As mobile app developers and marketers continue to rely on Average Revenue Per Daily Active User (ARPDAU) as a key metric for measuring monetization performance, it's essential to acknowledge the limitations and biases that can impact its accuracy. In this article, we'll explore why ARPDAU might not be the most effective way to track mobile app revenue, especially when it comes to comparing performance across different time zones.

The Bias in ARPDAU

At first glance, calculating ARPDAU seems straightforward: total daily revenue and divide by the number of unique users. However, this simplicity can lead to biased results. Consider a scenario where two users, User A and User B, have distinct activity patterns. User A is active between 11 am and 1 pm, while User B is active between 11 pm and 1 am. Both spend $1 per day. If we calculate ARPDAU for each user, we'll get different results: $1 for User A and $0.50 for User B. This disparity highlights the issue with ARPDAU's time-based calculation.

Time Zone Trouble

The problem lies in how most app developers define daily active users (DAU). Typically, this is calculated as the number of users active within a 24-hour period, which can be problematic when comparing monetization performance across different time zones. For instance, if you're based in San Francisco (UTC-08.00), your metric will work well for American users who are typically most active during daylight hours. However, when trying to analyze European users (UTC+00.00 to UTC+03.00), the bias becomes apparent: many of these users' activities will cross the Pacific Time day boundary, leading to under-reported revenue.

Limitations and Implications

While the bias in ARPDAU might be small for most mobile apps, it's essential to acknowledge its limitations. As a metric, ARPDAU is prone to errors when comparing performance across different time zones or analyzing user behavior that doesn't fit within the standard 24-hour window. This doesn't mean we should abandon ARPDAU entirely; rather, we should be aware of these biases and consider alternative metrics, such as lifetime value (LTV), which provides a more comprehensive view of long-term monetization performance.

Conclusion

As mobile app developers and marketers, it's crucial to recognize the limitations of our performance metrics. ARPDAU might seem like a straightforward metric, but its simplicity can lead to biased results when comparing performance across different time zones or analyzing user behavior. By acknowledging these limitations, we can refine our metrics and gain a more accurate understanding of mobile app revenue.