Twitter Engagement Is Declining, And User Growth Is Slowing

Twitter fourth quarter and full-year earnings are out. The company posted solid revenues, but user growth continues to slow, and engagement is declining.

Worldwide, the total number of monthly active users in the fourth quarter averaged 241 million — an increase of just 4% from the previous quarter and 30% over the fourth quarter of 2012. Audience growth in the U.S. has slowed to a crawl.

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Timeline views, which are an important metric for measuring user engagement on Twitter, declined for the first time ever. Specifically, users viewed the Twitter timeline 11 billion fewer times than they did in the previous quarter, about a 7% fall off. We predicted this worrying trend in a chart we published last month. Declining timeline views means users are searching less within Twitter and refreshing their timelines less frequently to show the latest tweets. Fewer timeline views results in fewer ad opportunities.

On the earnings call, CEO Dick Costolo attributed the decline in timeline views to product improvements across iOS and Android that increased the value of each timeline view. For example, the threaded conversations feature has cut down on the number of clicks it takes for a user to track multiple tweets related to one conversation. Costolo stressed repeatedly that timeline views took a hit as a result of making Twitter a better service for users, and ultimately, more accessible to a wider audience.

It’s also important to note that Twitter’s measurement of timeline views does not include views conducted via third-party apps and clients, which is more common among Twitter’s power desktop users. Although most Twitter activity is conducted on mobile, Twitter’s information on timeline views still does not capture the full breadth of Twitter activity.

Despite the weak audience metrics, Twitter ad revenue in the fourth quarter reached $US220 million, up 44% sequentially and an increase of 121% from one year prior.

Twitter’s CFO Mike Gupta said a “record number of retailers flocked to Twitter in the fourth quarter to reach consumers.” Although there was no talk of how Twitter’s new ad exchange MoPub was being integrated with the company, Gupta said it will be critical to growing Twitter’s core advertising business.

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