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What is ARPDAU?

by AppLovin on Dec 30, 2020

ARPDAU stands for average revenue per daily active user and is an important part of measuring and operating against a successful monetization strategy. 

This metric is a staple, day-to-day measurement that tells you how much revenue each of your daily active users is driving revenue for your app. (This isn’t to be confused with ARPU, or average revenue per paying user.) 

ARPDAU focuses on the average of all users who are actively engaged in your app every day and calculates profits from all revenue streams, including in-app purchases (IAPs), ads, and subscriptions.

Top metrics for your app

Depending on what your monetization strategy is and what your goals are, you should have specific key performance indicators (KPIs). These provide details about how your app is performing. 

When looking at the data to understand more about your users’ behavior, ARPDAU is one of the most important KPIs to closely follow. 

The other metrics to analyze may include retention rates, or how many users return to your app (often measured from the install date) and churn rate, which refers to how quickly users are leaving your app. These are more examples of metrics to examine:

Why is ARPDAU important?

Like many other metrics for success, ARPDAU is a way to see steady growth and implement and test new monetization strategies. You will easily be able to monitor and understand why there are sudden drops or increases, for example. 

Ultimately, when you understand the data that is coming from ARPDAU, you will be able to make better-informed decisions for your business in order to grow. 

Without understanding the revenue your daily active users are generating, you won’t be able to understand how to further grow and monetize your business. 

ARPDAU helps you analyze the results from app updates, campaigns or events such as promotional events (liveops) and can better align you with a top-level view of your income.

How do I calculate ARPDAU?

A popular approach to using ARPDAU data is to segment your new users by source so you can see where they are coming from.

You can also use ARPDAU to view which networks, games, or ads performed best or worst in your app. 

ARPDAU is your gateway into your audience and target users. You’ll get to see how:

  • Your app is being downloaded
  • How your user engages with your content
  • How the user responds to in-app ads, or opportunities to make a purchase, for example
  • The average amount of payments a user makes

For a mathematical calculation of ARPDAU, take your daily income, and divide it by the number of daily active users. 

Formula for calculating ARPDAU

ARPDAU = Daily income ÷ Daily active users

How to increase ARPDAU

Testing is one of the best ways to figure out what isn’t working so you can iterate and shift gears. Iterating is a regular part of building apps, and there are a variety of useful methods you can use. 

Use an in-app bidding solution 

Using a traditional waterfall to manually optimize ad networks is quickly becoming a thing of the past. In-app bidding helps automate the process by filling the highest paying network in an auction. Developers turn to solutions like MAX from AppLovin to save time and increase revenue. 

Based on Kelowna, British Columbia, mobile game developer Hyper Hippo saw huge improvements in their manual workload by implementing MAX’s in-app bidding. They freed up the time it took to communicate with other teams and the tedious process of managing a manual waterfall.

[Must read: Find out how Eureka Studio improved their ARPDAU by 30 percent with MAX.]

Test where your ads will go

Ad placement is important. A/B test to optimize and figure out the best time or location to show the ad. For example, in a game, you may place these in between levels or when there is a natural break in the game. 

PocketGems, a San Francisco-based gaming studio, saw a 60 percent increase in ad ARPDAU on Android after creating a more enjoyable ad experience for their users. Specifically, they balanced the amount of ads shown while strategically placing engaging ads to enhance the time spent playing the game.

Segment users 

Various groups in your user base will inevitably have different ARPDAUs, due to differences in behavior and demographics. Divide and group your users based on unique features or traits to help you better understand how to improve your monetization. 

Use rewarded video ads

These kinds of ads can typically increase an app’s profits by 20 to 40 percent. It helps engage users in a deeper way than display ads can. Users know they will get something in return, such as more coins or lives.

Encourage non-paying users to make in-app purchases 

A great way to do this is through showing rewarded videos to users who have never made purchases. It may give them a glimpse of premium benefits and show them how they can instantly improve their status within the app. 

How will you use ARPDAU in your monetization strategy?

As you build your app and grow your business, use ARPDAU to see how users are responding and making purchases. 

ARPDAU is a powerful metric to analyze your apps and a key performance indicator to ensure your monetization goals are on track. 

Interested in making your first game but aren’t sure where to start? Watch our App Hacks video series with AppLovin’s Head of Games, Keith Kawahata, who walks you through a checklist (part one) and user engagement and marketability (part two).