Mobile Analytics for the Growth Marketer: A Closer Look at Average Revenue Per User (ARPU)
Calculate and leverage “Average Revenue Per User” to grow your mobile app revenue. Learn how.
by Neel Banerjee, Product Manager, Urban Airship & Alyssa Meritt, Head of Strategic Consulting, Urban Airship
Who wouldn’t want 10 million downloads, and a 5-star average app store rating?
Well, it depends on whether those big numbers are actually helping you execute your mobile growth strategy and app goals.
Some mobile analytics matter more than others — especially to subscription or revenue-driven apps.
One metric, Average Revenue Per User (ARPU) is especially important to consider as it reflects key metrics within the mobile user lifecycle; acquisition, retention and monetization.
How to Calculate Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is the amount of revenue each of your active users (on average) contributes:
ARPU = Total Revenue Generated During a Specific Timeframe / Total Number of Active Users During a Specific Timeframe
Let’s say that the timeframe is one month. Monthly active users would include anyone active within the selected month period. So to determine revenue, you’d look at:
Monthly Active Users X Monthly Average Revenue Per User = Revenue
Levers for Improving ARPU
The app analytics to watch — and levers to increase revenue — include:
- Number of app installs
- Number of monthly active users
By assessing each of the app analytics contributing to ARPU, you can start to identify where to improve. For example:
- Do you have many installs, but low retention? What is your hypothesis about why users leave? Are you attracting the wrong audience? Lacking a retention strategy or reason for the user to return?
- Do you have a small number of installs, but high retention? What attributes do your retained users share? Does your monthly active user generate more revenue than the cost to acquire them?
- Do your retained users spend any money? Subscription, in-app advertising, affiliate marketing, and in-app purchase models benefit from retention over time. What experiences can be improved to improve mobile app monetization efforts and increase spend?
How ARPU Metrics Can Help You Demonstrate ROI and Grow Revenue
ARPU is a springboard to calculating the return on investment for your marketing efforts, and complements other metrics.
What is your cost per install (CPI)? Are your acquisition costs less than your average revenue per user? What’s your cost per install for a retained user? Or a user who has purchased?
The attributes of your “best user” cohorts can be used for lookalike campaigns or referral programs. This can decrease cost of acquisition through designing more targeted and more effective campaigns.
Using Urban Airship Insight to Make App Metrics Actionable
The industry-specific dashboards and app analytics tools on Urban Airship Insight make it simple to get a high level view of ARPU — as well as the average revenue for a conversion event.
For example, Our Revenue Dashboard within the Insight UI shows the total purchase value for the last 30 days was $15,327,758.82 and the average purchase value for all users that purchased was $261.16.
The Overview Dashboard showed we have 159,456.monthly active users (MAU). Based on the earlier formula, the ARPU = Total Revenue / MAU = $15,327,758.82 / 159,45 = $96.13.
Pulling this all together, we can see that:
- The average transaction value is $261.16, and
- Taking into account all monthly active users, the average revenue generated was $96.13 per monthly active user.
It’s important to measure both the average transaction and ARPU, as the average transaction value gives you a sense of how much users that complete the purchase funnel spend. The ARPU gives you a sense of how many of all your monthly active users end up spending in the app.
Measuring both helps you associate the value of growing your monthly active users while also maintaining a high conversion value.
Need to get more out of your mobile data? Take a look at our Insight tool, and try it for free for 30 days. Contact us to learn more about how we can help you make even better, more data-driven decisions — and accelerate your mobile app success.
