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Customer-obsessed marketing

The Facebook And Twitter Q2 Earnings Story: Quality Over Quantity

Jessica Liu
Senior Analyst
July 27, 2018

What you’ll hear from the press this week:

  • Facebook missed its earnings for the first time since 2015. But in our world, 43% YOY increase in revenue and 11% YOY increase in DAUs and MAUs is still a solid performance. Facebook continues to diversify by augmenting its core Facebook social network with ancillary products (Instagram, WhatsApp, Messenger), new ad formats and inventory, and experiments with different features. A slight hit in one area like Facebook core users can be offset by other areas, such as Instagram growth.
  • No news is good news for Twitter given its historically uneven performance. Twitter’s results weren’t notable: It maintained user numbers and exhibited respectable revenue growth. It continues to stress its relevancy during major global events like the World Cup or Wimbledon as the proof point for users and advertisers.

The real story is that the social networks are finally coming around on “quality over quantity.” Facebook and Twitter recognize that online abuse continues to erode the social user experience, and they are taking action:

What it means: Moving forward, we expect to see deceleration in user and revenue growth for both social networks as attention turns to quality over quantity. This should surprise no one, because for the past year, Facebook in particular has been stating ad nauseam that it anticipates a slowdown. The GDPR tightened user privacy and data controls, impacting ad targeting and the ability to share social network data with third-party apps.

Forget “networks.” The new buzzword is “communities.” Prepare for the resurrection of private social communities.

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