Mobile marketing is essential for businesses to connect with their audience and grow in this digital world. To achieve this effectively, marketers use various terms and metrics to understand user behavior, campaign performance, and revenue generation. Understanding these key terms is essential for creating strategies that engage users, manage expenses wisely, and improve results.
In this blog post, we’ll explain some of the most important mobile marketing acronyms in simple terms, helping you use these metrics to make better decisions and achieve better outcomes. From DAU and MAU to ROAS and LTV, we cover the essential metrics that drive successful mobile marketing.
Before starting with mobile marketing acronyms, let’s first understand KPIs
What are KPIs?
KPI, or Key Performance Indicator, is a number that marketers use to track and measure the progress of any business. This could be the number of leads every month, the number of web visitors, or the number of people who have subscribed to the email list. KPIs are important because they help organizations understand how things improve or decline. Marketers can then use this information to change their strategy for better results.
Let’s start with the most used mobile marketing Acronyms:
DAU (Daily Active Users)
DAU, or Daily Active Users, is a metric that measures the number of unique users who engage with a service, app, or platform within 24 hours.
It helps to understand the level of user engagement and the popularity of a product over time.
It helps to understand trends in user activity. Tracking DAU over time can help businesses understand the effectiveness of marketing campaigns, product updates, and overall user retention strategies.
Also Read: What Are Ad Servers and How to Choose the Right One?
MAU (Monthly Active Users)
MAU, or Monthly Active Users, is a metric that measures the number of unique users who engage with a service, app, or platform within a month.
ARPDAU (Average Revenue Per Daily Active User)
ARPDAU, or Average Revenue Per Daily Active User, is a KPI (Key Performance Indicator) used to calculate the average revenue generated by each user who engages with the app daily. It calculates revenue from multiple sources, including ads, subscriptions, and in-app purchases (IAPs).
ARPDAU helps to understand the app’s daily performance and the impact of ongoing promotions and events.
It provides insights into how well a game or app can convert daily active users into revenue. Higher ARPDAU typically indicates better monetization strategies, while lower ARPDAU may suggest opportunities for improvement in monetization methods or user engagement.
How to calculate ARPDAU?
ARPDAU= Daily Revenue / Daily Active Users
Where,
- Daily Revenue is the sum of all revenue generated within a given day.
- Daily Active Users are the number of unique users who engage with the app within the same day.
ARPPU (Average Revenue Per Paying Users)
ARPPU, or Average Revenue Per Paying Users, is a metric used to measure the average revenue generated from each paying user over a specific period of time, usually a month.
It provides insights into the spending behavior and purchasing power of paying users. Higher ARPPU generally indicates that paying users are spending more on average, which could signify a strong monetization strategy or a valuable user base.
Tracking ARPPU over time can help businesses evaluate the effectiveness of their pricing strategies, promotions, and overall monetization efforts.
How to calculate ARPPU?
ARPPU = Total revenue / Total paying users
Where:
- Total Revenue is the sum of all revenue generated within the specified period.
- Total Paying Users is the number of unique users who purchased or generated revenue for the service, game, or app during the same period.
CAC (Customer Acquisition Cost)
CAC, or Customer Acquisition Cost, is the average cost incurred by a company to acquire a single customer. It involves all the costs associated with acquiring customers, such as marketing expenses, advertising costs, sales team salaries, and any other expenses related to customer acquisition.
Understanding CAC helps businesses make budgeting decisions for attracting new customers.
How to calculate CAC?
CAC=Total Cost of Acquiring Customers / Number of Customers Acquired
Where:
- Total Cost of Acquiring Customers includes all expenses directly related to customer acquisition during a specific period (e.g., a month or a quarter).
- The number of Customers Acquired is the total number of new customers acquired during the same period.
CPM (Cost Per Mille)
CPM, or cost per mille, or cost per thousand impressions, is a metric used to measure the cost of reaching one thousand impressions or views of an advertisement. It is the amount advertisers are willing to pay for every one thousand impressions they receive.
It’s typically used in display advertising, such as native or banner ads, where advertisers pay for the number of times their ad is displayed to users, regardless of whether the users interact with it.
How to calculate CPM?
CPM = (Total Cost of Advertising / Total Impressions) x 1,000
Where,
- Total Cost of Advertising is the Total amount spent on the advertising campaign.
- Total Impressions are the total number of times the ad has been displayed on the website or app.
eCPM (effective Cost Per Mille)
eCPM, or effective cost per mille, is a key metric in measuring ad performance, indicating the total revenue earned from ads per 1,000 impressions. Therefore, the higher your eCPM, the more revenue you earn from your ad units. It’s an advertiser’s side metric that helps them decide the budget of their campaigns.
People generally confuse these terms and often use eCPM and CPM interchangeably. While CPM is an advertiser-side metric that helps them decide the budget of their campaigns, eCPM is used by publishers to forecast earnings per 1,000 impressions.
Also Read: What is eCPM and how can it be increased for high revenue?
How to calculate eCPM?
eCPM = (Total Earnings / Total Impressions) x 1,000
Where,
- Total Earnings are the revenue generated by displaying ads on a website or an app.
- Total Impressions are the total number of times the ad has been displayed on the website or app.
ROAS (Return On Advertising Spend)
Return on advertising spend (ROAS) is a metric used by marketers and advertisers to measure the effectiveness of their advertising campaigns in generating revenue.
