This is the third post of our series of articles, where we talk about Successful User Acquisition Campaigns. As the title says, we will focus now on how to Improve the CPI & ARPU of your Mobile Games.
In previous articles, we talked about Top Strategies for your Retention Rates on Mobile Games, and the LTV on Mobile Games. Throughout this post, we will mention some of the things that we discussed in these previous articles.
But let’s get back to the issue at hand.
Today, we’re going to give you some tips and strategies to improve ARPU, ARPDAU, and other revenue metrics and connect them to your user acquisition campaigns to reduce your ads’ CPI (cost per install).
Shortcuts for this article:
- What is ARPU & how to calculate it?
- The connection of ARPU with other metrics
- Why is ARPU important for mobile apps & games?
- Align the CPI to your ARPU & Revenue Metrics
- Which CPI you should be Paying
- How to improve the ARPU of your UA Campaigns
- All you need to Boost your Paid Campaigns
What is ARPU & How do I calculate it?
First, we should start by saying that ARPU is the Average Revenue per User.
To calculate the ARPU is quite simple: first, you must define a cohort, and then you divide the total revenue generated by that cohort by the number of users it has.
This cohort may be all the users of your app given a specific time frame – a week, a month, a year, or whatever you decide-. You can even segment the cohort by users that have interacted with a particular feature of your game or come from a specific ad campaign.
However, when developers talk about their ARPU, the cohorts they use are usually the whole userbase of their app, and the range of time they use is the lifetime of those users.
The connection of ARPU with other Revenue Metrics
Other revenue metrics work in a similar way to ARPU. Some are even born from it.
To be concise, we won’t mention all of them. I’m only going to talk about those that are more important and more relevant for this article.
ARPU & ARPPU
We should start then with the ARPPU (Average Revenue per Paying User). This one only considers those users who have actively spent money from their virtual wallets with your mobile app or game.
They may spend money through IAPs (In-App Purchases), subscriptions, pay-walls, or others alike. Notice that, in ARPPU, In-App Ads are not contemplated, either of those monetization models where users don’t spend their money, even if you get revenue from them.
ARPU & ARPDAU
Another revenue metric often used in the mobile gaming industry is the ARPDAU (Average Revenue per Daily Active User). Similar to ARPU, APRDAU focuses on those users who are engaged with your mobile game daily.
To properly understand ARPDAU, we need first to define our DAU (Daily Active Users). This usually varies between apps.
Some Hyper Casual games consider that a user is engaged with the game if they, at least, play one game session (which usually takes between several seconds to few minutes).
However, a Casino mobile game may consider that an engaged user has to at least play a spin in a slot machine, which only takes half a second, but the whole journey maybe longer. Casino players have to come across several pop-up offers, daily rewards in the lobby, friends’ interactions, and several more secondary in-game features. They go through a long path until they decide on a slot machine, open it and trigger the “spin button” to determine they are part of the DAU.
Therefore, you will have to decide which event will determine if your user is engaged.
This makes ARPDAU a revenue metric that gives you different insights, way more focused on active users.
ARPU & LTV
Also, we should not confuse ARPU with LTV (Life-Time Value).
LTV is super useful to understand if you’re targeting the right users and understand your mobile apps’ overall success. I highly encourage you to read the article on LTV in Mobile Games.
On the other hand, ARPU works best when you have to evaluate the performance of specific in-game stuff, such as IAP pricing, acquisition channels, and the quality of your revenue.
And this is the topic that we are now going to talk about in more depth.
Why is ARPU important for Mobile Apps & Games?
ARPU and other revenue metrics are essential to determine the ROI of your marketing efforts. With these metrics, you can compare your campaigns’ performance and get a better understanding of where to spend your marketing budget.
ARPU is also beneficial for Game Economy Designers to decide the IAP pricing strategy and Ad Monetization Managers to tweak their in-app ad strategies.
These revenue metrics become even more helpful when you compare between them.
