CPI (Cost per install) is one of the most important marketing metrics that indicates the cost app marketers pay to acquire new users. In other words, the cost per install – mobile advertising pricing model that helps evaluate the effectiveness of paid user acquisition (UA) campaigns.
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.
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.
Drawbacks of Cost per Install Model
Mobile cost per install used to be the most frequently used metric for evaluating an ad campaign’s performance. However, you shouldn’t focus only on it. As we all know, installs don’t guarantee further in-app engagement including purchases.
Moreover, installs don’t necessarily equal new users, because your existing users are free to reinstall the app whenever they want. It’s worth keeping in mind that there’s always a chance of user churning right after installing the app. Thus, your marketing expenditure may go to waste in the end.
Today there are KPIs that give you more accurate information on the complexities of the current state of the mobile markets. For example, cost per action (CPA) can be way more useful for identifying the lifetime value of a user.
We also shouldn’t forget that cost per install model come at a higher price than some other monetization methods. On top of that, it can vary on the basis of geolocation, device, operating system, category, genre, etc. That’s why app publishers should always use cost per install in combination with such engagement metrics as lifetime value (LTV) and return on ad spend (ROAS). Only then you’ll be able to see the full picture of your ad campaign performance.
Splitmetrics team prepared a comprehensive guide for those who want to reduce their app’s CPI and CPA. It will help you optimize acquisition costs by conversion optimization, opting for optimal CPT bids, and refining your tap-through rate (TTR).