Go in to look at something that you have been sent on Facebook? Money for Mark Zuckerberg and his people. Take a picture of yourself on Snapchat? Money for the company. Interactions on social networks, even if they are to enter for a moment and see something, generate money for them.
Every time you walk in and use one, you are making money for it without knowing it. Do you want to know which one earns the most at your expense? This is the Top 3.
ARPU, acronym for Average Revenue Per User or ‘average revenue per user’, is the indicator used by companies with a high number of users and is used to determine how much revenue they obtain per user. This season, most of the major social media giants reported year-on-year increases in ARPU in the third quarter, motivated above all by the pandemic we are experiencing, the new reality and lockdowns. And the leader, the social network that earns the most money with its users, is Facebook.
Revenues per user are $ 7.89 (6.74 euros), the highest among social networks, which also grew compared to the second quarter of 2020 ($ 7.05), as indicated by the company’s economic results in the third trimester.
Depending on the country, users generate income other than Facebook, and the most profitable are those from the United States and Canada, which contributed € 33.85 each in the third quarter. This figure is reduced to € 10.6 for each European user of the company, and even more in the case of Asia Pacific (€ 3.14) and the rest of the world (€ 1.90).
Facebook, the social network that earns the most money per user
The rest of the social networks are far behind the data of Facebook in their income for each user. Snapchat achieved a total of $ 2.73 (€ 2.33) for each of its users in the third quarter, 28% more than last year. In the same way, their income per user is higher in the United States and Canada, where they reach € 4.69 and are lower in Europe (€ 1.22) and even more in the rest of the world (€ 0.81) .
Pinterest, for its part, obtains an average of $ 1.03 (€ 0.88) for each user, which represents a growth of 15% compared to the previous year, as reflected in its results for the third quarter of the year.
For their part, other social networks such as TikTok do not publish their income per user data. Twitter is another of those that do not publish it, according to the analysts of the consulting firm Raymond James estimate that it entered $ 4.30 (€ 3.68) per user in the past quarter, as reported by the CNBC network. The ‘microblogging’ platform did publish that in the third quarter it had b (mDAU, according to its acronym in English) on average, compared to 186 million registered in the previous quarter.
Victims of their own success
But here’s the fun fact: ARPU is showing how effectively companies monetize their users, and these social networks are becoming victims of their own success. Why, if they are making more money? Because the number of potential new users continues to decline. If user growth begins to stagnate or slow for these companies, revenue growth must come from squeezing more and more value from existing users.
According to the results recorded by the ARPU report, Facebook is entering that stage. It remains the clear leader in ARPU, but “investors were scared last week when the social network announced that its number of daily active users in the US and Canada fell to 196 million from 198 million in the third quarter.”
Facebook noted at the time that it expects its user base in that region to remain stable or decline in the next quarter as well. Its user base in Europe was also stable at 305 million daily active users for the third consecutive quarter.
But there may be little room for ARPU improvements in the US and Canada region, as analysts at Needham noted in a note last week. ARPU was already $ 39.63 last quarter, compared to $ 12.41 in Europe, $ 3.67 in Asia Pacific and $ 2.22 in the rest of the world.
Improve the situation
How to increase the numbers in terms of new followers? According to KeyBanc analysts, the key to growth in the case of Facebook may lie “in the broad family of Facebook applications.” At the company’s results presentations, executives discussed early efforts to integrate messaging apps with ads, so companies can run ads on Facebook and Instagram and lead users to a Messenger or WhatsApp thread.
Facebook is also expanding its e-commerce business through Facebook and Instagram, with executives suggesting last week that the ads could reach Instagram Reels, Facebook’s TikTok competitor. These types of ancillary services for Facebook are still in the “early innings of monetization.”