Active users is a measurement metric that is commonly used to measure the level of engagement for a particular product or object, by quantifying the number of active interactions from visitors within a relevant range of time (daily, weekly and monthly). The metric has many uses in both
commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, natio ...
and academia, such as on
social networking services,
online games, or
mobile apps. Although having extensive uses in digital behavioural learning, prediction and reporting, it also has impacts on the privacy and
security, and ethical factors should be considered thoroughly. Like any metric, active users may have limitations and criticisms. The term is relatively
neologistic in nature, becoming important with the rise of the commercialised internet, with uses in communication and
social-networking. It measures how many users visit or interact with the product or service over a given interval or period.
This metric is commonly assessed per month as monthly active users (MAU), per week as weekly active users (WAU), per day as daily active users (DAU) or peak concurrent users (PCU).
Commercial usage
Predictors of success engagement measurement (KPI) and advertisement
Active users on any time scale offers a rough overview of the amount of returning customers a product maintains, and comparing the changes in this number can be used to predict growth or decline in consumer numbers. In a commercial context, the success of a
social-networking-site is generally associated with a growing network of active users (greater volume of site visits), social relationships amongst those users and
generated contents. Active Users is can be used as a
performance indicator,
managing and
predicting
A prediction (Latin ''præ-'', "before," and ''dicere'', "to say"), or forecast, is a statement about a future event or data. They are often, but not always, based upon experience or knowledge. There is no universal agreement about the exact ...
future success, in measuring the growth and current volume of users visiting and consuming the site. The ratio of DAU and MAU offers a rudimentary method to estimate
customer engagement and retention rate over time. A higher ratio represents a larger retention probability, which often indicates success of a product. Ratios of 0.15 and above are believed to be a tipping point for growth while sustained ratios of 0.2 and above mark lasting success. Chen, Lu, Chau, and Gupta (2014) argues that greater numbers of users (
early adopters) will lead to greater
user-generated content
User-generated content (UGC), alternatively known as user-created content (UCC), is any form of content, such as images, videos, text, testimonials, and audio, that has been posted by users on online platforms such as social media, discussion f ...
, such as posts of photos and videos, that "promotes and propagates" social media acceptance, contributing to social-networking-site growth. The growth of social media use, characterised as increase of active users in a pre-determined timeframe, may increase an individual's
social presence.
Social presence can be defined as the degree to which a social-networking communications medium allows an individual to feel present with others, Moon and Kim's (2001) research results found that individual's
enjoyment of web systems have positive impacts on their
perceptions
Perception () is the organization, identification, and interpretation of sensory information in order to represent and understand the presented information or environment. All perception involves signals that go through the nervous syste ...
on the system, and thus would form "high behaviour intention to use it". Munnukka (2007) have found strong
correlations between positive previous experience of related types of
communications
Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...
and
adoption of new mobile
site communication services. However, there are also cases where active users and revenue seemed to have a negative
correlation. For instance, Snap Inc.'s gains in daily active users (DAU) have
stabilised or decreased during the
COVID-19 Pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
, revenue still exceeded estimates, with strong similar strong trends in the current period.
Greater number active users boost the number of visits on particular sites. With more traffic, more
advertisers will be attracted, contributing to
revenue generation. In 2014, 88% of
corporation
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
's purpose of social media usage is
advertising
Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
. Active Users increase allows
social-networking sites
A social networking service or SNS (sometimes called a social networking site) is an online platform which people use to build social networks or social relationships with other people who share similar personal or career content, interests, act ...
to build and follow more customer profiles, that is based on customer's needs and consumption patterns. Active user data can be used to determine high traffic periods and create behavior models of users to be used for targeted advertising. The increase of customer profiles, due to increase of active users, ensures a more relevant
personalised and customised advertisements. Bleier and Eisenbeiss (2015) found that more
personalised and
relevant
Relevant is something directly related, connected or pertinent to a topic; it may also mean something that is current.
Relevant may also refer to:
* Relevant operator, a concept in physics, see renormalization group
* Relevant, Ain, a commune ...
advertisements increase "
view-through responses" and strengthen the
effectiveness
Effectiveness is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression.
Etymology
The ori ...
of "the advertised
banner
A banner can be a flag or another piece of cloth bearing a symbol, logo, slogan or another message. A flag whose design is the same as the shield in a coat of arms (but usually in a square or rectangular shape) is called a banner of arms. Als ...
" significantly. DeZoysa (2002) found that consumers are more likely to open and responsive on personalised advertisements that are relevant to them.