ARPPU to tweak your ARPU
We can easily connect the ARPU (Average Revenue per -all- user) with ARPPU (Average Revenue per Paying User).
There’s usually a gap between ARPU & ARPPU. This is because paying & non-paying users have generally different in-app behaviors. But when you put these two metrics into a rigorous analysis, you may find opportunities to improve your in-game features and your paid campaigns.
Let’s use an example to clarify the previous statement:
Imagine that your mobile app only monetizes with Ads & IAPs. You have an active User Acquisition Campaign that brings you 1.000 new users per month with a $1 ARPU. Over the total acquired users, 100 of those become paying users, and they have an ARPPU of $6.
Therefore, 40% of that campaign’s revenue comes from the 90% of the users who watch in-app ads. With that info, you can now check your ad monetization strategy for those non-paying users. It’s up to you to spend time tweaking and optimizing your ad units or try other stuff, such as implementing new ad formats to grow your ad income.
ARPDAU to understand your ARPU
You may face a similar situation when you compare ARPU with ARPDAU (Average Revenue per Daily Active User).
Engaged and non-engaged users also have very different in-app behaviors. When crossing data from both ARPU and ARPDAU, you may discover that you need a different approach from what you first thought.
Following the previous example, we had a $1 ARPU for a cohort of 1,000 users. So, you decide to push more “Ad Impressions per User Session.” And your ARPU increases up to $1.20. However, your ARPDAU does not increase equally or even decreases.
You may think: “well, now I’m getting $1.20 instead of $1. I’m good with that”.
However, the ARPDAU is telling you that now you have lower revenues from engaged users. And this may be problematic for two reasons: first, because engaged users may be necessary for the sustainability of your paying-users; and second, because those engaged users have more potential to become paying-users.
Therefore, even if you’re boosting the ARPU of your campaign, you may be devaluating your overall users’ LTV.
And this same example can happen in the opposite direction.
I’ve personally managed apps that, when decreasing the average Ad Impressions of Interstitials to engaged users, or even replacing Ad Interstitials with Rewarded Ads, the ARPU of a specific campaign decreased, but the overall users LTV increased.
At this point, you may be thinking, “then what the heck should I do?”. Do not panic. Further down in this article, we’ll talk about strategies to control your ARPU and align it with your Acquisition campaigns and your CPI.
Also, we have recently updated your Appodeal Dashboard. Now you can align all your Attribution, Retention, and Monetization metrics with your Acquisition Campaigns and find out new growth opportunities pretty easily. If you still haven’t checked that out, you should give it a try.
Align the CPI to your ARPU & Revenue Metrics
Once you have already found your ARPU and other revenue metrics, it is time to connect them with your User Acquisition Campaigns.
We must talk now about the metric that all User Acquisition Managers always look at: the CPI (Cost per Install).
Once you connect your AppsFlyer account to your Appodeal Dashboard, you will see that -in most cases- ARPU and CPI are directly related. Geos/markets with higher CPIs tend to provide users with higher ARPU.
When you combine and connect the CPI -costs of your campaign- with the ARPU -revenue generated from your users-, is when you get the ROAS (Return over Ad Spending). This is the metric that will tell you if you need to put more budget in that campaign, optimize it, or even stop it at once.
Payback Period is the range of time you need before you recover your investment.
Every publisher or developer uses different Payback Periods. Therefore, you must check your ROAS & ARPU on day N. This means that, if you want a positive ROAS on day 365, you could check your CPI on day 180 and discover that it is higher than your ARPU on that specific day. However, when you check your campaign on day 365, your CPI must be lower than your ARPU if you want your ROAS to be positive.
ROAS is your friend. It tells you which direction you should take with your ad creatives and why ARPUs are a lot more related to the ROAS of your acquisition campaigns than their CPI.
In a straightforward example: You may increase your CPI, but that may not increase your ARPU. However, if your ROAS increase, your ARPU will rise too. And if your ROAS falls, your ARPU will go the same way.
Sometimes, even when the CPI of an acquisition campaign drops, that does not translate to higher ROAS.
