Social Media Q4 Earnings Roundup: Holiday Ads + Mystery User Numbers
“It’s every bit as certain as death and taxes.” (Meet Joe Black, 1998) . . . And I’d add “holiday advertising.” Q4 2018 proved yet again that advertisers ramp up their media budgets in Q4 to get consumers to buy those holiday gifts. Facebook, Inc. (inclusive of its family of products: Facebook.com, Instagram, Messenger, WhatsApp, Facebook Audience Network, etc.), Twitter, and Snap all reported steady increases in ad revenue in Q4. Advertisers have fully embraced social networks as performance marketing platforms when holiday season pressure is on (seemingly ignoring Facebook, Inc.’s user privacy woes). This is the tangible and more straightforward story.
“Everything you have seen here has been an illusion.” (The Illusionist, 2006). Twitter made the first move by dropping traditional daily active users (DAU) in favor of a new “monetizable daily active users” (mDAU) metric — and will eliminate reporting monthly active users (MAU) entirely next quarter. Per Twitter, mDAU are “Twitter users who log in and access Twitter on any given day through Twitter.com or our Twitter applications that are able to show ads.” This is Twitter’s attempt to discount fake users/bots and duplicate users. For its part, Facebook, Inc. stated that it would eventually stop reporting only Facebook.com user numbers and instead reveal “overall family metrics” — its best estimate of de-duplicated users across all of its apps. On the surface, these changes seem like a moral attempt to stop double-counting and including fake users. But we know better. Twitter wants to make its user numbers look better; while its MAU have been on a steady decline in 2018 as it eliminated spam and bots, mDAU have been on a steady increase. Facebook is also looking to beef up its user numbers, because mo’ eyeballs, mo’ advertiser money. Ad pricing and advertisers’ media plans are based on users and impressions, so social networks modifying how they report those numbers may have ripple effects on media strategies. This is the opaque and more intriguing story.
What It Means
Users and revenue drive headlines, but we would have also liked to hear about — especially from Facebook, Inc. — the social networks’ concrete plans to protect users and their data beyond platitudes of “keeping people safe” and “fostering healthy communities.” Facebook, Inc. and Twitter may have ramped up 2018 investment to clean up their platforms (while Snap put on blinders and spent its year retooling Snapchat to recapture core users) — but they are far from safe havens. Bring on the regulators to expedite consumer protection.