What is ARPU
Average Revenue Per User, or ARPU, is the average amount of revenue generated by an app’s total users within a given period. In the context of mobile marketing, ARPU is similar to lifetime value (LTV). ARPU, essentially, helps determine the value of an app's users over a set amount of time.
How to calculate ARPU
Average Revenue Per User is calculated by dividing the total app revenue within a specific period of time by the number of users in that same time period
ARPU = Total App Revenue within a Time Period / Number of Users in a Time Period
For instance, if the revenue generated between May 1st, 2023 to May 31st, 2023 is $20,000 and the number of users during that period is $2000, then the ARPU is $10.
Why is ARPU important
Average Revenue Per User plays a crucial role in helping apps gauge how much they are earning. Here are some of the reasons why it is important:
- Optimize marketing: ARPU helps identify high-value and low-value users, enabling businesses to re-examine their channels, ad networks, and campaigns for better revenue generation. This allows them to focus on campaigns that generate more revenue.
- Boost ROAS: Analyzing ARPU with Cost Per Installs (CPIs) or Cost Per Action (CPA) provides a better understanding of the ROAS.
- Formulate powerful strategies: ARPU helps understand how well an ad meets the customers' needs and expectations. A low ARPU indicates a possible drop in users and calls for a re-evaluation of strategies.
ARPU vs ARPDAU
Average Revenue Per User helps understand the revenue at any specific period of time. Average Revenue Per Daily Active Users (ARPDAU) refers to the revenue generated by users on a daily basis.
ARPDAU is a short-term value but helps gauge performance in real-time. However, ARPU gives a perfect bird's eye view of one's channels and helps gauge long-term performance.