As a creator and/or developer of Mobile Games, you are likely familiar with eCPM, fill rate, Click-Through Rate, ARPDAU, and other metrics. Every publisher is eager to evaluate the growth of their audience and revenue. But what’s really behind each metric, and what's the best way to apply them?
As management master Peter Drucker said, “What gets measured, gets managed.” Apply that to managing and optimizing your mobile ad revenue, and you’ll learn to measure what matters with the following on-point metrics.
Summary of this article:
- eCPM
- Fill Rate
- CTR: Click-Through Rate
- CAC: Customer Acquisition Cost
- ARPDAU: Average Revenue per Daily Active User
eCPM for a Mobile Game
This metric has been a part of the advertising world for ages. Effective cost per mille, or eCPM, is used to determine the cost of advertisements (whether they’re in newspapers, magazines, or mobile apps) per every one thousand impressions.
eCPM stands for Effective Cost per Mile (‘mile’ means ‘thousand’ in Latin). In other words, eCPM demonstrates what you earn per 1,000 impressions. The formula is the following:
How to Find eCPM & use it
To calculate eCPM, simply divide your ad revenue by the total number of impressions. Multiply this number by 1000.
eCPM = (Total Revenue / Total Impressions) x 1000
For example, let’s say your ad took in $1,870 in revenue and achieved 10,000 views in the allocated period of time. Divide $1,870 by 10,000 and you’ll have 0.187. Multiply this number by 1,000. This brings your eCPM to $187 (per every 1,000 impressions).
For this reason, eCPM becomes relevant in cases such as:
- Testing the performance of different ad formats, positions, and styles.
- Comparing monetization solutions on the market.
Comparing Ad Performances with eCPM
Since eCPM is a standard advertising metric, it usually comes to mind first when you need to compare the performance of ad networks. The higher eCPM is, the more you receive from an ad provider per thousand impressions.
However, eCPM can be surprisingly unreliable. Let’s turn to math to see the catch.
Let’s say you have two ad networks: TomsNetwork and JerrysAds. Your eCPM comes out at $5 for TomsNetwork and $2 for JerrysAds. Who’s the winner?
- TomsNetwork
- JerrysAds
- Or do you need more data to evaluate?
Result (select the text to know the answer): If you picked C) you’re the real winner here!
There’s no way to answer this question accurately without analyzing the revenue and impressions together.
To make the most informed decision, you have to look at the big picture. With TomsNetwork, you received $5 per 1000 impressions in a week’s span while JerrysAds brought you $20,000 per 10,000,000 impressions for the same time period.
Keep in mind that it’s only a comparative figure; the total number of ad impressions can influence it radically.
With this example, we can see that sometimes eCPM says nothing about how exactly you earn money.
Consequently, eCPM isn’t particularly suitable for evaluating your provider’s performance or making a revenue forecast. In order to estimate the effectiveness of a given ad network, you’ll need to dive deeper into metrics and data.
Fill Rate in Mobile Games
Yes, we’re talking about fill rates again. This rate reveals how many of your requested impressions were actually shown to users.
Take time to compare eCPM along with fillrate. Fillrate calculates the rate your ad unit is filled in with provided ads. An ideal fillrate is 100%, meaning that all of the ads your app requested were delivered and displayed.
Seriously, this metric is vital to optimizing your mobile ad revenue. What’s the sense in throwing away impressions and earning potential?
Finding your Fill Rate & How to use it
To find the fill rate, divide the number of impressions displayed by the number requested. Multiply the resulting number by 100 to find the exact percentage.
Fill Rate = (Ad Impressions / Ad Requests) * 100
If you requested 1000 impressions by your ad network and only 800 were fulfilled, the fill rate would be a mediocre 80 percent. Remember—when it comes to fill-rates, keeping it at 100 is a must.
Therefore, fill rates will be very useful when:
- Maximizing your ROI
- Maintaining inventory
Achieving a 100% Fill Rate
Unfortunately, 100% fillrate is difficult to achieve, because too many factors influence it, such as bad or lost connection, low phone battery, or a failed network. On the other hand, the fillrate shouldn’t be too low; if it goes down all of a sudden, check the app’s stability and your networks. Even if the eCPM is high, bad fillrate can be the reason for low revenue, so you must consider them together as demonstrated below.
Back to our two ad networks: TomsNetwork and JerrysAds.
TomsNetworks’ eCPM from the last month was $10, whereas the fillrate was 20%. On the other hand, JerrysAds’ eCPM equaled $3 with 90% fillrate.
