How to Calculate and Increase Your ARPU and ARPDAU?

How to Calculate and Increase Your ARPU and ARPDAU?

by Andrea Knezovic

If you are starting in the world of mobile gaming, you might feel overwhelmed with all the abbreviations, terms, and mobile gaming industry lingo. Terms like ARPU and ARPDAU sure can sound confusing when you hear them for the first time. Hopefully, I can help you navigate the waters of mobile gaming.

Mobile games are not just games, they are also a business. If you’re trying to be successful, stay profitable and keep your head above water, you NEED TO KNOW your numbers.

In one of our previous articles, we listed the most important mobile game metrics. You won’t be able to know what’s working and what needs to be optimized if you don’t know the data.

One of the most important metrics you need to measure is the number of installs. Mobile games are a business of volume, and more installs will correlate to the growth of your user base. 

But the question that remains is – how do you know your game is meeting your user’s needs? 

To find this out, we’re going to look at a bit more specific metrics – ARPU and ARPDAU.

We give you information about what they are and why you have to track them. Equally important, you will find out how to optimize your app features to increase them. 

What do ARPU and ARPDAU mean?

ARPU or “Average Revenue Per User” is a metric that helps you understand whether your business model/monetization strategy is working (or not). For this reason, ARPU is one of the most important mobile game KPIs. 

Basically, ARPU can be defined as the average revenue you make from each user in a certain period. This calculation includes all the users that have downloaded and actively used the app. 

When you’re acquiring users via different marketing channels, you’ll see that the ARPU can vary from channel to channel.

Keeping track of ARPU per channel/source from which users were acquired can help you understand which channel is making you money.

This metric is very similar to another one with an additional letter in the name – ARPPU.

ARPPU stands for average revenue per paying user. This metric allows you to understand how much of your revenue is coming from paying players over a time period. 

By separating ARPPU from ARPU, you get better insights into your paying users and their value for your app or game. 

ARPDAU is a metric that stands for “Average Revenue Per Daily User”. Unlike ARPU which includes all users, ARPDAU refers to daily active users only. This metric reveals how much revenue is generated from those users over a  24-hour period.

How do you calculate ARPU?

Calculating ARPU is easy. Divide the revenue with the number of users in a specific period of time (i.e. day – ARPDAU, week – ARPWAU, month – ARPMAU). Want to know what’s your ARPDAU or ARPWAU? Use the same formula over the desired period of time.

arpu and arpdau

 

Why is ARPDAU important to track?

Even though your app might have a huge user base, only some of these users engage with the app every day. 

This group of users should be put under a magnifying glass. 

And that’s the main purpose of tracking ARPDAU.

If you track your ARPDAU, you’ll easily see how some changes or events are affecting your revenue. 

Constant testing is always a good idea for your app, and this is the group of users whose reactions to the tests you want to observe. Whether it’s changing the placement of your ads, trying out new creatives or adding new ad formats to your app.

Some other trends you may notice are if the users spend more on certain days, weekends, or just after a new round of ads was launched. 

This group of users is extremely important because of its high LTV (lifetime value). Keeping track of their behavior, you’ll notice positive (or negative) trends that will tell you how to further optimize to achieve maximum revenue. 

The next step is how you react to the trends you notice. For example, a reaction to better results on weekends could be offering a discount for weekdays only. Another option would be to update your pricing model and see how new and existing users will react. 

On the whole, this metric will allow you to get a better understanding of how much money your app makes in a day from your most valuable users. Since it excludes certain groups of users, it gives you a deep understanding of your app’s paying customers and consequently, revenue potential. 

How to Increase ARPU?

Now that you know what ARPU and ARPDAU are, you’re probably wondering “how can I increase them?” Seeing that ARPU is the reflection of your app’s monetization strategy, you have to optimize the app’s monetization features. 

  • In-app ad revenue
  • In-app purchases
  • Subscription models
  • Pricing models

The ultimate goal of optimizing these areas is to improve the in-app experience and user retention. Let’s get to 5 ways to increase ARPU. 

New ad formats

Try to take the opportunity of new ad formats and experiment with them. Banner ads are a thing of the past. They are being replaced with new formats like rewarded video, playable ads, direct play, and offerwalls.

Playable ads are interactive ads that users engage with by playing a part of the game, or by using the app before downloading. These ads are effective at increasing conversion rates, user retention, and revenue.

Direct play is an ad unit that takes over the whole screen and plays a video automatically (there is no need to press the play button). Another interesting format is direct play, where a choice is given to the user to select their preferred ad experience in return for in-app currency.

example of playable ads

Users actually don’t mind ads and they appreciate it if you give them a choice. Many game publishers are struggling to choose between an ad-based monetization model and an in-app purchases monetization model. But, if you balance the number of ads and make sure that the ads are high-quality, users will engage with and enjoy watching them.

Additionally, make sure your overall game design is optimized for monetization. Besides the ads themselves, the game mechanics should be carefully planned as well. For instance, you should prevent ads from accidentally occurring during gameplay when a user accidentally taps or swipes. 

Encourage in-app purchases

Not all users will be open to making in-app purchases. Actually, almost half of the revenue of some game publishers will come from a very small group of users. In the mobile gaming lingo, those users are called mobile gaming whales. That term is used to describe a tiny group (around 2%) of users that drives the most revenue for mobile apps and game publishers

For this group of users, you might want to consider introducing a subscription model. In this case, the key is finding out which features should be offered in exchange for a monthly fee. 

