ingrained into the other apps and services we use.

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