Still, even if ROAS can highlight better the trend of a campaign, there will be times where you will need to prioritize to lower your CPIs. The best example is when you’re soft-launching an app.
But again, no matter what your marketing goals, it is hard to find a situation where you wouldn’t want to see the ad creative with the lowest CPI and scale it further. Even if it’s not giving you the highest ROAS at that time, maybe what your mobile game needs at that stage is a high volume of users.
Which CPI you should be Paying on your UA campaigns
CPIs (Cost per Installs) may vary significantly between app platform, game genre, country, ad type, and even user targeting. There is no way to tell you which exact CPI you should pay.
CPIs vary a lot from year to year. They shift even during the year.
However, we can say for sure that your CPI has to be aligned with your marketing goals and, if possible, stay under the ARPU (Average Revenue per User) of your acquisition campaign.
Usually, iOS users have higher ARPUs, and consequently, acquiring users for iOS costs more than acquiring users for Android.
Also, CPI’s vary a lot between countries. They are divided between tiers. A Tier 1 country, such as the USA, Canada, UK, etc., have higher CPIs. Tier 3 countries such as Botswana, Iraq, Vietnam, or Moldova have lower CPIs. Again, the lower the CPI, the lower the ARPU.
Udonis has a great article about choosing the right geos for your acquisition campaign that is worth a read.
Your best shot to find out your ideal CPI is to connect your AppsFlyer account with your Appodeal Dashboard and A/B test your creatives in tier-2 or tier-3 markets with user targets that are as close as possible as your ideal player.
Check your Retention & Engagement rates for your Campaigns
If you see that your metrics are close to your ideal targets, but you still require making minor adjustments and improvements to your mobile app or game, we recommend you to do a Technical Launch.
Lower CPIs will allow you to afford a higher volume of users from low-tier countries and get more data to fix any bugs and optimize your game’s engagement metrics. On the other side, if you are already monetizing your game, go with a Soft Launch campaign in a mid-tier country.
Also, after connecting Appsflyer, you’ll be able to get more granular data from your User Acquisition Campaigns in your Appodeal Dashboard. Cross your attribution data with your retention & monetization data.
Pro Tip: Display your data segmented by the ad groups -or ad sets- of your UA campaign and detect those with better retention rates (engagement, ARPDAU), even if they provide a small number of installs. This way, you’ll be able to launch your next UA campaign focusing all your efforts on those that you know will give you a more remarkable performance.
Once the metrics you get from your UA campaigns reach, or even surpass, your goals, then you’ll be ready for the global launch!
On the other side, if you keep struggling to acquire metrics from your UA campaigns, you may have to make drastic decisions. Sometimes it is hard to admit that the mobile game or app we have created is not prepared for the current market. But far from getting stuck with something that will drain your energies, you may want to consider shifting your focus to other projects or ideas.
For your next project, we have prepared this 30-page guide to test your game concepts that may come in handy.
In any case, if you opted in the Appodeal Accelerator Program, do NOT forget to share the results of your soft launch with the Appodeal team. Whether your mobile game is starting to become successful or is not getting the expected results, contact our support team, and we will help you anyway.
How to improve the ARPU of your User Acquisition Campaigns
There are many, many ways to improve the ARPU of a UA Campaign.
Depending on your game genre or other variables, some of them will make more sense, and some others may be entirely useless for you. Therefore, we will point you in the right direction, and it will be up to you to adapt these suggestions to your particular game.
The following suggestions to improve the ARPU are suitable for Mobile Apps & Games in a Soft Launch phase.
Do NOT deactivate Rewarded Video Ads
Usually, game developers add IAPs (In-App Purchases) specifically focused on disabling the in-app ads.
If you’re monetizing your mobile game with IAPs and Ads, this is an option to consider most when you are using “intrusive” ad formats, such as banners that take part of the screen or interstitials after game levels.
However, you should not remove the Rewarded Video Ads to those users who have purchased a “disable ads” IAP.
