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Increase Revenue by Improving Use Rate

Posted Jul 23, 2015

While some aspects of mobile app monetization can be complicated to optimize, there is one element that rests squarely in the publisher’s control that can have an immediate, jaw-dropping impact on their daily revenue:  Use Rate.

Defining Use Rate
An app’s Use Rate is the percentage of daily active users of a given app who are served at least one ad that day. For instance, if an app has 1 million daily active users and 200,000 of them see one video ad today, that app has a 20% Use Rate. Publishers on the AdColony platform can easily check their Use Rate on the dashboard under the Monetization tab, as shown below:

adcolony_dashboard_userate

For example, this publisher has two iterations of their app:  one for iOS and one for Android. The Use Rate for each app is listed separately. In this instance, the publisher has a 31.26% use rate on iOS and 25.57% on Android, as highlighted in yellow below:

dashboard_closeup_new

Note:  The Use Rate listed in the AdColony Dashboard is based on the number of DAUs initialized with the AdColony SDK and may not be indicative of the entire DAUs of the app.

Importance of Use Rate
At a glance, Use Rate tells a publisher how effectively they are reaching users with in-app ad monetization integrations. If an app’s use rate is only 20%, then the publisher is leaving 80% of their ad revenue sources on the table each day, which can translate into even higher overall revenue losses.

Effect of Use Rate on Daily Active Users
Granted, some publishers may be wary of exposing a larger segment of their users to ads for fear these users may not respond well and cease using their app. However, this is simply not the case.

For instance, one publisher recently adjusted the visibility of their ad placements by adding a tool tip reminder for users to watch videos, notably increasing their Use Rate without adversely affecting their DAU. In fact, average DAU in the week following the update were 1.4% higher than average DAU the week prior.

USE-RATE.002

So why weren’t DAUs affected as some publishers may fear? Simply put, the user experience remained consistent and the influx of new video impressions were divided among considerably more users.

Albeit more visible to more users, viewing the video remained an option as part of a value exchange video program, thus maintaining the existing user experience. The result was an increase in the average Use Rate from 13.3% to 25.5%, nearly doubling the unique users viewing at least one ad per day.

Additionally, while the Use Rate increase was considerable, the average daily impressions per ad monetized user also increased a notable 13.3%, improving publisher earnings for already monetized users.

Effect of Use Rate on Revenue Per User
Not surprisingly, average ad revenue per daily active user (Ad ARPDAU) also dramatically increased as Use Rate increased. Breaking down the Ad ARPDAU during the test period, the effect of the integration update is clear:

AdColony_UseRate.001

Of course, this is just one publisher. Reviewing data from top earning publishers this year, a similar correlation between increasing Use Rate and revenue is found:

AdColony_UseRate.004

From this data, it is evident that increasing Use Rate dramatically increases publisher revenue. On average, a publisher with a 20% Use Rate can expect the following revenue growth by increasing their Use Rate to the listed thresholds:

Use Rate Ad ARPDAU
30% + 13%
40% + 182%
50% + 437%
60% + 529%
70% + 643%
80% + 946%
90% + 1786%

Visually, this translates into exponential growth in Ad ARPDAU as use rate is increased:
AdColony_UseRate.006

Effect of Use Rate on Overall Ad Revenue
Of course, as revenue per daily active user increases, so does overall revenue. By increasing the app’s average Use Rate, the publisher increased their average daily revenue 140%, with peak days earning over 3 times the previous average.

userate_revenue_time.052

Standardizing daily revenue by Use Rate over a longer period, it is easy to see how use rate directly translated into increased daily revenue for this publisher:

USERATE_Charts.003

Improving Low Use Rates
Low Use Rates can be caused by a number of factors, including restrictive user segmentation, poor placements, and infrequent ad requests. To determine what may be causing low Use Rates in a given app, consider the following:

  • Are there user segments blocked from seeing the ads?
  • If ads are optional, are opportunities visible, or are they buried on a secondary tab or below the fold?
  • Is frequency appropriate for the average session duration, or are users ending their sessions before an ad could occur?

Remember, increasing Use Rate isn’t about inundating users with ads. It’s about making a reasonable number of ads available to more users to maintain an enjoyable user experience while driving exponential revenue growth. To receive a complimentary analysis for improving an app’s use rate, contact the AdColony Publishing Team.

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