Monthly Active Users (MAU) or Daily Active Users (DAU)?

Ajay Sridharan

Monthly Active Users (MAU) or Daily Active Users (DAU)

Monthly Active Users (MAU) is a metric that is used to measure the number of people who use a product or service in a given month. It is different from the number of registered users, which is a metric that measures the number of people who have signed up for a product or service.

The MAU metric is used to measure the growth of a product or service. It is also used to measure the engagement & retention of a product or service.

How to calculate the number of active users

There are several ways to calculate the number of active users. The most common way is to calculate the number of users who have used the app within a given time period.

The most common time period is a month. This is the period that is used in the calculation of the monthly active users metric.
The calculation of monthly active users is done by dividing the number of users who have used the app in the last 30 days by the total number of users.

Example: Flipkart
Flipkart is a popular ecommerce website with a large user base. They are a very successful company and have been doing a lot to raise awareness, including PR, advertising, etc. So it is easy to see the impact of those efforts on the MAU on their website. The number is quite good for a startup, being close to 85,000.

But what is important is the DAU/MAU ratio. It turns out that about 26% of the Flipkart’s active users are returning customers from the last visit. This metric is very important because a repeat user is a good early adopter and an important potential customer for any business.

It is also important to know that a very high MAU can be misleading. The Flipkart website had many start-ups among its active users. It is possible that those start-ups may not have had a very good retention rate. In fact, that might have been a reason for the high active users. Another part of this problem is that despite starting out as an ecommerce website, Flipkart has recently started offering B2B (business to business) products and then started adding content related to those products into the prime product. So the traffic from searches of people looking for products has dropped. This clearly affects the company’s active users.

The lesson to be learned is that it helps to look at DAU/MAU ratio to understand how many users a start-up has, are they active, and what is the quality of those users.

Daily Active Users (DAU):

Monthly active users (MAU) is sometimes confused with daily active users (DAU). The main difference is that DAU refers to the number of unique users who open the app on a given day, while MAU refers to the number of unique users who open the app on any given day during a 30-day period.

Calculating DAU/MAU ratio

It is calculated as the average daily active users (DAU) divided by the average monthly active users (MAU). The DAU/MAU ratio is a number that indicates the strength of a social network within a specific period of time. The DAU/MAU ratio also indicates the average level of users’ interest towards the network during a specific period of time. This simple ratio will act as a good indicator of the relative popularity of a social network.

Let’s take Facebook as an example: the average daily active users (DAU) is around 1.7 billion, while the average monthly active users (MAU) is around 1.3 billion. This means that the DAU/MAU ratio of Facebook is 0.66. So, Facebook has about 66 million daily active users (DAU) against its average monthly active users (MAU) of 1.3 billion. Facebook and Google are the top two in terms of DAU/MAU ratio.

Facebook and Google have about 3 to 1 DAU/MAU ratio, which means that Facebook has about 3 times more DAUs than MAUs. Social media users prefer Facebook because its DAUs are more than MAUs.

A more detailed analysis of the DAU/MAU ratio is a bit more complicated, and it is here that we can see how the industry still has its fair share of problems. Although the number of DAU/MAU ratio has been increasing over the years, the rate of increase has been slow, and the year-on-year growth rate was even lower than that of MAU.

This is because mobile apps are often played multiple times a day, every day, which means that the number of times that an average user opens an app is very high. This is what we call “churn”, and it’s what many people have been waiting for.

Theoretically, if a player has a MAU/DAU ratio of 1.5, they’ll have an average DAU/MAU of 1.5 and that means that they’ll have an average of 3.5 times more users opening the app within a single month than they did the month before.

If we can easily see how much churn can be lowered by improving the user retention rate, then we can also see how important it is to increase the DAU/MAU ratio.

Decreasing Active Users:

This can result from:

Lapsed users
If too many users have lapsed on the app, then even the ones who have re-activated would no longer contribute to the active user count.

Deteriorating user experience
If the user experience (UX) on the app is poor, then users are less likely to re-activate.

Press
Negative media coverage can also lead to decreased active users .
New features – If the app is released with new features that the users can’t access, then the app could no longer be used. The users would lose interest and no longer be active.

Corporate action
Corporate actions can also destroy MAU. For instance, if a start-up is acquired or is acquired by another company then MAU could drop. Also, if the start-up is shut down, then MAU will drop.

App-store closures
If the app store closes down the app, then MAU/DAU will drop.

If the start-up is able to address these factors, then it can recover from a sudden decrease in MAU/DAU.

How to improve DAU/MAU ratio?

To begin with, these are:

  • Increase our DAU/MAU ratio by improving our user retention rate
  • Improve the usability and design of our app
  • Add more advertising to our app
  • Increase the frequency of app promotion

As you can see, there are just a few things that we can do in order to improve our DAU/MAU ratio. What’s more, as long as these things are done correctly, then it doesn’t matter whether or not our DAU/MAU ratio is 1.5 or 2.0; it’ll still be considered positive.

The problem is that many people take these numbers as the holy grail of app success when in fact they are merely indicative of how well our app performs. Of course, if we could manage to increase our DAU/MAU ratio by even just 0.1, then it would be seen as a success.