A greater percentage of Facebook’s monthly active users became daily active users in recent years as consumers switched to smartphones, according to an analysis of the company’s filing for an initial public offering.
DAU as a percentage of MAU is an important metric to judge “stickiness.” If the company were gaining millions of new users but not maintaining a steady DAU over MAU, it would suggest those users were not finding reasons to return as frequently. In Facebook’s case, the ratio of monthly users returning daily has increased from 44 percent to 57 percent since June 2009. This supports the idea that the social network not only grew in volume but became more engaging. In its IPO prospectus, the company attributes much of this growth to mobile usage.
DAU over MAU grew at its fastest rate between June 30 and Dec. 31, 2009, as smartphone growth took off in the U.S. and Europe. Apple released the iPhone 3GS and Palm released the Pre in June 2009. Motorola introduced the first Droid in October of that year. As millions of consumers purchased smartphones and added Facebook apps, daily engagement accelerated. That period saw faster DAU growth in the U.S. and Europe than it did in Asia and the rest of the world.
The DAU/MAU ratio is not increasing as drastically as it had been, but it continues to grow. DAU as a percentage of MAU increased from 54 percent in December 2010 to 57 percent in December 2011. We can expect this number to keep improving as more users connect to Facebook through mobile apps. Another factor that could encourage more users to engage daily is Open Graph. As more apps and websites integrate Facebook, the social network can increase daily active users without those users visiting the site directly.
It’s unclear how high the percentage will go, but at some point, DAU over MAU will hit a threshold. Investors should keep an eye on this metric to gauge how well Facebook is growing and maintaining interest among its new and existing users.