Your app is out on the store and has started making some money. But how do you effectively measure whether your app is making your profits? You need some real metrics that can reveal the real status of your app download, user engagement and other key indicators of app monetization.
Now, most of us are already aware of the term ‘monetization’ in technology. It is a term that indicates the ability of generating revenue through a blog or website or app. Here are some basic metrics that you should be accustomed with for measuring app monetization.
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LT stands for Life Time of the app usually calculated in months and represents the duration of time users use your app. The longer the duration of time your app is used, the more the money it will bring. This metric is also important in the calculation of app monetization.
LTV stands for Life Time Value and it shows the value of each user using your app over the time period they use the app. It is calculated by multiplying the monthly revenue minus the monthly expense per user with the LT value in months.
eCPI is effective cost per install and is the amount of money that costs you for getting users to download and use your app. It’s quite similar to CPI (cost per install) but is even more effective as it includes the K factor in its calculation. K factor is the amount of marketing or advertising done by word-of-mouth and the resultant effect on your app downloads. CPI divided by K factor gives the value of eCPI, one of the crucial metrics for app monetization.
The Average revenue per user (ARPU) is normally calculated in terms of months and is hence the monthly revenue divided by the number of active users in that month (Monthly revenue/ MAU).
Users may be classified as paying and non paying users and in such cases, ARPU may be modified as Average Revenue Per Paying User (ARPPU) including only the users who have been making payments for your app. Sometime, looking at daily revenue per active user may also provide some helpful insights.
5. eCPM and other advertising metrics
eCPM is the ‘effective cost per mile (thousand) which measures the cost it takes to get you a user base of 1000 users. The formula to calculate eCPM, one of the metrics for app monetization, is given as follows:
Total revenue = CPC rate X number of clicks
CPM units = total number of impressions/1000
eCPM=Total revenue/CPM units
Besides eCPM several other advertisement metrics can be used to indicate the success of your ad campaigns and app marketing. Some more ad metrics are
Fill rate – measures the efficiency of the ad in catching the attention of users.
CTR, CPC, CPI – Click Through Rate, Cost Per Click and Cost Per Install metrics.
Daily active users (DAU) and Monthly active users (MAU).
Length of session
6. FUUU factor
FUUU factor is used to measure the level of interaction users have with your app especially gaming apps. It measures the scale of difficulty for the various levels in the game and thus helps game developers develop games that are not too difficult yet addictive enough to continue playing.
One of the important measures for app monetization, it is calculated by dividing the number of tries until won by the number of times a user most won a level. Lower FUUU factor levels indicate an addictive game that keeps the user motivated and engaged.
7. Retention rate
Retention rate refers to the rate of users who keep using your app after their first try. The number of app downloads may get high with an effective marketing but the real use of the app can be measured by this metric as this indicates whether users will stay loyal. The value of churn, the rate at which users stop using your app and choose some other app is also measured using retention rate. The formula for churn rate is 1-retention rate. A high retention rate means your app is doing well and whereas a low retention rate indicates you are losing your users.
So, given above are the metrics that are crucial to app monetization. Hope these help you. For queries or feedback, you can always write to us!