How you figure ad revenue from app downloads.
A little long and I understand many will not have the attention span to learn.
Go TDEY
You need to first calculate (or estimate) your conversion rate, a partial CLV, eCPM, fill rate, how much time a person who doesn't convert spends using your app, and what percentage of the install base is network connected.
Here's one way to do a napkin estimate of the revenue:
The average conversion rate for the entire mobile apps industry is around 10%. So, first calculate the other 90%:
100,000 * .9 = 90,000
How many of those devices are network attached? Let's use 60%.
90,000 * .6 = 54,000
Let's assume that all of the non-converts just installed, tested, and deleted the app. How much time did they spend evaluating the app? Let's assume 5 minutes. For an ad display to count as an impression, it has to be up for 30 seconds, so that's 2 impressions per minute.
54,000 * 5 = 270,000 minutes * 2 impressions/minute = 540,000 impressions.
Let's assume you get 100% fill rate for ads and your eCPM is $3. You've served 540,000 ads. So...
540,000 / 1000 (CPM is per 1000) = 540 * $3 = $1,620
So from the original 100,000, those 90,000 that downloaded, tried, didn't like, and deleted the app you made $1,620, or about $0.02 per . (There are other factors like network effect that could increase the value of these non-converts, but it's based on the type of app you have.)
Now let's look a the 10,000 converts. You need to calculate their CLV (customer lifetime value).
The most simple CLV is how much the person pays for the premium version or your app (or the average spend on in-app purchases) plus the value of the advertising they are served. We'll ignore the purchase revenue, since we're only interested in ad revenue.
How long is a user considered a customer? At some point they'll get tired of your app and stop using it. Let's say they use it for an average of 3 weeks. During those three weeks, they use it for an average of 10 minutes a day.
7 days a week * 3 weeks * 10 minutes/day = 210 minutes
So a customer uses your app for 210 minutes while they're a customer. How many ad impressions did you serve them? Let's assume a 100% fill rate.
210 minutes * 2 impressions/minute = 420 impressions.
How much were you paid for those impressions. Let's assume the same $3 eCPM.
420 impressions / 1000 * $3 = $1.26
So you could make $1.26 per customer serving ads. There were 10,000 converts, but not every customer is network connected. If we use the same 60% figure above.
10,000 converts * 60% * $1.26 per convert = $7,600
and then converts + non-converts:
$7,600 + $1,620 = $9,220
So from 100,000 downloads you would make $9,220 in ad revenue in this scenario (about $0.09 per download). You'll need to plug in numbers for your app, but that will give you a rough idea.
