ARPDAU: Calculation, formula, and meaning

For an app developer wanting to understand more about the health of their app, there’s a whole load of metrics to choose from. Some give insight into the day-to-day, others take a longer view.

ARPDAU is a staple day-to-day metric developers should be using - but what exactly does it tell you about your app, and how do you go about measuring it?

what is ARPDAU

What is ARPDAU?

ARPDAU, which stands for Average Revenue Per Daily Active User, is a metric that helps you understand how well your monetization is working, whether it’s monetization from ads, from IAPs, or both. ARPDAU also tells you how any in-app changes you have made are affecting the success of your monetization.

ARPDAU calculation and formula

When learning how to calculate ARPDAU, focus on: the revenue from IAPs, ads, or both in any given day, divided by the number of unique active users on that day.

ARPDAU for mobile games

If you have a free-to-play game, you will need to be constantly monitoring and adjusting your monetization strategy to maximize engagement for all the different kinds of players.

Looking at your ARPDAU over time, you can easily see how changes or events affect the revenue you make that day. Changed the IAP prices? Mixed up your ad placements, or added rewarded video ads to your app for the first time? This metric will show you the impact of those changes, and then you’ll be able to optimize for getting the maximum amount of revenue while keeping users happy.

Because it’s a metric that applies to each individual daily active user, ARPDAU also excludes any fluctuations in your user base, giving you a clear picture of how much money you made in a given day from the users who were in your app.

How to increase ARPDAU

ARPDAU depends on many factors in your app. First, in-app features - traffic drivers or prompts to invite users to watch a rewarded video or make an IAP, as well as the prices and variety of in-app purchases. Secondly, the ads in your app - where they are placed, how frequently they appear, what kind of ads they are, and how relevant they are for your users. Third, external factors such as days of the week and special holiday times.

Let’s take a look at 5 ways to increase your ARPDAU in more detail:

1. Integrate rewarded video ads into your app

Rewarded video ads can increase app revenue significantly. How? Click-through-rates for rewarded videos are about 4 to 5 times higher than typical display ads because users have a reason to engage. The ad unit is more enjoyable for users to interact with, and they also know they will get something concrete - like coins, swords or extra lives - in return. And since app developers get paid for every opt-in ad engagement, rewarded videos equal higher ARPDAU for you.

2. Nudge non-paying users towards IAPs

Rewarded video ads are also a great way to encourage those users who haven’t ever paid for an in-app purchase to do so. If the reward is similar to an IAP, they get a taste of the premium features that they’re missing out on, and then they are more likely to purchase it in future. One study found that users who watch rewarded video ads are more likely to make in-app purchases - 6 times more in some cases.

3.  A/B test ad placements in your app

Ads that interrupt user experience are unlikely to convert well, and worse - will annoy your users. If you’re going to have ads in your game, timing is everything - if your game has levels, show an ad at the end of the level, rather than the beginning or in the middle. If you have a turn-based game – show an ad at the completion of every single game (not after each turn).  A/B testing can help to make sure you’re optimizing ad placement. Make sure to also cap the frequency that users are seeing ads in your app - an optimal rate is around 3 to 4 ads per session for a gaming app. You can use ironSource's ad monetization A/B testing tool to test different ad monetization strategies. and learn with certainty which one maximizes ARPDAU. 

4. Segment your users

From whales to minnows, not all users are equal. Making sure to treat them differently is going to help give your ARPDAU a boost. Try modifying your IAP prices according to different user behaviors or geos, for example offering Halloween special deals on coins, or double rewards on a rewarded video for a user who hasn’t been in the app for a while. This is going to increase ad engagement, and you’ll see your ARPDAU go up as a result. Learn 4 ways to segment your users and boost monetization here

5. Use in-app bidding

Developers everywhere are turning to in-app bidding as the sole setup model for monetizing their apps. In contrast to the traditional waterfall solution, which requires developers to manually optimize and rearrange ad networks according to CPM, in-app bidding completely automates the process - holding an auction for each ad impression and serving the impression to the highest-paying ad network. Because the impression gets filled by the highest paying network each time, developers don't risk losing out on more dollars. Since using in-app bidding, developers are seeing massive boosts in revenue - from Budfarm by East Side games which boosted ARPDAU by 60% with ironSource's in-app bidding solution LevelPlay to Metamoki which increased ARPDAU by 50%.

Let's put these tips to good use

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