Twitter claims to have counted its users by as much as 1.9 million over the past 3 years.

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Twitter didn’t have as many users as it was thought, a predicament that may have prompted the company to more seriously consider adopting Elon Musk’s proposal take the company private in a $44 billion deal. In accordance with Twitter earnings for the first quarter of 2022 The company admits this morning that it has been inflating the number of users of its service for at least 3 years due to a technical error related to linked accounts.

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In his income statementTwitter explains that it launched the account linking feature in March 201, which allowed users with more than one Twitter account to link them together in its user interface, allowing them to more easily switch between their different identities. These multiple accounts clearly belonged to the same person, but continued to be counted as separate mDAUs—or “monetizable daily active users.”

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The mDAU metric has already been homemade, custom a way to measure users on a service. Twitter came up with an idea after struggling to show growth through quarterly measurements of monthly active users. Instead, the mDAU metric would represent users who logged in and accessed Twitter on any given day through its website and apps, and were able to view its ads. However, it was noted that this metric would not be comparable to similar daily active user disclosures from other companies, as they often use a broader metric that includes users who do not view ads.

This metric was intended to give advertisers a better idea of ​​how many people on Twitter could be targeted by their marketing messages within a given time period. And as ads continue to fuel Twitter’s business, majority his income, it was an important indicator in terms of Twitter’s health.

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Unfortunately, this was wrong.

Twitter says it re-ran the numbers for the mDAU metric for previous quarters, where it found an overestimation, and adjusted the totals. His results showed that he inflated the number of mDAUs from anywhere from 1.4 million to 1.9 million, depending on the quarter. (The company noted that restated data was not available until Q4 2020 due to its data retention policy, but stated that it estimates prior period adjustments will not be larger than those seen in Q4 2020 .)

Image Credits: Twitter

As you can see in the chart, as Twitter’s overall user base slowly grew, so did the recount — ending up almost 2 million mDAU higher than the company actually had.

Such an adjustment is unlikely to be negligible for a rival social network like Facebook – Meta just reported For example, in the first quarter of 2022, its app family had 2.87 billion users, while Facebook alone had 1.96 billion. But it matters more for a small service like Twitter, which has historically fought with flat user growth. In fact, user growth was such a thorn in her side that they invented this new metric to better hide their problems.

Despite the adjustment, Twitter ended the quarter with a presumably accurate 229 million mDAU, up 15.9% year-over-year and above analyst estimates of 226.9 million.

However, the company has set lofty goal to reach 315 million mDAU by 2023 while doubling income. This mDAU target would represent about 20% compound annual growth rate from its baseline of 152 million mDAU reported in Q4 2019. Twitter believed it could achieve this through the development of its new products, many of which could be monetized, such as Super Follow subscriptions, Twitter Spaces tickets, and a premium subscription service. Twitter blue. But it’s clear that Twitter is still a long way from seeing that investment pay off not just in dollars and cents, but in attracting newcomers to the network.

This isn’t the first time Twitter has reported erroneous user metrics, but it’s the first time Twitter has been impacted since the move to mDAU. Company admitted in the third quarter of 2017 that he overestimated his MAUs by 1-2 million, while its MAU base exceeded 300 million.

This mistake could put Twitter in an even more dangerous position with respect to its advertisers. Elon Musk is preaching on Twitter a plan to adopt a “free speech” policy, which often means a more lenient attitude towards insults, bullying and hate speech. This is not what brands want sell yourself against.

There are signs that advertisers are getting nervous too.

adage reported The immediate reaction from advertisers was dismay and confusion. Brands have reached out to agencies to help them understand and prepare for what’s next on Twitter. One agency executive said there were also signals that advertisers were willing to stop spending money after the Musk takeover, if necessary.

Twitter in response email advertisers insisted that it will remain a safe place for brands after Musk’s takeover, according to the FT. The company has heard similar concerns from advertisers, who have so far taken a wait-and-see approach before adjusting their budgets. However, one group of advertisers is more concerned: automakers. They fear that their marketing campaigns will now be taken over by their rival Tesla, which Musk also owns. For example, the CEO of electric car manufacturer Fisker, Henrik Fisker, has already deleted his Twitter account.

Despite assurances from Twitter, advertisers know that promise cannot be kept if Musk decides to make more drastic changes. For a company as dependent on ad revenue as Twitter is at present, it’s surprising why they agreed to a deal that puts free speech absolutist at the head. Miscounting Twitter users partly helps explain why he went for the deal — because the growth he thought he had was less than he thought.

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