Monthly active users (MAU) is a metric used by social media and other companies to determine the traffic to their websites. It is part of the Key Performance Indicators (KPI) that these type of entities use.
This stems from software where companies quantify the number of users. The time frames are usually broken down into daily, weekly, and monthly.
MAU metrics help Internet businesses determine the health of their operations. It helps to provide feedback as to the results the company's marketing campaigns.
With the introduction of the Internet, traditional valuation metrics were insufficient. The development of new quantifiers was required for digital businesses.
Web traffic is the essence of many of these entities. A business like Facebook or Twitter operates exclusively online. If the MAU drops, that is a sign customers (users) are shifting elsewhere.
This can have an impact upon the price of a stock as the market interprets what it means for the company.
Websites tend to generate revenues in three ways:
All are affected by the number of month active users. Any increase can be seen as optimistic for the business and growth is taking place. Stagnant or declining numbers can negatively affect the performance of the security.
Investors have to determine how much weight they give to this metric. There are no industry standards meaning this is rather subjective.
Corporations can determine what they consider to be an "active user". For some it is simply logging in. Others require a commercial transaction.
Twitter, when taken over by Elon Musk, moved to what is calls monetizable daily active users (mDAU). It defines it as an account "who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com or Twitter applications that are able to show ads."
These are examples of entities that use MAU
In addition to lack of standardization, there is another limitation with MAU.
The metric measures the number of users yet has no way to gauge depth. Some try to expand the metric by looking at things such as time on site (or time on page). This is an attempt to quantify the users.
Even with the limitations, the metric is useful as a starting point of any analysis of online companies. Most sites are enhanced by more traffic. While depth is missing from the equation, people need to show up before anything can be achieved from the website's perspective.
Greater number active users boost the number of visits on particular sites. With more traffic, advertisers will be attracted, contributing to revenue generation. A large percentage of corporation's purpose of social media usage is advertising. Active Users increase allows social-networking sites to build and follow more customer profiles, that is based on customer's needs and consumption patterns. Active user data can be used to determine high traffic periods and create behavior models of users to be used for targeted advertising. The increase of customer profiles, due to increase of active users, ensures a more relevant personalized and customized advertisements which increase "view-through responses" and strengthen the effectiveness of "the advertised banner" significantly. Researcher found that consumers are more likely to open and responsive on personalized advertisements that are relevant to them.
This all helps to feed into the profits a company achieves.
