Following the news that Threads had gained 100 million users in its first week, Bloomberg Intelligence (BI) analysts believe this is due to creators switching from Twitter, following user-engagement declines caused by algorithm changes that prioritised paid subscriber content on feeds. Meta’s risk of cannibalising its own users is lower for its Instagram and Facebook apps, with the additional first-party data to further boost its ad targeting, say BI technology analysts Mandeep Singh and Nishant Chintala.
Twitter is likely to lose creators who saw declines in engagement with their followers due to the recent algorithm changes to prioritise paid subscription users in the home feed, believes BI. Most social-media companies continue to rely on ads for monetisation and revenue sharing with top creators.
Until Twitter is able to boost engagement and time spent on its platform, similar to video platforms such as YouTube, we (BI) believe the pivot to subscriptions may continue to be a drag in terms of creator retention. Average time spent on TikTok, Instagram and YouTube is 60-90 minutes per daily active user per day, which has allowed these platforms to layer subscriptions on top of ads. In the case of Twitter, it was too premature to pivot aggressively to subscriptions without a clear revenue-sharing model with its top creators.
– Mandeep Singh, Senior Technology Analyst, Bloomberg Intelligence
100 Million Signups in a Week
Meta’s record pace of onboarding 100 million users to its Threads app with only text-based functionality suggests it could see a further boost in user growth and engagement from adding features to consume photos, video and messaging content.
The risk of Threads’ cannibalising engagement for its Instagram and core blue app is low, and the company will benefit from increased first-party data, which could further aid its ad-targeting advantage over social-media rivals. Meta could see a boost to its sum-of-the-parts valuation, based on user signups with Threads contributing at least 5-10% of its recent market cap, our calculations show.
-Nishant Chintala, Associate Technology Analyst, Bloomberg Intelligence
Threads Can Benefit From Meta’s AI Capacity
Meta’s AI capabilities are likely to become a key differentiator, not only for its content and algorithmic recommendations on Threads but also with ad targeting on its new app, which BI believes could aid monetisation for creators relative to Twitter. The company has been able to narrow its Reels engagement gap vs. TikTok and YouTube due to its sharp shift to AI-based content recommendations.
Apple’s IDFA changes were a major headwind to ad targeting last year, yet Meta has done well to leverage its AI to offset the loss of ad signal (data available for personalisation) with first-party data, which we believe could aid Threads’ monetisation once Meta starts to embed ads in the app.
– Mandeep Singh, Senior Technology Analyst, Bloomberg Intelligence
