The mobile app industry is a massive and highly dynamic environment that can sometimes appear intimidating, especially to those have just started to get their feet wet in all things app-related. There’s so much to understand and learn, and it might be difficult to know where exactly to begin. To help you get on the right path, this post brings the explanations of some of the most important terms in the app monetization you need to master before you can embark on this exciting adventure.
1. App developer
App developers are the people or companies in charge of creating an app. They can sometimes also self-publish their apps, whereas lots of publishers have developers among their staff. App development covers several areas, including art, design, and programming.
2. App publisher
An app publisher is a person or more often a company involved in the marketing, sales, and PR of an app. The developers often reach out to publishers to pitch their app idea and finance its development. After an app has been completed, the app publisher markets and distributes it. Often a developer and publisher are the same entity.
3. App store optimization (ASO)
To ensure their (published) app is as visible as possible in an app store, publishers deploy various techniques known as the app store optimization. This includes optimizing keywords, images, reviews, and other elements that affect the app’s ranking and discoverability in app stores.
Freemiums are apps that are free to use but include in-app purchases or ads to support themselves. They are often limited versions of premium apps and require payment to unlock their full functionalities.
A premium app is available for use if the user pays a certain amount of money for it. Sometimes an app will have certain functions locked and offer a transition to the premium to get full functionality.
6. In-app advertising (IAA)
In-app advertising is a method of app monetization in which a publisher displays an advertiser’s ads inside the app. You can monetize app with video ads, rewarded videos, banners, interstitials, push notifications, and playable ads.
7. Ad whales
Closely connected to in-app advertising is the term ad whales, which refers to a valuable but small group of users who generate the most ad revenue in an app.
8. In-app purchases (IAP)
In-app purchases (IAPs) refer to all kinds of purchases made within an app, such as buying special features, virtual currency, extra lives, power-ups, etc. and paying for them with real money.
A list of rewards in an app that users can receive by performing a specific action, usually downloading an app, watching a video ad, or sharing content on social media, is called an offerwall. The rewards are often in the form of in-app currency, extra features, more chances to play, and the like.
Some apps have a subscription model instead of the traditional one-time payment. This means paying a certain amount of money to use the app (or access its full functionality) for a specific period.
11. Data monetization
Data monetization is the practice of collecting anonymous data about users’ behavior in-app and selling them to third parties. When trying to monetize app data, make sure to let your users know what information is gathered.
12. User acquisition (UA)
Refers to the marketing efforts and methods to acquire new valuable users – users who will download and use a specific app.
13. Cost per mille (CPM)
CPM refers to the fixed price an advertiser pays to the publisher for every thousand ad impressions (ad views by users). It’s calculated by dividing the cost of an ad with a total number of impressions, and multiplying the result by 1,000.
14. Effective cost per mille (eCPM)
eCPM is used to measure generated ad revenue. It is typically calculated by dividing total revenue by the total number of impressions and then multiplying the result by 1,000.
15. Cost per click (CPC)
CPC refers to the price advertiser is charged every time a user clicks on the ad shown in an app. It can be calculated by dividing the total cost of your clicks by the total number of clicks the campaign generates.
16. Cost per acquisition/action (CPA)
CPA pertains to the cost an advertiser pays a media source to acquire a new paying user or getting them to perform a certain post-install action, like registration, app launch, item purchase, etc.
17. Cost per install (CPI)
CPI is a fixed or bid price paid by the advertiser each time a user installs their app through their ads. It is calculated by dividing the cost of an ad campaign by the number of installs attributed to that specific campaign.
18. Daily active users (DAU)
DAU indicates the number of unique users that have used your app in a single day.
19. Monthly active users (MAU)
MAU is the number of unique users that have used your app at least once in a single month.
20. Average revenue per daily active user (ARPDAU)
ARPDAU is the total daily revenue divided by the number of unique users who opened your app on that particular day.
21. Average revenue per user (ARPU)
ARPU is used for measuring the income generated by users. It is usually calculated by dividing the total revenue with the number of users. Depending on the objectives, it can also be calculated using other factors like user age, occupation, geographical location, and so on
22. Lifetime value (LTV)
LTV of a user in an average-based metric that estimates the potential financial profit from a future relationship with a user.
23. User experience (UX)
UX refers to all aspects of a user’s interaction with an app. This usually includes simplicity, performance, and graphic design of the app.
24. Ad network
Ad networks are platforms that connect advertisers looking for a platform for their ads with app publishers who want to generate revenue by serving ads in their mobile app.
25. Ad mediation
Ad mediation allows developers to manage and optimize multiple ad networks using only one SDK integration. In other words, ad mediation platforms automatically or manually allocate ad inventory across multiple ad networks to maximize fill rates and revenue.
26. Mobile attribution
Attribution is a technique that allows publishers to see where their installs came from, for example a paid ad on Facebook, a mobile web ad, or a banner in another mobile game.
27. Software development kit (SDK)
An SDK is a set of tools added to apps to support the development of new capabilities. A developer integrates an SDK with the app’s code to monitor and share app usage attributes.
Making sense of these terms
Now that you have mastered the most important terms in the world of mobile apps, you can learn about the very thing that brings all of them together – a good analytics platform. Such a platform can give you precise information concerning many metrics mentioned in the post and help you make sense of them.
For instance, Soomla can assist in measuring app revenue per user, cohort, and traffic source. It can also tell you who your ad whales are so that you can focus on bringing more of similar users. Ultimately, it is your knowledge combined with a robust monetization tool that will get you the most out of your app. Best of luck!