10 App Monetization Terms That You Should Know

This post was contributed by Tony Cohn, a marketing manager at Adscend Media, an Austin-based company that specializes in app monetization and user-generation solutions.

For most developers, the process of launching their first app is quite challenging. From rigorous testing to bug fixes to ASO, getting an app launched can be a Herculean task. Compounding the challenge of launching an app is the terminology that surrounds the app economy, most notably, terms relating to monetization. Considering that the App Store was launched in 2008, there isn’t much of a body of work available on these terms. Add in the fact that many of these terms derive from gaming slang and developer experience, things can get a little confusing. Therefore, to help make your app monetization efforts run smoother, here are the definitions of ten of the most commonly used app monetization terms:

  • Lifetime Value (LTV): Lifetime Value is the measure of how much revenue a user generates for your app during his or her total usage time on your app. 
  • Retention Rate: The percentage of users who continue to use your app after a designed period of time is known as retention rate. Common time periods used to measure retention rate include one, seven, and thirty days. A directly-related metric to retention rate is churn rate, which calculates that amount of users who discontinue use of your app in a given time period.
  • FUUU Factor: Named after a popular meme which features a swearing cartoon face (you gotta’ love the internet!), FUUU factor measures the combination of frustration and motivation in a user trying to get past a challenging level in a game. FUUU factor is calculated by dividing the number of attempts to beat a level by the number of “near misses” and has shown to be a major factor in creating highly-successful games.
  • Session Length: The time period from when a user opens your app to when the user and closes your app is known as session length.
  • Session Interval: The amount of time between usage sessions of your app is known as session interval.
  • Average Revenue Per User (ARPU): As simple as it sounds, Average Revenue Per User is the average amount of revenue that your users generate for your app. Note that ARPU is typically calculated monthly and contains your paying and non-paying users.
  • Daily Active Users (DAU) and Monthly Active Users (MAU): The number of users who open your app during a specific time period.
  • Average Revenue Per Daily Active User (ARPDAU): The average amount of revenue generated by your daily active users during a specific time period is known as ARPDAU. This metric is also commonly used to measure engagement.
  • Lifetime (LT): The overall amount of time in which an app is used is known as lifetime or LT. This metric is typically calculated in months.
  • Fill Rate: A major key to revenue generation, fill rate refers to the amount of times that an ad was served to your users vs. the amount of times that an ad request was generated by users. If a user requests an ad but no ad is served, that’s bad fill – you don’t earn ad revenue and your user has a bad experience. 

If you know of any important app monetization terms that aren’t listed above, feel free to add them in the comments section below.

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