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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 Active 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 and ARPDAU?

Now that you know what ARPU and ARPDAU are, you’re probably wondering “how can I increase them?” Seeing that these metrics are a reflection of your app’s monetization strategy, you have to optimize it. That goes for in-app purchases, in-app ads, subscriptions, and hybrid models.

Encourage In-App Purchases

One of the most effective ways to increase ARPU and ARPDAU is to offer enticing in-app purchase offers players can’t refuse. Depending on the game and genre, in-app purchases can include various boosts, power-ups, weapons, gear, currency, extra lives, loot boxes, game characters, skins, etc. 

To make the offer seem more valuable, it’s a good idea to include bundles, discounts, and limited-time offers – they can boost purchases. For example, according to Clevertap, implementing limited-time offers can outperform other types of promotions by 8%. They can create a sense of urgency and encourage players to make a purchase.

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 them 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. 

ad placements on imobi

Switch Up Ad Placements

If you’ve 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.

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

Implement Rewarded Video Ads Into Your Game

One of the ways of increasing ARPU and 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 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 ARPU and 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 because casual gamers are not big spenders.

Choose the Right 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. Learn more about playable ads here. 

Try Subscriptions

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. 

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. For example, features like mini-games, push notifications, social features, personalization features, etc. 

Moreover, you need to constantly be adding new content to your game to keep it fresh. 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. 

Summing Up 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.

Udonis

About Udonis

Udonis is an independent full-service mobile marketing agency that acquired more than 300,000,000 users for mobile games since 2018.

Visit udonis.co

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