External reporting purposes
The
Financial Accounting Standard Board defines that objective of financial reporting is provide relevant and material financial information to financial statement users to allow for decision making and ensure an efficient economic , resource allocation. All reporting entities, primarily
publicly listed companies and large
private companies are required by law to adhere to disclosure and accounting standards requirements. For example, in Australia, companies are required to comply with
accounting standards
Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on th ...
set by the
Australian Accounting Standards Board
The Australian Accounting Standards Board (AASB) is an Australian Government agency that develops and maintains financial reporting standards applicable to entities in the private and public sectors of the Australian economy. Also, the AASB cont ...
, which is part of the
Corporations Act 2001. In social media company's context, there is also reporting of non-financial information, such as the number of users (active users). Examples may include:
Source: Weitz, Henry, Rosenthal (2014)
Alternative methods of reporting these
metrics are through social networks and the web, which have become important part of firm's "information environment" to report financial and non-financial information, according to Frankel (2004), whereby firm relevant information is being spread and disseminated in short spans of time between networks of investors, journalists, and other intermediaries and stakeholders. Investment blogs aggregator, like
Seeking Alpha
Seeking Alpha is a crowd-sourced content service for financial markets. Articles and research covers a broad range of stocks, asset classes, exchange-traded funds (ETFs), and investment strategies. Unlike other equity research platforms, insight ...
, has become significant for professional
financial analysts
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job.
The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, o ...
, who give
recommendations on buying and selling stocks, and influence
stock volume and
prices
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in t ...
. Studies by Frieder and Zittrain (2007) have raised new concerns about how digital
communications technologies information reporting have the ability to affect
market participants.
Admiraal (2009) emphasised that nonfinancial metrics reported by
social media
Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social me ...
companies, including active users, may give not desirable assurance in success measurements, as the guidance, and reporting
regulations that safeguards the
reliability and
quality of the information are too few and have not yet been
standardized. Cohen et al. (2012) research on a set of economic performance indicators found that there is a lack of extensive
disclosures and a material
variability between disclosure practices based on industries and sizes. In 2008, the U.S Securities and Exchange Commission took a cautious approach in revising their public disclosure
guidance
Guidance may refer to:
Arts and media
* Guidance (album), ''Guidance'' (album), by American instrumental rock band Russian Circles
* Guidance (film), ''Guidance'' (film), a Canadian comedy film released in 2014
* Guidance (web series), ''Guidance ...
for social media companies and claim the information to be "
supplemental rather than
sufficient by themselves". Alexander, Raquel, Gendry and James (2014) recommended that executives and managers should take a more
strategic
Strategy (from Greek στρατηγία ''stratēgia'', "art of troop leader; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the "art ...
approach in managing
investor relations
Investor relations (IR) is a strategic management responsibility that is capable of integrating finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial c ...
and
corporate communications, ensuring investor's and
analyst's needs are jointly met.
Usage in academia
Researching and web-behavioural analysis and prediction
The active user metric can be particularly useful in
behavioural analytics and
predictive analytics
Predictive analytics encompasses a variety of statistical techniques from data mining, predictive modeling, and machine learning that analyze current and historical facts to make predictions about future or otherwise unknown events.
In busine ...
. The active user metric in the context of
predictive analytics
Predictive analytics encompasses a variety of statistical techniques from data mining, predictive modeling, and machine learning that analyze current and historical facts to make predictions about future or otherwise unknown events.
In busine ...
can be applied in a variety of fields including
actuarial science,
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
,
finance services,
healthcare
Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health pro ...
,
online-gaming, and
social networking. Lewis, Wyatt, and Jeremy (2015), for example, have used this metric conducted a research in the fields of
healthcare
Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health pro ...
to study quality and impacts of a mobile application and predicted usage limits of these applications.
Active users can also be used in studies that addresses the issue of
mental health problems
A mental disorder, also referred to as a mental illness or psychiatric disorder, is a behavioral or mental pattern that causes significant distress or impairment of personal functioning. Such features may be persistent, relapsing and remitt ...
that could cost the
global economy $16 Trillion U.S Dollars by 2030, if there is a lack of resource allocated for
mental health
Mental health encompasses emotional, psychological, and social well-being, influencing cognition, perception, and behavior. It likewise determines how an individual handles Stress (biology), stress, interpersonal relationships, and decision-maki ...
. Through web-behavioural analysis, Chuenphitthayavut, Zihuang, and Zhu (2020) discovered that the promotion of informational, social and
emotional support
Emotions are mental states brought on by neurophysiology, neurophysiological changes, variously associated with thoughts, feelings, behavioral responses, and a degree of pleasure or suffering, displeasure. There is currently no scientific ...
that represents media and public perception has positive effects on their research participants behavioural intention to use online mental health intervention. Online psychological educational program, a type of online mental health interventions are found to promote well-being, and decreased suicidal conception.
