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Twitter’s growth problem in America

October 7th, 2013 at 1:25 PM
Twitter Growth Analysis

It is surprising that Twitter only grew its U.S. monthly active user base by 1 million between the March and June quarters — from 48 million to 49 million. One year earlier, Twitter’s MAU base in America grew from 34 million to 37 million. The growth is slowing at a fairly surprising rate. But what is even more shocking is that according to Onavo, the number of U.S. iPhone owners using Twitter has stalled completely between March and August, moving from 27.2% to 27% over a five-month period. Why does Twitter have a growth problem in its core market? One explanation is that American smartphone users are extremely sophisticated and alert to new trends. Twitter and Facebook broke out first in America, and it is in their home market where these giants are now witnessing the explosive growth of alternative services.

It’s worth noting that as Twitter engagement among American iPhone owners stalled during the summer, Instagram sailed on from 34% to 38.3%. Snapchat soared from 13.2% to 20.8%. Yes, the quizzical Snapchat service now has a U.S. monthly engagement level that is just six percentage points below Twitter. This is an astonishing achievement considering how deeply entrenched Twitter is in the U.S. media environment. It now looks possible that Snapchat might catch up with Twitter’s monthly engagement level by next Easter. Smaller messaging services like Kik and Viber may also be on the threshold of growth spurts as they reach critical mass in coming quarters.

One common theme to many of these novel services is a smaller, tighter group of followers. Many teens and college kids are getting wise about the problems associated with public comments involving crude language, alcohol, drugs and nudity. Moving from Facebook and Twitter to Snapchat and Kik protects rapscallions from too much exposure, while enabling them to reach a peer group of dozens of people.

This is why Twitter’s decision to file for an IPO at this point is a smart move. Better cash in now than wait for the U.S. MAU number to start trending down and some young whippersnapper to actually surpass Twitter in iPhone engagement. Those events will not make for positive headlines — and they could happen as soon as this coming winter.

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