What is Cost per Install (CPI)?

CPI is a metric exclusively for mobile apps, used by marketers to measure their advertising budgets. It’s calculated by dividing the total cost of an advertising campaign by the number of app installs associated with that campaign. For instance, if you spend $10,000 on mobile ads and accrue 5,000 installs, the CPI would be $2 per install.

The Significance of CPI

CPI is vital for mobile app marketers as it directly affects the Return on Investment (ROI) of their advertising campaigns. By optimizing campaigns for a lower CPI, advertisers can acquire new users at a lower cost, enhancing the profitability of their app. However, it’s important to note that a low CPI does not necessarily indicate high-quality users. Advertisers must balance CPI with other metrics like retention, engagement, and Lifetime Value (LTV) to ensure long-term success.

Formula for Calculating CPI

Let’s examine how CPI is calculated. The formula is as follows: ad spend over a specific period of time is divided by the total number of app installs associated with a campaign. 

CPI = Total Campaign Cost / Total Number of App Installs

Example of CPI Calculation

• Total Campaign Cost: $15,000
• Total Number of App Installs: 3,000

Using the formula:

CPI = $15,000 / 3,000

CPI = $5 per install

In this example, the CPI, or the cost for each app install, is $5.

However, keep in mind that calculations are dependent on a few factors:

• Location. The CPI cost depends on the country of a user. Regions with higher socio-economic standards are expected to bring higher value users who are ready to make more in-app purchases. 

• Ad Channel. It goes without saying that different advertising channels come at different prices. Naturally, giants like Facebook or Twitter are more expensive as they are able to reach enormous audiences. Nevertheless, there are cases when cheaper niche channels bring you more motivated users. So it’s definitely something worth experimenting with.

• App category and genre. It goes without saying that entering the most competitive categories and genres within the same vertical call for a more considerable cost per install.

• Store. Google Play Store and Apple App Store generally have different CPIs for the same app. The logic is similar to one of the geolocation differences – an average iOS user tends to spend more.

Benefits of the CPI model

Cost per install advertising is uniformly available, which means it’s a great tool to compare the performance of various acquisition channels, historical trends, or audiences from different locations. 

Cost per install can also boast a relatively low risk for advertisers compared to other pricing models. For instance, Cost Per Mille (CPM) model charges marketers for every 1000 ad impressions and gives no guarantee a potential user takes any further action with your app. In the case of CPI, a promoted mobile app will be installed for sure.

Furthermore, CPI mobile advertising may become a good companion to help you create buzz when your new app debuts in the app stores. Cost per install campaigns can help you be featured in store rankings way quicker and trigger the initial boost in both popularity and visibility. The truth is, it’s nearly impossible not to get lost in the myriads of available apps without it. That said, these days app CPI model has considerable drawbacks. 

CPI vs. Other Marketing Metrics

CPI should not be confused with other metrics such as Cost Per Mille (CPM), Cost Per Action (CPA), or Effective Cost Per Install (eCPI). While CPI focuses on the cost per installation, CPM charges per thousand ad impressions, and CPA involves a fixed rate paid once a user completes a predefined event post-install. eCPI, on the other hand, considers organic variances in a marketing campaign and is calculated after the campaign.

Factors Influencing CPI

Several factors can affect the CPI, including:

• Ad Networks: Different networks have varying rates.
• App Vertical: The category of the app can significantly impact CPI.
• Device Platforms: iOS and Android apps often differ in CPI.
• Target Markets: CPI varies by country/region due to different market dynamics.
• Ad Types: The nature of the ad (banner, video, etc.) can influence CPI.

Reducing CPI

To reduce CPI, app marketers should review variables impacting their campaigns, compare results to industry benchmarks, and continuously optimize their advertising strategies. This involves selecting the right ad networks, targeting appropriate markets, and choosing ad types that resonate with the target audience.