In the fields of online-gaming, active users is quite useful in behaviour prediction and
churn rates of online games. For example, active user's features such "active Duration" and "play count" can have inverse
correlations with churn rates, with "shorter play times and lower play count" associated with higher churn rates. Jia et Al. (2015) showed that there are social structures that transpire or emerge and centred around highly active players, with
structural similarity between
multiplayer online-games, such as
StarCraft II and
Dota.
The Active Users metric can be used to predict one's
personality traits
In psychology, trait theory (also called dispositional theory) is an approach to the study of human personality. Trait theorists are primarily interested in the measurement of ''traits'', which can be defined as habitual patterns of behaviour, ...
, which can be classified and grouped into categories. These categories have accuracy that ranges from 84% - 92%. Based on the number of user's in a particular group, the internet object associated with it, can be deemed as "trending", and as an "area of interest".
Ethical considerations and limitations
With the internet's
evolution
Evolution is change in the heritable characteristics of biological populations over successive generations. These characteristics are the expressions of genes, which are passed on from parent to offspring during reproduction. Variation ...
into a tool used for communications and
socialisation
In sociology, socialization or socialisation (see spelling differences) is the process of internalizing the norms and ideologies of society. Socialization encompasses both learning and teaching and is thus "the means by which social and cul ...
, ethical considerations have also shifted from data-driven to "human-centered", further complicating the ethical issues relating with concepts of public and private on online domains, whereby researchers and subjects do not fully understand the
terms and conditions Ethical considerations need to be considered in terms of participative consent,
data confidentiality-privacy-integrity, and disciplinary-industry-professional
norms and accepted
standards Standard may refer to:
Symbols
* Colours, standards and guidons, kinds of military signs
* Standard (emblem), a type of a large symbol or emblem used for identification
Norms, conventions or requirements
* Standard (metrology), an object t ...
in
cloud computing
Cloud computing is the on-demand availability of computer system resources, especially data storage ( cloud storage) and computing power, without direct active management by the user. Large clouds often have functions distributed over mu ...
and
big data
Though used sometimes loosely partly because of a lack of formal definition, the interpretation that seems to best describe Big data is the one associated with large body of information that we could not comprehend when used only in smaller am ...
research. Boehlefeld (1996) noted that researchers usually refer to ethical principals in their respective disciplines, as they seek guidance and recommended the guidelines by the
Association for Computing Machinery
The Association for Computing Machinery (ACM) is a US-based international learned society for computing. It was founded in 1947 and is the world's largest scientific and educational computing society. The ACM is a non-profit professional member ...
to assist researchers of their responsibilities in their research studies in technological or
cyberspace.
Informed consent
Informed consent is a principle in medical ethics and medical law, that a patient must have sufficient information and understanding before making decisions about their medical care. Pertinent information may include risks and benefits of treat ...
refers to a situation that participant voluntarily participates in the research with full acknowledgement of the methods of research, risks and rewards associated. With the rise internet being used as a social networking tool, active users may face unique challenges in gaining informed consents. Ethical considerations may include
degree of knowledge to the participants and
age appropriateness
Age appropriateness refers to people behaving as predicted by their perspective timetable of development. The perspective timetable is embedded throughout people's social life, primarily based on socially-agreed age expectations and age norms. Fo ...
, ways and practicality in which researchers inform, and "when" it is appropriate to waive the consent. Crawford and Schultz (2014) have noted
consent to be "innumerable" and "yet-to-be-determined" before the research is conducted. Grady et al. (2017) pointed out that
technological advancements can assist in obtaining consent without the in-person meeting of investigators (researchers) and the
research participants.
A large number of researches is based on individualised data, that encompass users
online identity (their clicks, readings, movements) and contents consumed and with data-analytics produced inferences about their
preferences
In psychology, economics and philosophy, preference is a technical term usually used in relation to choosing between alternatives. For example, someone prefers A over B if they would rather choose A than B. Preferences are central to decision t ...
,
social relationships
A social relation or also described as a social interaction or social experience is the fundamental unit of analysis within the social sciences, and describes any voluntary or involuntary interpersonal relationship between two or more individuals ...
