Threads’ user engagement decline could spell trouble for advertising potential

The news: Meta's new social media app, Threads, experienced an initial surge in user sign-ups, reaching 100 million in five days. However, user engagement has since plummeted, with analytics data from Sensor Tower and Similarweb indicating significant drops in daily active users and time spent on the app.

• Threads struggled to maintain daily active users after a burst of sign-ups. Sensor Tower data revealed a 20% drop in daily active users and a 50% decline in time spent on the app one week post-launch. Similarweb reported a 25% drop in daily active users and a more than 50% decrease in app usage time.
• The situation is complicated by EU data protection laws: Since Threads may violate those regulations, it can’t launch in that region and has confirmed it is deliberately blocking access to users trying to access the app through a VPN.

The significance: This change in user behavior emphasizes the difficulties new platforms face in retaining interest once the initial curiosity subsides. Threads faces a challenging journey to become an integral part of users' social media habits—which Meta needs if it’s going to turn its new app into its latest advertising platform.

The analysis: Threads’ drop-off is a familiar story for new platforms. This trend can be attributed to the ease of sign-ups, much like offering a $10 Starbucks gift card for newsletter subscriptions. Initial uptake may be high, but genuine, long-term interest could be lacking, leading to an inevitable drop-off. This highlights the critical challenge of user retention in the fast-paced world of social media.

• Despite this drop-off, Threads could pose a significant threat to Twitter as the app matures and adds features like hashtags and topical search.
• Even in its early days, Threads seems to have lured some engagement from Twitter, with a 5% decrease in Twitter's web traffic during Threads' initial peak activity period, per Similarweb. That reduction in traffic could cost Twitter nearly $75 million in worldwide advertising revenues this year and $140 million in 2024, based on our latest forecast.
• Backed by Instagram and Meta, Threads should not be dismissed prematurely. Its immediate future hinges on offering users a compelling value proposition, improving its features, and differentiating itself from platforms like Twitter.