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How to calculate and increase your ARPU and ARPDAU?

ARPU or “Average Revenue Per User” is a metric which will help you understand whether your business model/monetization strategy works (or not).

Slavica Grgić

May 15, 2019

When I first started my job, to be honest, I was a bit overwhelmed with all the abbreviation, new terms, and lingo of the mobile gaming industry. Terms like ARPU and ARPDAU sure can sound confusing when you hear them for the first time. Now, as I’ve gained a bit more experience, it’s easier to navigate the waters of mobile gaming.

Mobile games are games, but they’re also a business, and if you’re trying to stay successful, be profitable and keep your head above the water, you NEED TO KNOW your numbers.

In one of our previous articles, we listed the most important mobile game metrics. How else are you going to know if something works or not? You won’t be able to know what’s working and what needs to be optimized if you’re not basing your changes on data.

One of the most important metrics you’ll measure are installs. Mobile games are business of volume, and the number of installs will clearly be correlated with the growth of your user base. But now we’re going to look at a bit more specific metric, ARPU and ARPDAU.

What are ARPU and ARPDAU?

ARPU or “Average Revenue Per User” is a metric which will help you understand whether your business model/monetization strategy works (or not).

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

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

Why is ARPDAU important to track?

If you track your ARPDAU, you’ll easily see how some changes or events are affecting the revenue you’re making. Whether you’re changing the placement of your ads, trying out new creatives or added a new ad format to your app, you’ll notice positive (or negative) trends that will tell you how to optimize further to achieve the maximum revenue.

ARPDAU within strategy games has soared by 199.9% to 21 cents while in casino games, ARPDAU has risen 41.6%!

ARPDAU by Game Genre.

Some game genres are simply prone to having a higher ARPDAU than others. Top game genres by ARPDAU, according to SOOMLA statistics, are Racing, Board, Puzzle and Casual. The adventure genre is the one with the lowest ARPDAU.

Now that you know what is ARPDAU, you’re probably wondering how to improve it. Here are 4 ways of improving your ARPDAU:

New ad formats

Experiment with new ad formats, try to take the opportunity of new ad formats. Banner ads are a thing of the past and they are being replaced with new formats like rewarded video, playable ads, direct play, and offerwall. Playable ads are interactive ads that users engage with by playing a part of a game or by using an 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, without even needing to press a 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 a Facebook playable ad.
Example of an interactive ad on Facebook.

Users actually don’t mind the ads and they appreciate if you’ve given them a choice. Many game publishers are struggling to choose between ad-based monetization model and 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 them and actually enjoy watching them.

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 lingo of mobile games, those users are called mobile games whales. That term is used for describing a tiny group (around 2%) of users that drives the most revenue for mobile apps and game publishers. And even a smaller percentage will install the game and start spending right away.

But 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 game whales. The average revenue per user increases as the number of paying game players increases.

Switch up the ad placements

If you’ve already decided to place ads in your app, chose wisely where you’ll place them. Don’t place your ads too often on a 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 the level. Optimal rate for a mobile game is around 3 to 4 ads per gaming session.

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

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

User segmentation

Not all users are the same. Some are simply more valuable than others. Already mentioned mobile game 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 that will enable you to understand your users. You’ll be able to see what are they tapping, swiping, watching and buying.

Most of the mobile app analytics will allow you to segment the users. Groups of users are called audiences. Audiences are users that you group together on any combination of attributes that is important to your business. That way you can see behaviors of different segments of your users. Mobile app analytics include segments – in which users are grouped by the activity, the ARPU, the app version they user, age, gender, country/region, their interests.

To sum up:

There are plenty of mobile game metrics that you need to track, and ARPU and ARPDAU are one of the most important metrics for tracking 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 to decide which changes you need to make for your app to succeed.

I think you’ll also find these articles interesting! 👇 💁

Mobile user acquisition – 7 ways to attract new users
What is user acquisition (UA)?
11 Key Mobile Game Metrics That Developers MUST Track

About Udonis:

We are an award-winning marketing agency specialized in mobile apps & games. We help scale products that people love, keeping the attention on data and results. Have questions, need help? 🤗 Email us at hello@udonis.co!

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