ARPDAU: What Is Average Revenue per Daily Active User?
- ARPDAU helps you determine the effectiveness of your monetization strategy
- Understand the impacts of in-app changes and live ops events with ARPDAU
- Use ARPDAU as a metric to determine which UA channels are worth investing in
ARPDAU Formula: How Do You Calculate ARPDAU?
When it comes to investigating your app’s performance, ARPDAU can be calculated once you know the value of your overall revenue or each revenue stream. Then, as you might have realized, you also need to know your daily active users.
There’s not much more to it than that: Here is the ARPDAU formula.
Let’s say, for example, your app earns 50,000 US dollars of revenue on a given day and you have 500,000 daily active users. That gives you an ARPDAU of 0.10 US dollars.
When determining your 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.
You can go as granular as you like when calculating your app’s ARPDAU. That means you can check the user-level contribution to a certain revenue stream or the ARPDAU of one of your user acquisition channels.
Let’s imagine your rewarded video revenue is 5,000 US dollars, and your app’s daily active users remains at 500,000. That means your ARPDAU is 0.01 US dollars. If you want to understand how powerful that revenue stream is based on the users that do engage with it, then you should check out your average revenue per engaged user (ARPDEU).
How Do Apps Use Average Revenue per Daily Active User?
Depending on what role you play in your app’s development, you can look at ARPDAU from various perspectives. ARPDAU can be used by ad monetization managers, user acquisition managers, and developers all to evaluate how successful their efforts are when it comes to converting users into revenue.
Using ARPDAU as an Ad Monetization Manager
Ad monetization managers are responsible for revenue growth, monetization strategy, and the performance of each revenue stream. As part of their role, they must understand which revenue streams boast the highest impact, how they fluctuate over time, and find new ways to maximize each revenue stream’s potential. And this metric is undoubtedly a great way to measure that.
If we paint a specific scenario, an ad monetization manager might notice that there has been an increase in ARPDAU coming from their rewarded video channel. This increase might be a result of two things:
- A boost in revenue the publisher earns for the ads displayed
- An increase in the number of users who are engaging with the rewarded video
The ad monetization manager might then learn that there has been an increase in the eCPM of the placement. Therefore, to capitalize on this, they would want to boost the number of daily active users who are engaging with rewarded video. This could be achieved by adding a second rewarded video placement, which would mean higher revenue but the same amount of DAUs. Meaning an uplift in both revenue and ARPDAU.
Using ARPDAU as a User Acquisition Manager
User acquisition managers are responsible for identifying the most profitable users. That means they need to be experts in which channels and campaigns are driving the highest ARPDAU in order to scale them.
If a user acquisition 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. User acquisition managers should examine this KPI alongside additional KPIs like retention rate, ROAS, and LTV, however, to gain a holistic bigger picture of a user’s value.
Using ARPDAU as an App Developer
Then we have app developers. Many app developers look to ARPDAU as a way to understand how app changes or even live ops affect their users and revenue. For example, if you publish role-playing games (RPG) games, and you have an event for a special quest that can only be completed over one day, you would want to understand how much revenue that event brought. That and its monetization impact on a user level.
Breaking down ARPDAU by day means a developer can see here straightaway that the first special quest they ran generated a higher ARPDAU than the most recent one. Depending on the goal of the event, they can use ARPDAU to determine if they achieved their user-level revenue goals for each of the events.
For developers, it’s highly crucial to understand how any of the changes or events they run in their app help them move toward their revenue goals. That’s why it’s important to monitor how well the users convert to revenue to see if app changes and developers’ efforts bring home the bacon – that is, the desired returns.
Whether you’re a UA manager, app developer, or monetization manager, a high ARPDAU speaks highly of your app and which revenue streams, channels or campaigns are really carrying you toward your all-important KPIs.
By measuring this metric, you can gain true insights into how your app performs on a daily basis – be it a mobile game, news app, or travel app. You can pinpoint just how certain events or changes in your app impact your revenue, meaning you can make data-driven decisions on how to improve the fiscal performance of your app overall.
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.