Comparison of user monetization levels of US social networking companies in 4Q19: FB is 1.7 times that of Twitter

Advertising is a monetization model commonly used by foreign social networking companies. So how much money can a social networking company make from its users? The difference in user ARPU on different social networking platforms is a comprehensive reflection of the user's use of the product and the company's commercialization level. Let's take a look at the monetization data of Facebook, Twitter, and Snap.

FB has the highest per capita revenue contribution, 1.7 times that of Twitter and 4.8 times that of Snap

On average, each global daily active user on Facebook can contribute $12.5 to the company's quarterly revenue, which means that one active user per day can contribute $0.59 to Facebook's daily revenue. The monetization ability is 1.7 times that of Twitter and 4.8 times that of Snap.

In the US market, FB's per capita revenue is even more exaggerated, 3.2 times that of Twitter and 11.8 times that of Snap.

Note: The data comes from the financial report, using quarterly revenue divided by the average DAU of the quarter (the last month)

The revenue contribution of a single user depends on many factors, and not every platform can achieve the same level of monetization as FB.

If we use FB's ability to monetize a single user as a benchmark, it is clear that SNAP has the greatest potential for revenue growth, but this cannot be simply interpreted because factors such as products, users, advertising technology, and commercialization progress will affect this value. For example, FB has more products, users spend more time on FB, and FB understands users better than Twitter and Snap, and can be more precise in advertising. Combined, it can make more money from each user than the other two platforms.

SNAP is more comparable to Twitter

In comparison, Snap's monetization potential is more comparable to Twitter, which is what the company recommends investors to compare. Twitter can earn $7.2 per daily active user per quarter, which is 2.8 times that of Snap; in North America, it is 3.7 times that of Snap, which means that if Snap catches up with Twitter's user monetization level, its quarterly revenue will be about 2.8 to 3.7 times the current level.

In addition to the differences in user contribution between companies, there are also differences in user contribution between countries. For example, the value of FB's North American users is 4.2 times the global average. This difference depends largely on the GDP and economic development level of each region, as well as the local usage of products and commodity progress. For example, if the people of India, Africa, and America can all become rich, then the ability of users in other regions to contribute to the revenue of these companies will also reach the level of the North American market. If people around the world can achieve common prosperity, then this means that the revenue of these companies still has great growth potential because they all have many users from overseas.

For example, 89% of FB's daily active users come from outside North America, and its global monetization level has strong growth potential. If people all over the world were as rich as Americans, FB's revenue would be 3-4 times what it is now. This is the subsequent long-term growth space brought about by the improvement of people's living standards overseas.

60% of Snap’s users are overseas, and its monetization level in North America is about twice that of the world. Its growth potential is smaller than that of FB, which is about 1.7 times. Twitter is similar, with about twice the potential.

Whether the monetization level of global users can one day approach that of North America depends on the development of the global economy and the process of world equality. We must believe that although the mountains and rivers are different, the moon and the sky are the same, and the gap will be narrowed one day. It’s just that this process is relatively long. But for companies with users from all over the world, this is always an economic development dividend that can be continuously reaped.

If you make the above assumption that FB's monetization ability in the United States has reached its peak, then relying on the improvement of people's living standards around the world, FB's revenue potential is 3-4 times the current level; if Twitter's monetization in the United States has also reached its peak, its revenue can increase by 1-2 times after the geographical monetization gap narrows; if Snap can catch up with Twitter, and the geographical monetization gap narrows, then its revenue potential will be 6 times the current level.