Basically, it means that TomsNetwork displayed expensive ads once every five times, whereas JerrysAds delivered cheaper ads, but consistently. With an equal number of impressions, the second option is preferable.
Click-Through Rate (CTR)
Of course, you want users to see the ads. But what they do afterward matters. Do they stare off into the abyss, check their Facebook newsfeed, or actually click on the ad? Add the click-through rate to your metric arsenal, and you’ll be closer to finding out.
Understanding & calculating your CTR
This metric’s a breeze to solve for. Just divide the number of clicks by impressions, and you’ve got your CTR.
CTR = (Ad Clicks / Ad Impressions) * 100
You will find that Click-through Rate is good for:
- Studying your conversion rate
- Determining the performance of your CPC or CPA campaign
- Comparing CTRs for ads placed on the web vs. in-apps
Customer Acquisition Cost (CAC)
How much green do you have to put out to attract a new user? The CAC metric answers this question for you in a flash.
Customer acquisition cost is a key business metric that is commonly used alongside the customer lifetime value (LTV) metric to measure value generated by a new customer.
For more info on the Life-Time Value or LTV metric, check our extensive article on LTV for Mobile Games (Life-Time Value) - Successful UA Campaigns
Conquering your Customer Acquisition Cost
Understanding the cost to acquire new customers is crucial to analyzing marketing return on investment.
Thankfully, this one doesn’t require an advanced degree in mathematics. Take your marketing costs to obtain new users during a selected time period and divide them by the number of customers acquired.
CAC = Marketing Costs / Customers Acquired
Therefore, if you spent $800 on the acquisition and took in 750 new users, your CAC would come out to be $1.06.
Understanding its CAC provides a business with the ability to fully analyze the value per customer and improve its profit margins. It is commonly used when:
- Analyzing the performance of conversion tactics
- Maintaining profit by achieving a lifetime value for each customer higher than the acquisition cost.
Average Revenue Per Daily Active User (ARPDAU)
It’s impossible to discuss metrics without considering the most important factor of all: revenue. At the end of the day, apps are developed to make money for their owners, aren’t they? We suggest evaluating ad performance with ARPDAU or Average Revenue per Daily Active User.
ARPDAU shows how much money you earn from a daily active user. The metric is based on the average number of daily active users, your core audience.
ARPDAU vs ARPU: Knowing how much money is generating each user is important to make realistic budgets and figure out how to drive those revenue numbers up. With ARPU, you need to determine your total revenue for an allocated time period—a week, a month, galactic years… While ARPDAU, the time period is fixed to a day, and you only focus on active users during this 24h.
Mastering your ARPDAU
The ARPDAU formula is simple:
ARPDAU = Daily Revenue / Daily Active Users
Going back to the previous example, let’s imagine that you have two apps with 15.000 daily active users (DAU) each. App A works with TomsNetwork while App B is on board with JerrysAds. You’re curious to see how much revenue each active user is bringing in per app.
With TomsNetwork, App A has a daily revenue of $4,000 while AppB comes in at $4200. To determine your ARPDAU for each respective app, simply divide the revenue by your DAU. In this case, App A has an ARPDAU of .26 while App B is at. 28. The difference in these two figures might not appear as significant at first glance but after consideration, you can see that the potential impact on daily and overall revenue is huge.
ARPDAU helps estimate how changes influence monetization. By monitoring your ARPDAU, you can see how engagement campaigns, sales on in-app purchases, deliberate user segmentation, and the like, affect your revenue.
Use it to assess the effectiveness of personalization made via Segments or to determine if users are spending more (or less) than they were yesterday, last week, and so on. Over time, you can use the insights you glean from analyzing ARPDAU to build a more successful monetization strategy.
Other details of ARPDAU:
In all, ARPDAU can be used when:
- Determining upwards and downwards trends
- Budgeting ad-spend
- Predicting revenue generation
Also, it's important to remember that ARPDAU applies to networks delivering 1000 impressions, as well as to networks delivering 1,000,000 impressions.
This metric is neither influenced by users fluctuations nor by the number of impressions. Even if your audience multiplies tomorrow, ARPDAU will remain an objective indicator of your app’s revenue. For that very reason, always place ARPDAU at the forefront of your monetization strategy while keeping a close eye on eCPM and fill rate.
Checklist to Get started with these metrics
✅ Need a quick checklist to get started with better metrics analysis? We’ve got you covered:
- Know your eCPM, but always compare it with revenue.
- Check the fillrate of every ad network in your app.
- Monitor your ARPDAU to keep track of the effect changes has on monetization results.
