Facebook reported blockbuster earnings yesterday, which saw the company pull in more than $8 billion in revenue – nearly a 50% jump from Q1 2016. CEO Mark Zuckerberg took the opportunity to reinforce the company’s dominance, especially against a key social media competitor, noting “I think we were a little bit late to the trend initially around making cameras the center of how sharing works. But I do think at this point we’re pretty much ahead in terms of the technology that we’re building, and making an open platform I think is a big step forward. A lot of people are using these products across our family of apps. And I would expect us to continue leading the way forward on this from this point on.”
Now, industry eyes are on Snap, the parent company of Snapchat, which will report its first earnings as a public company next week. While Snapchat has a much smaller user base than Facebook, those users tend to be younger (either an asset or a liability for certain advertisers and stakeholders) and possibly more engaged. But are they also sticking around for the long term?
Who’s losing users? Churn rates for Facebook, Snapchat, Twitter
While user numbers and retention rates are key vital signs for any digital company, an often-overlooked number is churn rate: the percentage rate at which users of a given service leave that service from one time period to the next. That is to say, it’s the percentage or number of consumers that a given company loses over time.
Verto Analytics compared the churn rates (among U.S. adults, 18 and above) of five social media platforms: Facebook, Snapchat, Instagram, Twitter, and Kik, to see which platform is losing users over time. We measured churn between Q3 and Q4 2016. According to our data, Facebook clearly has the most stable and consistent user base: less than 3% of its massive base of nearly 200 million users stopped using Facebook between the last two quarters of 2016. The other four platforms on the chart show much greater volatility and higher churn rates: both Snapchat and the ailing Twitter show churn rates of around 25%, meaning that both platforms have lost nearly a quarter of their user base between Q3 and Q4 2016. And Kik, which has the smallest user base on the list, has the highest churn rate on our chart; it lost a third of its users during that same time period.
While churn is not necessarily a bad thing for all businesses, a high churn rate compared to your competitors can be a troubling sign. For social media and advertising platforms, it can suggest a lack of engagement and loyalty among the user base – and increased consumer dissatisfaction with the platform at large. Especially for companies that rely on advertising revenue, the lack of a consistent, engaged audience could jeopardize key business models and monetization strategies.