Average revenue per daily active user (ARPDAU)
ARPDAU, or average revenue per daily active user, is a key performance indicator (KPI) that measures app monetization per active user per day. This method of measurement is useful for identifying when or if changes made to an app begin to impact the app’s ability to monetize its users.
What is ARPDAU?
ARPDAU uses revenue generated from in-app purchases (IAP), subscriptions, and ads to calculate daily revenue per active user of an app.
Whether your app has undergone an update or you’re running a new campaign or promotional event, ARPDAU offers a top-level view of your app’s revenue and how it fluctuates once you initiate changes.
Two primary benefits of ARPDAU
ARPDAU is a metric that allows app developers and marketers to learn about and see their app’s monetization capabilities in real time, down to the minutest detail.
Let’s say, for example, your app offers its paid users certain perks. You decide to reduce the price of your paid version to entice more subscriptions. With ARPDAU, you can see if the price decrease actually boosts your paid subscriptions and cash inflow.
Using this metric benefits app developers because:
- Frequent analysis ensures you are maximizing your monetization efforts.
- Your advertising strategy is visible and balanced, as evidenced by your ARPDAU.
Two limitations of ARPDAU
A lot of app developers employ ARPDAU to compare monetization over time. At the same time, app developers are aware that ARPDAU is a short-term metric and can be slightly problematic (least of all because lifetime value (LTV) is a better metric when measuring monetization performance over time).
So, what are the limits or challenges to using this metric?
- Let’s say your app is a two-player game. Every day, player one is active from 8 am to 11 am and spends exactly $1. Player two is active from 10 pm to 1 am and also spends $1 each day. So, the average revenue on each day would be $2, with these two active users making the ARPDAU $1.
Now, what happens if player two skips a day. Considering they cross the midnight/day boundary — what happens to their ARPDAU amount?
In this one contrived scenario, we’ve already witnessed a major flaw in the calculation, which demonstrates why LTV is a more representative or accurate metric.
- ARPDAU only considers your daily active users, which limits your data and your overall understanding of the effectiveness of your monetization strategy over time.
How to calculate average revenue per daily active user
The formula to calculate ARPDAU is simple:
So, if you have a popular social media app with 11 million daily users that generates $5 million a day in revenue, it would look like this:
Your ARPDAU in this case would be 45 cents — meaning each active user, on average, is spending 45 cents a day on your app.
Two simple steps to increase ARPDAU
Increasing your daily revenue average per user is not as daunting a task as it sounds. And there are specific, actionable, and immediate strategies to implement — that can impact your average daily user spend.
- Boosting ad engagement with things like offerwalls can be an easy win: Users love engaging when they can get something back in return (like game currency or extra lives). Serving users ads they’ll be tempted to engage with will improve your chances of increasing your revenue flow.
- Delight and entice with your IAPs, special offers, or exclusive deals: Served directly and exclusively to specific segments of users, this can increase the likelihood of clicks and buys.
ARPDAU vs. ARPU: When to leverage each metric
ARPU, or average revenue per user, is a metric that calculates the average revenue generated per user within a certain time frame. This metric is preferred when your aim is to acquire new users across different channels.
On the most basic level, your ARPU rate per channel or platform helps you understand which platforms and or channels have the potential to generate the most income for your app.
Although the acronym ARPDAU is a mouthful, it is easy to understand as a digital marketing metric.
- ARPDAU uses revenue generated from in-app purchases (IAPs), subscriptions, and ads to calculate daily revenue per active user.
- There are both benefits and limitations to using this marketing metric.
- The formula to calculate daily revenue per active user is: revenue (in 24 hours) / users (24 hours)
- The best way to increase your ARPDAU is to increase engagement through ads like offerwalls and exclusive deals served in IAPs.
- Not to be confused with ARPU or average revenue per user — which is a metric that looks at all users over varying amounts of time — that is not limited to active users or a 24-hour time period.