The Only Way to Truly Compare Twitter to Facebook
You already know that Twitter and Facebook are competing intensely for your eyeballs and subsequently advertiser dollars. Both companies operate social content feeds populated with ads, albeit with different value propositions.
In numerous ways, Twitter is much smaller and much younger than Facebook. However, comparing their actual businesses is a little tricky since they don't use the same reporting metrics.
Facebook reports average revenue per user, or ARPU, which is a fairly common monetization metric. Facebook used to report "Likes" as a proxy for engagement, which the company has since stopped doing. This is likely because it was a poor proxy to begin with, and "Likes" were at risk of becoming Wall Street's newest metric. No analyst wanted to begin modeling projections for "Likes."
Twitter, on the other hand, does not specifically disclose ARPU. This is where the legwork comes in.
A numbers game
Using the same methodology that Facebook does, investors can calculate Twitter's ARPU by dividing advertising revenue by the average number of monthly active users, or MAUs, during a given period. On a worldwide basis, Facebook is monetizing users over twice as effectively.
Geographical segments have very different monetization levels, and both companies naturally do best on their home turf. We can manually calculate Facebook's geographical ad ARPUs using the same method, but Twitter doesn't disclose a geographical breakdown of ad revenue (it only discloses a geographical breakdown of total revenue).
Instead, we can use Twitter's company-specific metrics to get better insight here. Twitter measures monetization as ad revenue per 1,000 timeline views. Twitter separately also discloses timeline views per MAU to measure engagement. Using these two figures, we can prorate ad revenue per 1,000 timeline views to get a proxy for ad ARPU per MAU.
Ad revenue per 1,000 timeline views
Timeline views per MAU
Prorated ad revenue per MAU
This is about the closest estimation that investors can get to geographical monetization. Note that this uses MAUs at the end of the period instead of the average number for the period, which makes it slightly lower. Still, we can then compare this to Facebook's geographical monetization figures.
U.S. and Canada
Rest of World
As it stands, Facebook is still monetizing users far more effectively in every part of the world. That's not to say that Twitter can't eventually get there. As Twitter matures and embraces its role as a news dissemination service (Twitter recently hired NBC News Chief Digital Officer Vivian Schiller as its News Chief), the ad platform will continue to grow.
One day, Twitter may be able to catch up with its larger rival in terms of monetization, but for now, Facebook is still king of the mobile advertising hill.
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The article The Only Way to Truly Compare Twitter to Facebook originally appeared on Fool.com.Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, Facebook, and Google. The Motley Fool owns shares of Amazon.com, Apple, Facebook, and Google. 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.
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