What Is ARPDAU?
- ARPDAU varies considerably depending on GEO and vertical
- ARPDAU is used by publishers to compare the effectiveness of various monetization solutions
- The metric is used to calculate the profit generated from each user
Why Is ARPDAU Important?
Average revenue per daily active user can be used to identify an app’s revenue per user. It goes without saying that striking the right balance between cost and profit is nonnegotiable for an app’s long-term profitability.
This is why ARPDAU should be monitored by both monetization managers and user acquisition managers to evaluate how successful their efforts are when it comes to converting app users into revenue.
A monetization manager will use this metric to understand which revenue streams boast the highest impact, how these fluctuate over time, and how to optimize the performance of each revenue stream – be it in-app purchases or rewarded advertising.
UA managers can use this metric to identify the most profitable users according to channel and campaign. Knowing this metric allows them to then scale the campaigns.
Say, for example, a UA manager notices that users from Traffic Source A have a higher ARPDAU than their goal. They may want to increase their marketing efforts to acquire more of the users from this traffic source. UA managers should examine this KPI alongside others like retention rate, ROAS, and LTV, however, to gain a holistic bigger picture of a user’s value.
How Can You Increase ARPDAU?
To maximize an app’s revenue a monetization manager might look at the following:
- optimizing the app placement – ensure it’s visible enough for app users
- encouraging advertisers to pay higher CPIs for valuable ad inventory
- increasing an ad’s conversion rate
- adding second ad placements when the first one has been successful
- checking which GEOs boast a high ARPDAU for the vertical in question and expanding to these regions
How Do You Calculate ARPDAU?
When it comes to investigating an app’s performance, you can calculate ARPDAU once you know the value of your overall revenue or each revenue stream. You also need to know your daily active users in order to calculate the ARPDAU.
There’s not much more to it than that: Here is the ARPDAU formula.
Let’s say, for example, an app earns $50,000 of revenue on a given day and it has 500,000 daily active users. That gives you an average revenue per daily active user of 0.10 US dollars.
When determining an ARPDAU by source or revenue stream – such as in-app purchases or in-app advertising – the formula remains the same. The only difference is that you take the daily active users for the app regardless of if users have interacted with that revenue stream or not.
What Is ARPDEU?
If publishers want to understand how powerful a revenue stream is based on the users that do engage with it, they should track the average revenue per engaged user (ARPDEU) – or ARPDAU (engaged).
For example, a publisher might want to see how effectively it is monetizing users with video ads. To monitor its average revenue per engaged user, the publisher would check how many users have clicked on an ad unit.
As a principle, the bigger the difference between ARPDAU and APDEU, the smaller an ad’s exposure is in the app. Tracking both of these metrics together will help define the user reach within an app.
For both UA managers and monetization managers alike, a high ARPDAU speaks highly of their app. Monitoring this metric ensures they can clearly identify which revenue streams, channels, or campaigns are carrying them toward their KPIs.
With this metric, you gain true insights into how an app performs on a daily basis – publishers can optimize their ARPDAU for certain GEOs and verticals by tweaking small elements such as ad placement, improving conversion rate, and charging advertisers a higher CPI for valuable ad inventory.
Average revenue per daily active user (ARPDAU) takes the amount of revenue your app is earning and how much each user contributes to that revenue on a daily basis. It helps publishers better understand the performance of their monetization strategy as well as user-level impacts.
ARPDAU is calculated by taking your overall revenue or the revenue of one of your specific revenue streams and dividing it by your daily active users.
Maximizing your ARPDAU is something apps should always be striving toward. Sometimes, small optimizations can convert into big profits. And it’s often also a matter of diversifying your revenue streams.