ARPDAU, or average revenue per daily active user, serves as a crucial key performance indicator (KPI) that evaluates app monetization for each active user on a daily basis. This metric is valuable for detecting the impact of app changes on its user monetization potential.
ARPDAU employs earnings derived from in-app purchases (IAP), subscriptions, and advertisements to compute the daily revenue per active user of the application.
Whether your app undergoes updates, launches new campaigns, or introduces promotional events, ARPDAU provides a high-level overview of the app’s revenue trends in response to these modifications.
ARPDAU functions as a metric enabling app developers and marketers to gain real-time insights into their app’s monetization capabilities, delving into the finest details.
For instance, imagine your app offers special benefits to its paid users. You decide to decrease the price of the paid version to attract more subscriptions. Utilizing ARPDAU, you can assess whether this price reduction effectively increases paid subscriptions and overall revenue.
This metric benefits app developers because:
Regular Analysis for Maximizing Monetization Efforts Frequent evaluation guarantees optimal utilization of monetization strategies.
Visibility and Balance in Advertising Strategy ARPDAU provides evidence of a balanced and visible advertising strategy.
While many app developers use ARPDAU to compare monetization trends over time, they are aware that ARPDAU is a short-term metric and possesses some limitations. This is primarily due to the fact that lifetime value (LTV) serves as a superior metric for long-term monetization performance evaluation.
So, what challenges or constraints are associated with using this metric?
Consider an app that is a two-player game. Player one is active from 8 am to 11 am daily, spending $1 each day. Player two is active from 10 pm to 1 am and also spends $1 daily. In this scenario, the average revenue per day amounts to $2, resulting in an ARPDAU of $1.
Now, what happens if player two skips a day? Given that they cross the midnight/day boundary, how does this impact their ARPDAU?
This example highlights a significant flaw in the calculation, underscoring why LTV serves as a more accurate metric.
ARPDAU solely focuses on daily active users, limiting data and overall comprehension of the effectiveness of the monetization strategy over an extended period.
The formula for calculating ARPDAU is straightforward:
ARPDAU = Total daily revenue / Total active daily users
For instance, if a popular social media app boasts 11 million daily users, generating $5 million in daily revenue, the calculation appears as follows:
ARPDAU = $5,000,000 / 11,000,000 = 45 cents
In this case, the ARPDAU amounts to 45 cents, implying that, on average, each active user spends 45 cents daily on the app.
Enhancing the average daily revenue per user is a feasible endeavor, with actionable strategies to implement that yield immediate effects on user spending.
Elevating Ad Engagement with Offerwalls Encouraging users to engage by offering rewards, such as in-game currency or extra lives, through techniques like offerwalls can yield positive outcomes. Displaying enticing ads increases the likelihood of improved revenue.
Captivating Users with IAPs, Special Offers, or Exclusive Deals By offering specific user segments IAPs, exclusive deals, or special offers, you can stimulate clicks and purchases, thereby augmenting revenue.
ARPU, or average revenue per user, calculates the mean revenue generated per user within a specific timeframe. This metric is preferable when targeting new users across various channels.
Essentially, ARPU per channel or platform provides insights into the platforms or channels with the highest potential for generating app income.
Despite its lengthy acronym, ARPDAU is easily comprehensible as a digital marketing metric.
Key points about ARPDAU: