If you are related to mobile games or PC games, you must have heard the term “ARPDAU”? You hear it so frequently that one wonders what does this mean and how can it change revenue potential for mobile game. Well this article will answer some of very basic questions, and hopefully introduce more data driver approach to manage and build games.
ARPDAU is abbreviation for Average Revenue Per Daily Active User. It’s calculated by averaging out daily revenue divided by daily active user.
The simple metric help us understand how well our application is monetising and help us compare to industry benchmarks. E.g. ARPDAU for hyper-casual games ranges between 10 to 12 cents. If you have a hyper casual game, you can compare its ARPDAU to industry average to measure how well it’s performing. If your game’s ARPDAU is lower, then there is an opportunity to improve monetisation potential.
ARPDAU can also help us benchmark a game against its previous versions. So if you just introduced a newer version of the game making some improvements to monetisation strategies, ARPDAU can be reliably used to measure effectiveness of newer strategies.
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A simple way to calculate ARPDAU is by calculating average of revenue per daily active users, over a period of time.
First we calculate Revenue per daily active user ( RPDAU ) as
RPDAU = ( InApp + Add Revenues for a day )/ Number of unique active users for that day.
APRDAU ( 7 days ) = Average of seven days of consecutive ARPDAU
The weekly average helps us filter our abnormality for a certain days or factor in weekends.
How to increase ARPDAU?
We don’t have a canned response or a formula for this. Each game has to be accessed individually to identify areas of improvements. However it’s trivial to understand revenue stream to identify growth opportunities. ARPDAU is usually a function of revenues. Revenue stream can be divided into two broad areas, in-app purchases and ad-revenues.
In App purchases are usually a function of number of transections, and price points. E.g. a game can offer 10 gems for $1; and 25 gems for $2. In order to increase ARPDAU from in-app purchases, game designers closely analyse in-app purchases, user journey through analytics and adjust offerings. At times revenues can be enhanced by introducing discounts, and at times by bringing in-app purchases within game loop. However, this requires re-thinking about game design, monetisation strategies, offerings and studying analytics in details.
In order to identify opportunities to improve ad-revenue, we must understand that revenues from advertising are based on
- Number of impressions served
- eCMP ( cost for displaying 1,000 impressions )
In order to increase number of impressions served, we have to add more content to increase game play. For a particular game, we were able to increase impressions by adding more levels, and for other game by introducing collectibles that can be earned by watching ads. It’s extremely important to properly place advertisement in the game loop, as poorly placed ads would result in lower impressions served and bad eCMP.
In order to improve eCMPS, we must include auto-mediation toolkits and include more ad-networks to increase fillrate and eCMPS. eCMPS’s are based on various factors, including interaction with the ad, game category and user geographical location. various auto-mediation toolkits like Tapdaq, MobPub and Admob help in improving overall revenues.
More and more developers are adapting mixed monetisation to better earn from their players. No doubt, few years ago, in-apps was famous way to monetise the game. However only 2% of the users pay, and they account for larger amount of revenues from the game. They are usually termed as whales or VIP’s. However more and more developers are also implementing ad-based revenues to augment their earning stream. Rewarded videos are performing better for users as well as game publishers. You can review more about monetisation strategies for mobile games.
LTV and ARPDAU
LTV is the lifetime value of the user. It calculates the worth of the new user and what value it is bringing to your app. It is to determine the growth and success of your application.LTV is calculated by:
LTV = ARPDAU * User-Days Y
You can use following sheet to calculate LTV by using ARPDAU and retention matrices.
ARPDAU for marketers
ARPDAU is extremely important for marketers as its one of the basic ingredient to LTV. Marketers need to know LTV so as they can control CPI ( Cost per install). In shorts if a user can give us more money through its life-time then it costs us to acquire, we can continue marketing. The goal of marketers is to have LTV greater than CPI.
So, you should keep an eye on the growth and success of your application by calculating ARPDAU and start experimenting by using and implementing different strategies for success. ARPDAU is important for following reasons
- Benchmark our game against previous versions
- Benchmark the game performance against industry averages
- Run and manage marketing campaigns