, and movement or work habits. In some cases, individuals may greatly benefit, but in others they can be harmed. Afolabi and García-Basteiro (2017) believed that informed consent to research studies is beyond "clicking blocks or supplying signature", as participants could have feel pressured in to joining the research, without researcher's awareness of the situation. There is yet to be a universally accepted form of
industry standards Standard may refer to:
Symbols
* Colours, standards and guidons, kinds of military signs
* Standard (emblem), a type of a large symbol or emblem used for identification
Norms, conventions or requirements
* Standard (metrology), an object t ...
and
norms in terms of data-privacy,
confidentiality and integrity, a critical ethics consideration, but there has been attempts to design a process to oversee the research activities and
data collection to better meet the
community
A community is a social unit (a group of living things) with commonality such as place, norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, village, t ...
and
end-user's expectations. There are also policy debates around ethical issues regarding the integration of
edtech (education technology) into
K-12 education environment, as
minor children are perceived to be most vulnerable segment of the entire population.
Technical limitations and challenges
Many
social media
Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social me ...
companies have their respective differences definition and
calculation methods of the active users metric. These differences often cause differences in the variable that the metric is measuring. Wyatt (2008) argues that there is evidence that some metrics reported by social media companies do not appear to be
reliable, as it requires categorical
judgements, but is still value-relevant to
financial statement users. Luft (2009) conveyed that non-financial metric, like active users, there presents challenges in measurement accuracy and appropriateness in weighting when coupled with
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
reporting measures. There has been increasing notice from
business presses and academia. on
corporate conventions of disclosure of these information.
Active users are calculated using the internal data of the specific company. Data is collected based on unique users performing specific actions which data collectors deem as a sign of activity. These actions include visiting the home or
splash page of a website, logging in, commentating, uploading content, or similar actions which make use of the product. The number of people subscribed to a service may also be considered an active user for its duration. Each company has their own method of determining their number of active users, and many companies do not share specific details regarding how they calculate them. Some companies make changes to their calculation method over time. The specific action flagging users as active greatly impacts the quality of the data if it does not accurately reflect engagement with the product, resulting in misleading data. Basic actions such as logging into the product may not be an accurate representation of customer engagement and inflate the number of active users, while uploading content or commenting may be too specific for a product and under-represent user activity.
Weitz, Henry and Rosenthal (2014) suggested that factors that may affect accuracy of metrics like active users include issues relating to definition and calculation, circumstances of
deceptive inflation, uncertainty
specification and user-shared, duplicate or fake accounts. The authors describes
Facebook
Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dust ...
monthly active users
criterion as registered users past 30 days, have used the messenger, and took action to share
content
Content or contents may refer to:
Media
* Content (media), information or experience provided to audience or end-users by publishers or media producers
** Content industry, an umbrella term that encompasses companies owning and providing mas ...
and activity differing from
LinkedIn
LinkedIn () is an American business and employment-oriented online service that operates via websites and mobile apps. Launched on May 5, 2003, the platform is primarily used for professional networking and career development, and allows job se ...
who uses registered members, page visits and views. For example, a customer who uses the Facebook once, to "comment" or "share content", may also be counted as an "active user". A potential cause for these inaccuracies in measurement is the implemented
Pay-for-Performance systems, that encourages desired behaviours, included high-performance work system. In social media companies, active users is one of the crucial metric that measures the success of the product. Trueman, Wong, and Zhang (2000) have found that in most cases unique visitors and pageviews as a measurement of web-usage accounts for changes in stock prices, and net income in internet companies. Lazer, Lev and Livnat (2001) found that more popular website generated greater stock returns, in their research analysis of traffic data of internet companies through the division of higher and lower than median traffic data. Yielding
portfolio more returns may sway investors to vote on a more favourable bonus package for
executive management
Senior management, executive management, upper management, or a management is generally individuals at the highest level of management of an organization who have the day-to-day tasks of managing that organization—sometimes a company or a cor ...
. Kang, Lee and Na's (2010) research on the global financial crisis in 2007-2008 highlights the importance of prevention of "expropriation
incentives
In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...
" of investors, that provides very prominent implications on
corporate governance
Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions ...
, especially during an
economic shock.
Active user is limited in examining pre-
adoption and post-adoption
behaviours of users. Users commitment to a particular online
product may also depend on trust and the alternatives quality. Pre-
adoption behaviour's effects on post-adoption behaviour, that is predicted by past research has suggested, is found to have
associations with factors such as habit, gender and some other
socio-cultural demographics. Buchanan and Gillies (1990) and Reichheld and Schefter (2000)
argues that post-adoption behaviours and continuous usage is "relatively more important than first-time or initial usage" as it shows "the degree of
consumer loyalty
A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
", and that ultimately produces long term
product value.
See also
*
Customer engagement
*
Registered user
*
Unique user
References
{{reflist
Marketing analytics
Video game terminology
Internet terminology