Think of CPI ad networks as a bridge that connects advertisers and publishers and create the most synergy between the two – helping both to achieve their final objectives.
For publishers, it is to maximize their revenue by using empty advertising space. For advertisers, it is to gain the number of installs that they want, and promote their apps to the target audience.
Advertisers refer to anyone who has a mobile app to promote, for example a developer who has created an app and now wants to market it, or a marketer who works for an app development company. A publisher is someone who has an empty space in their apps to place advertisers’ ads.
The purpose of these ads is usually to encourage users to click on them and install advertisers’ apps, to help advertisers to increase their installs. Advertisers will pay money to ad networks every time a user installs their apps (that’s why the model is called ‘cost-per-install’).
Even though there has been an idea that compared to other payment models such as CPM (cost-per-mile) and CPC (cost-per-click), CPA (cost-per-action) and CPI ad networks (cost-per-install) are usually more efficient because they allow marketers to measure ROI (return on investment) for the budget they spent to advertise apps.
I wouldn’t say I agree with this idea. I won’t tell you which is more efficient than which. No method is actually more effective than others but they all depend on the OBJECTIVES that you want to achieve.
Saying one is more effective than the others without putting them in context is like saying the color red is better than the color yellow.
For every method, they are similar in the sense that there are advantages and disadvantages. You’ll have to decide which method works best to achieve your objective.
If there is one thing that I learn about marketing is that “testing is really important”. The purpose of testing is to find out what works and what doesn’t work. Marketers shouldn’t be afraid of ‘testing’ or taking risks.
You may have to run a few ‘experiments’ (and spend more money as well) to see which ad network brings you the best results. But at the end of the day, you will know the right answer to your question.
You may think this model may work best for your ad, based on the knowledge that you have acquired, but there’s always a chance that the results will be different from your expectations. At Inad, every time I run an ad, I will create different versions of it just to test which one will bring me the best results.
To help you choose the most effective model to promote your app, here I list a few characteristics of the different ad networks that will help you decide better:
CPM = Cost X 1000/Impressions
With the CPM model, advertisers agree to pay publishers for every 1000 times an ad is displayed. This model gives publishers much profits because publishers earn money for every ad impression.
CPM works best when advertisers want to create brand or product awareness and instant revenue is not a top priority. CPM may not generate an instant revenue but at least people will remember your brand or product because they have seen them so many times! Compared to CPA and CPI ad networks, CPM ad network allows advertisers to reach a large audience.
If you are a publisher who provides the CPM model, even if the ad display doesn’t generate a click, sale, or action for advertisers, you still make money for every ad impression that you serve.
The CPM price varies (from < $1 to > $100), depending on the quality of the traffic the publishers provides. The CPM rates for a targeted web traffic usually costs more than a broad, diverse web traffic. If my ad selling cookies is displayed on a website where most users visit to find out more about cookies, then of course the ad achieves my objective (to introduce my brand new cookies to people who love cookies) much better than if it is displayed on a technology website (where people visit the website not to find out about cookies).
CPA = Cost/Number of actions
CPA stands for ‘cost-per-action’. With the CPA model, advertisers will pay publishers for every predefined action the ad generates. The action can be any step in the customer’s journey such as buying a product, sign-up for e-newsletters, download a document, participate in a competition, etc. and was predefined by advertisers for each campaign.
The advantage that this model offers to advertisers is that advertisers only pay when the ad generates their desired outcome. No action taken by customers = no money paid.
Like CPI ad networks, this model offers low risk for advertisers because you don’t have to pay for clicks that bring no results like with the CPC ad network model (I will talk more about this later). On the other hand, advertisers who choose CPA might have to pay much more money (might go up to more than $100) to get a completed transaction or action from customers. In addition to this, the CPA model is not very effective if advertisers want to create large-scale brand awareness.
CPI = Cost/Number of installs
CPI ad networks is perhaps the most effective method to promote your app to users. If you think about it, CPI is just another more detailed version of CPA, while the action here is ‘install the app’. With CPI ad networks, advertisers only pay to publishers every time they receive an install or download of their apps.
Like CPA ad networks, CPI ad networks offer low risk for advertisers because they only have to pay when their desired outcome occurs.
But that’s not to say the CPI model doesn’t have its weakness. This happens especially with incentive traffic. There are usually 2 types of CPI ad networks, incentive and non-incentive.
Incentive ad networks are networks that will incentivize users in exchange for an app install. For example, users will be given a coupon or the ability to unlock more game levels if they install your app. The cost per install for incentive CPI ad networks is often cheap but the downside of it is that the download quality is not guaranteed. If you offer users something to install your apps, chance is they will be more interested in the prizes than your app. And when they get their prices, they will delete it.
Non-incentive CPI ad networks on the other hand offer more quality downloads because the download process happens naturally. Users will see your ad and install your app because it is relevant to their interests.
Even though incentive CPI ad networks may not bring the highest quality of app traffic, it nonetheless will increase your app traffic and help tremendously to increase your app ranking in app stores. If you don’t know why this will boost your app ranking in app stores, read my blog Here is why you should consider app store optimization for your app.
I wouldn’t say incentive CPI ad networks are ineffective to retain users. Actually, the ability to retain active users also depends on the quality of your app. If you have a good app, there is a high chance that your users will keep using it because your app offers value to them.
Like I said incentive CPI ad networks don’t guarantee high quality app traffic so make sure you keep track of user retention rate after they install your app so you know what to change in your app.
Check out the cost per install to promote an app in different countries here.
CPC = Cost/Clicks
With the CPC model, advertisers will pay publishers every time a user clicks on the ad.
Among these models, CPA and CPI ad networks are the only models that generate real installs for your app.
In my opinion, the CPC model is not very effective when it comes to promote mobile app. According to statistics, 40% of clicks on mobile are accidental. This means someone may just click on your ad by accident, or because of some silly reasons (curiosity etc.).
How many times have you clicked on an ad just by accident? Nonetheless, you still have to pay for those fruitless clicks (because they don’t convert into app installs and that’s what you want at the end of the day). Moreover, you won’t know how much app traffic you can generate using the CPC models (you only pay for clicks, not installs remember?).