Innovation

How many ways of measuring itself is Twitter going to invent?

July 18, 2014
July 18, 2014

Though the technology industry is rife with creative forms of measurement, Twitter stands out. The company has proven adept at inventing metrics that cast it in the best possible light.

In going public last year, it created several new measurements that no other company uses. Now comes word (paywall) that Twitter plans to unveil up to four additional ways of measuring itself that will, of course, make the company seem much bigger. The idea is to reflect the broad reach of Twitter beyond just the people who actively use the service.

Here’s a partial review of the key metrics Twitter currently reports:

  • average monthly active users: standard measure of how many people use the service at least once in any 30-day period
  • timeline views: invented by Twitter to count how many times people open the service or request to see new tweets
  • timeline views per monthly active user: according to Twitter, the best way to measure how engaged its users are
  • advertising revenue per 1,000 timeline views: the company’s preferred reflection of how efficiently it generates revenue from usage of the service
  • average cost per ad engagement: how much Twitter charges each time someone interacts with a sponsored tweet or other form of advertising
  • adjusted earnings before interest, taxes, depreciation, and amortization: a measure of profit that doesn’t follow standard accounting principles because it doesn’t account for stock paid to employees

Head hurt yet?

Those metrics were all well and good until Twitter reported earlier this year that timeline views had declined, sending its stock price down. Then the company started invented still newer metrics. “User interaction in the form of favorites and retweets is up more than 35%,” CEO Dick Costolo said on the fourth-quarter conference call with analysts and investors.

That’s one of several new forms of measurement Twitter is expected to codify when it reports second-quarter earnings on July 29, according to the Wall Street Journal. The others will likely reflect the number of people who see tweets on the web and perhaps on TV, which far exceeds the number of monthly active users who send and read tweets on Twitter itself.

In one sense, Twitter has to create its own metrics because the service is unique. It’s not quite a social network like Facebook (to which its numbers are most frequently compared) nor a media company like Time Warner (though, ultimately, it competes for the same advertising revenue). But invented metrics leave little room for comparison and context. They give Twitter too much latitude to pick data that make it look best and ignore less flattering measurements.

In another sense, this points to the problem with going public: At a crucial moment in Twitter’s evolution, it is focused on making the company look better to investors, rather than simply making its service work better for users.

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