By removing the rewarded ads, you may hurt your paid campaigns’ ARPU and your overall revenue. It also may decrease your retention and engagement rates.
It’s been studied in a lot of games that Rewarded Ads have a positive effect on IAPs. Often, players that interact with rewarded ads have more chances to become recurrent paying users. Even paying users tend to balance their gameplays with both monetization models.
Experiment with your Ad Waterfall & Price-Floors
Appodeal provides you with automatic waterfall optimization. Millions of data entries back the algorithm behind it, and it’s pretty well-tuned.
However, sometimes it makes sense for Indie developers to optimize their ad waterfalls and test different price floors. This is mostly valid for mobile games inspired in core-loops, art styles, or even a game genre experiencing a temporary boom in the market.
Let’s say that you have a “mine-crafter” game, and recently Minecraft has released a new update that most YouTubers are talking about. People are eager to play games like yours, and your DAU and user quality has increased. You may then be in a situation of “exceptionality”, and the automatic algorithm may not have adapted to it yet.
This is just an example, but there are many other situations that your retention and monetization metrics that tell you to go for it. Therefore, optimizing your ad waterfalls for a determined time range may be a better choice for you.
In any case, if you ever decide to experiment with your ad waterfalls, please, use the Segments & A/B Testing tool. Start small, and if it works, then expand and iterate.
Be sure that all your Ad Networks, Attribution & Marketing Tools are connected to your Dashboard.
When you’re launching a mobile game, sometimes you can overlook even the most obvious things.
If you launch a User Acquisition Campaign on Facebook, Google or any other source, be sure to connect your Appsflyer account to your Appodeal Dashboard.
Experiment with the Ad Frequency & Ad Types
How often do you show an ad? What is the time range between two ads? Which ad types have you integrated? Have you tried to increase or decrease the average ads per user session? Are prizes of your rewarded ads valuable enough for your users?
Play your game, and while doing it, ask all these questions. And not just those. Try to come up with questions that make sense in the context of your game. Play the mobile games of your competitors, look where they place their ads; or which ad networks they are using.
When you’re too close to a situation, sometimes it’s hard to look at it from the outside.
Try to ad MRECs to pause menu or settings, ad banners to the gameplay, interstitials between levels, or “ad break” placements. Or even better, if your game is too saturated with them, try to remove a few of them!
Sounds silly coming from a guy working in an Ad Monetization company. But honestly, we want you to have better retention rates and a well-optimized ad strategy, instead of 15 ad placements in less than 3-min. If your game thrives and grows, we both win.
Pro Tip: Do not push more than one interstitial per minute -according to our data, based on dozens of thousands of mobile apps-.
A/B Test until you find your Ideal Monetization setup
Find out your ideal Ad Monetization setup. Use the Appodeal A/B test tool, and pay attention to retention and engagement metrics as well as your ARPU.
A/B tests may require a high number of DAU (around ~1000 Daily Active Users).
Finding your perfect ad strategy may be a bit more complex during your Soft Launch phase. First, find your optimal setup by launching campaigns in your target countries.
Once you start your Global Launch, you can find the best ratio & retention rates.
You have all you need to Boost your Paid Campaigns
When ARPU is aligned with the user acquisition campaigns, mobile game & app developers can get granular data that is more relevant for their business.
You can get deeper insights and track what works best on your UA Campaigns by crossing your ARPU with other revenue metrics, such as ARPDAU or ARPPU. Revenue metrics are highly correlated with your retention strategy, so you may also want to check that you’re using the top strategies to grow your retention rates.
The context of your mobile app will determine which CPI you should be paying. Still, from your Growth Engine, you will be able to identify better how to tweak your campaign costs. In the end, you want a positive ROAS (Return Over Ad Spending).
Combine the insights & data you get from your Dashboard with monetization strategies that are most coherent with your mobile game, and you will not only get higher ARPU & ROAS, but you will also improve the LTV of your Mobile Game.
This article has shown you some ideas, and you have all the tools at your reach. Now it’s up to you to turn your apps into top earning hits!