How do tech investors decide where to put their money? According to Marketplace Tech host Ben Johnson, for investors, it’s all about the MAUs…but are MAUs worth the millions investors throw at them?
MAUs, or monthly active users, is a primary metric used by tech investors. Instagram recently announced its MAUs surpassed Twitter’s, which could mean big problems for the platform that’s already on shaky ground.
But a former CEO of Twitter Evan Williams says that number isn’t enough. He insists what investors should be measuring is the quality associated with time spent on a site. That, says Williams, is the true measure of value.
“You can land on a website and stay for three seconds, or you can land there and read something for five or 10 minutes,” Williams says. “When … the dimension of people who stop by is the only thing you talk about, what value are you measuring, either to the people or the company?”
Johnson agrees, and insists the move to mobile devices will be the big push away from the shallow MAUs metric. According to his report:
“Spending quality time with a product, service, or app, is something the monthly numbers simply don’t reveal. But since the monthly active user measurement is the industry standard for venture capitalists, user numbers start to stand in for value. Particularly for companies that are not publicly traded and have yet to make much revenue.”
As screens get smaller and audiences get more fragmented, Johnson predicts the companies that will win in the marketplace will be those advertising to niche groups. He predicts we’ll see less of the Super Bowl ad mentality, and more specialized mobile advertising that will be useful to the person holding the device.
This comes back to the importance of understanding “precision” vs. “accuracy.”
MAU measurements may be precise, but by themselves they’re not providing an accurate picture of audience engagement — or company value.