ROAS is an important metric for comparing the profit made by different ads, ad campaigns, or ad platforms and evaluating how much money you’ll get back if you increase spending on a set of ads.
ROAS is calculated by dividing the revenue generated by an ad campaign by the amount spent on it.
How to calculate ROAS?
ROAS= Revenue from Advertising / Cost of Advertising
Where:
- Revenue from Advertising is the total revenue generated from the advertising campaign.
- The cost of Advertising is the total amount spent on the advertising campaign.
ROAS is generally expressed as a ratio or a percentage. A ROAS greater than 1 indicates that a particular advertising campaign generates more revenue than the cost of the advertising, which is considered a positive return on investment (ROI).
CTR (Click-Through Rate)
CTR, or Click-Through Rate, is a metric used to measure the effectiveness of an ad in generating clicks from users.
How to calculate CTR?
CTR = (Clicks / Impressions) x 100
Where,
- Clicks are the number of clicks on the ad.
- Impressions are the total number of times users have viewed that particular ad.
A higher CTR means that a larger percentage of users who saw the ad clicked on it, which suggests that it is engaging and relevant to the audience. A low CTR may indicate that the ad is not working well with the target audience and needs optimization.
CPI (Cost Per Install)
CPI, or Cost Per Install, is a metric used in mobile app marketing to measure the amount spent for each installation of their mobile app.
How to calculate CPI?
CPI = Total spent on Advertising / Number of installs
Where,
- Total Spent of Advertising is the total amount spent on the advertising campaign.
- Number of Installs are the website or app installs.
Now, why is CPI so important for app developers and marketers? It’s like a financial health check for your user acquisition campaigns. Lower CPI values indicate that your advertising campaigns acquire users at a lower cost, which is generally good. But remember, it’s not the only metric to consider.
Also Read: How to Launch a Successful Marketing Campaign with Programmatic Advertising?
LTV (Lifetime Value)
LTV, or Lifetime Value, is a metric used to estimate the total revenue a single user generates over their entire relationship with an app or game. Lifetime Value is crucial for businesses, particularly in subscription-based models, online gaming, and e-commerce, as it helps them understand the long-term profitability of acquiring and retaining customers.
How to calculate LTV?
There are various ways to calculate LTV, but one common method is:
LTV = ARPU × Average Lifespan of a Customer
Where:
- ARPU (Average Revenue Per User) is a customer’s average revenue over a specific period, typically monthly or annually.
- The Average Customer’s life span is the average duration a customer stays engaged with the business or continues to purchase.
Retention Rate
Retention rate is a metric used to measure the percentage of customers or users who continue to engage with a service, product, or platform over a specific period. It is generally used to assess customer loyalty and the effectiveness of retention strategies.
How to calculate the Retention rate?
Retention Rate = E−N/S×100%
Where:
- E is the number of customers or users at the end of a specific period.
- N is the number of new customers or users acquired during the same period.
- S is the number of customers or users at the start of the period.
A higher retention rate indicates that more customers or users continue to engage with the product or service over time, which means stronger customer loyalty and satisfaction. Conversely, a lower retention rate may indicate churn, prompting businesses to focus on improving customer experience and retention strategies.
Also Read: Mobile Advertising Types, Benefits, and Best Practices!
CPC (Cost Per Click)
CPC, or Cost Per Click, is a metric used in online advertising to measure the amount advertisers spend each time a user clicks on their ad. It is commonly associated with pay-per-click (PPC) advertising models, where advertisers only pay when their ad is clicked, regardless of whether the click leads to a conversion or not.
How to Calculate CPC?
CPC= Total cost of Advertising / Number of Clicks
PPC (Pay Per Click)
Pay-per-click (PPC) is an online advertising model in which advertisers pay a fee each time their ads are clicked. It is generally used to buy website visits rather than earn them organically from Google through search engine optimization (SEO).
How to calculate PPC?
PPC= Total cost of Advertising / Total Clicks
Where,
- The total Cost of Advertising is the total amount spent on the advertising campaign.
- Total Clicks are the number of times the users clicked on the ad.
A/B Testing
A/B testing, or split testing, is a marketing method that compares two versions of a webpage, email, advertisement, or other marketing asset to determine which one performs better. It involves simultaneously presenting two variants (A and B) to similar audiences and measuring their performance based on predefined metrics.
CPA (Cost Per Acquisition)
CPA, or Cost Per Action, is a metric used in online advertising to measure the amount advertisers spend on each specific action a user takes, such as filling out a form, making a purchase, downloading an app, or signing up for a newsletter.
How to calculate CPA?
CPA= Total cost of Advertising / Number of Acquisitions
Where,
- The total Cost of Advertising is the total amount spent on the advertising campaign.
- The number of Acquisitions is the total number of completed actions (e.g., purchases, sign-ups) during the campaign.
Conclusion
Using these key performance indicators, you can make informed decisions that will help you increase user engagement, retain customers, and boost your profits. Whether you’re an experienced marketer or just starting, remembering these acronyms and what they mean will help you understand the world of mobile marketing and stay competitive.
To improve your strategies, it’s essential to keep learning and track your progress with these important metrics. With the proper knowledge and tools, you can make the most of your mobile marketing efforts and achieve long-term success in the digital world.
