Nielsen’s Twitter Take Nearly Half Baked

Nielsen posted an article on Tuesday titled "Twitter Quitters Post Roadblock to Long-Term Growth" claiming that Twitter had a 40% user retention rate. As seen above, I enjoy catchy headlines that rhyme, but Nielsen fails to mention one very important factor when evaluating Twitter traffic: It's only able to measure return visits to Twitter.com, but a large percentage of people using Twitter are using applications to tweet, according to TweetStats and TwitStat. TweetStats estimates around 40% of Twitter usage is through applications as can be seen in the chart below:

It is difficult to estimate how many of these application users still visit Twitter.com once a month, but it is safe to say that a 40% retention rate by Nielsen is an underestimate.  Ironically, they use the application TwitterFeed to update @NielsenWire, so to some extent Nielsen understands the importance of the role Twitter applications play in retention.  Ultimately, third party applications and API’s will force web metrics services to take a step forward in the way they evaluate a web property.  The increasing popularity of smartphones such as the iPhone and G1 is only going to increase the percentage of Twitter application users as the web goes mobile. 

Nielsen posts, “Twitter has enjoyed a nice ride over the last few months, but it will not be able to sustain its meteoric rise without establishing a higher level of user loyalty.” Comparing the flawed data they have on Twitter to MySpace and Facebook in the following chart they emphasize the importance of audience retention.

Data from Quancast contradicts the notion that audience retention rate plays such an instrumental part in long term growth.  Wikipedia has 55% passer-by traffic, YouTube has 53% passer-by traffic, and Blogspot has 65% passer-by traffic. Those three sites all make the top 15 list for unique traffic in the United States.

Critics often point out that Nielsen does not always capture the true user base, whether it is television or the online space. This is one of those times where the critics are correct. While Nielsen in general provides quality data, their recent report on Twitter truly is half baked.