The most recent data tells us that the ARPU is growing, and many of the game publishers don’t need to rely exclusively on mobile gaming whales. The average revenue per user increases as the number of paying players increases.

Switch up the ad placements

If you’ve already decided to place ads in your app, choose wisely where you place them. Don’t place your ads too often or in the wrong spot. That will most probably annoy your users.

If your game has levels, a better option would be to place ads after or before a new level than in the middle of a level. The optimal rate for a mobile game is around 3 to 4 ads per gaming session.

ad placements on imobi
Ad placements to choose from on InMobi, one of the biggest monetization networks.

There is no universal formula for knowing which ad placement will work for your app. A/B testing will help you optimize for the right ad placement.

User segmentation in ARPU

Not all users are the same. Some are simply more valuable than others. The already mentioned mobile gaming whales will spend a lot of money on in-app purchases and they will make a significant share of your app’s revenue.

To properly understand your users, you should set up a mobile app analytics platform. You’ll be able to see what your users are tapping, swiping, watching and buying.

Most of the mobile app analytics will allow you to segment users into groups (audiences). Audiences are users that you group together using any combination of attributes important to your business. That way you can see the behaviors of different segments of your users. Mobile app analytics include segments like activity, ARPU, app version, age, gender, country/region, their interests, etc. 

Adjust your pricing model

After you’ve added value to the app itself and set starting prices, you will have some initial information on ARPU. Based on this data, you can decide if you should go for pricing adjustments. 

Increasing your prices is the most obvious way to increase ARPU, but then comes the question –  how to determine the maximum amount the user is willing to pay?

The only way to find out is to test and review. And most importantly, to do it strategically and transparently. Remember, every price increase has to be followed by an obvious added value. Any kind of sudden pricing changes will likely disappoint loyal users. 

For this reason, if you want to test different pricing models, it is a better idea to try it out on new users and observe their behavior.

Another strategy to apply when it comes to pricing is focusing on those users that have the highest growth potential. You can offer them optional premium features and see if they want to spend more than usual. 

How to increase ARPDAU?

The better your ARPU is, you can expect ARPDAU to grow as well.

However, this is no rule. 

When it comes to ARPDAU, you have to keep in mind that it also gets influenced by external factors such as holidays and seasonal variations. Nevertheless, there are certain strategies you can apply to increase this metric in particular.

Implement rewarded video ads into your game

One of the ways of increasing ARPDAU is by boosting ad engagement. Rewarded video ads are one of the most interactive ad types. Not only do they come with a higher CTR, but their cost is 86% lower than for interstitial video ads.

Generally, users are more likely to interact with this kind of ad because they like getting something in return for watching the ad.  Whether it’s in game-currency, extra lives or something else, it will do the trick. 

After all, app developers profit from every opt-in ad engagement. Consequently, that results in higher ARPDAU.

However, don’t forget about other ad formats like interstitial and banner ads. 

In-app ads in general work quite well for increasing revenue. That’s especially true for casual games – it’s the main monetization method for this genre since casual gamers are not big spenders. 

Offer enticing in-app purchases

Just like ARPU, ARPDAU can be increased by offering great deals for in-app purchases. What’s popular with players are bundles, limited-time offers, and exclusive deals. Those give players great value for their money, which is why it’s worth including them in your monetization strategy. 

Use rewarded video ads to boost in-app purchases

We’ve already mentioned that a lot of users are non-paying. You can use rewarded videos to give them a glance into premium app features.

If they are currently willing to give their time and attention in exchange for rewards, they might be willing to pay for them in the future. 

Aim to retain 

Obviously, if you can’t even get your users to stay within your game, you can’t really expect great ARPU and ARPDAU.

Here are some strategies that can help you retain players in your game.

When they launch it for the first time, give them a great first-time-user experience (FTUE). Learning how to play the game should be as simple as possible, so work hard on your game tutorial. FTUE should also be rewarding and fun. Basically, it should showcase your game’s best features. 

Furthermore, you can use different proven retention methods. You can use features like mini-games, push notifications, social features, personalization features, etc. 

Moreover, constantly add new content to your game. After all, one of the most common reasons why players churn is repetitiveness and lack of new content. 

All of these features should make your game more interesting. They should also make players want to come back to it over and over again. 

ARPDAU Benchmarks

According to Game Analytics Mobile Gaming Benchmarks, there are two game genres that stand out most when it comes to average ARPDAU values →  Role Playing and Strategy games

For these two genres, the ARPDAU value goes up to $3.30. That is on average 5-7x more than the standard for other genres. 

In comparison, among the 15% top-performing mobile games, the typical ARPDAU range is from $0.10 to $0.14. Card and Simulation games also make a decent contribution to this section with ARPDAU of up to $1. 

On the lower end, Word and Trivia games have the lowest ARPDAU values, from $0.02 to $0.03.

To sum up our thoughts on ARPU and ARPDAU

There are plenty of mobile game metrics that you need to track, and ARPU and ARPDAU statistics are amongst the most important ones for your monetization journey.

Make sure to base your business decisions on data, not on your feelings. Having enough data and tracking the right metrics will give you leverage and help decide which changes you need to make for your app to succeed.

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About Udonis

Udonis is an independent full-service mobile marketing agency that acquired more than 200,000,000 users for mobile games since 2018. Visitudonis.co

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