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Mobile apps are businesses.
It doesn’t matter if your app was launched as its own product, or used to supplement your existing company; it’s still a business. Like any other business, your app needs to be profitable in order to survive.
Naturally, this means you’ll need to keep track of certain metrics that are relevant to your business model. But with that said, mobile apps require you to monitor metrics that are specific to the platform. Some of these are different compared to your KPIs for a brick and mortar business or ecommerce shop.
So what should you track?
Cost per install, better known as CPI, is one of the most important metrics for mobile applications.
Sure, there are other metrics you need to keep an eye on, but CPI should be at the top of the list. Just make sure you don’t confuse this number with pay per install because the two figures are not the same.
Some of you may have heard of CPI, but don’t really know what it means or how to use it. Others might not be familiar with CPI at all. The rest of you probably fall somewhere in between.
Regardless of your situation, this article will cover everything you need to know about CPI. Even if you already have a basic understanding of CPI, you’ll still benefit from this information.
Before we proceed any further, let’s start off with the basics.
What exactly is CPI?
By definition, CPI campaigns are specifically intended for mobile apps. This metric can’t be applied to any other areas of your business.
Here’s how it works. With CPI campaigns, digital ads are placed to drive installs to a specific mobile app. Businesses are then charged a fixed rate or bid rate whenever the app is installed.
So, how do you calculate cost per install? It’s actually not that complex. All you need to do is divide the total spending on ads by the number of installs.
Here’s a look at the CPI formula.
The total spending on ads will vary on different factors. As I said before, pricing can be based on a fixed amount or bid amount. The rates will also depend on the advertising networks and publishers that you’re using to display your ads. But we’ll discuss this in greater detail as we continue.
As I mentioned earlier, CPI campaigns are strictly made for mobile apps. Here’s how the campaigns work.
A mobile app owner or developer decides they want to promote their app with paid advertisements. So they work with advertising networks or publishers directly to increase the exposure of the app.
Then, advertisements are placed within other apps or mobile websites in various formats. These are some of the most popular options:
If a user clicks on the advertisement, and that click leads to an installation, the advertiser (the app owner) gets charged.
This is just one of the many pricing models for app advertising campaigns. Other options include:
In the case of a CPM campaign, advertisers get charged just for ads being shown. The other models are pretty self-explanatory.
But if you compare CPI to these other campaigns, you’ll realize that it’s much more important. As a business, you know you’re paying for ads that are actually working since they are leading directly to app installs.
That’s not necessarily the case with CPV, CPC, CPA, or CPM campaigns.
With that said, CPI campaigns will usually cost more than these other formats, as they should.
CPI is a crucial metric for you to track in terms of your marketing budget.
According to a recent survey of developers, marketing their app is the most challenging aspect of development.
You need to make sure that your campaigns are worth it.
CPI can be compared to customer acquisition cost, which I’m sure you’re familiar with if you own and operate a business. Except unlike customer acquisition, this metric can be tied to specific campaigns. You don’t have this same luxury when tracking customer acquisition cost.
The importance of CPI is also related to the type of app you have.
For example, there is a difference between apps that are standalone products, as opposed to ecommerce apps.
With an ecommerce app, you already have an existing business and network. So you’ll have other ways to drive installs from your current customers and distribution platforms.
That doesn’t necessarily mean you can’t run CPI campaigns, but this strategy works much better for standalone apps, such as games.
In this case, you could potentially set the price of your CPI campaign to trigger after a specific action is made within the game itself, such as reaching a new level. This would be much more beneficial to you since the act of simply installing an app doesn’t necessarily translate to usage.
Without these parameters in place, you could be paying for installs that never actually get used. However, these types of details would need to be worked out with the publisher that’s displaying the ad for you.
In this instance, you can definitely expect the rates to be higher.
Let’s dive deeper into different CPI rates.
You can use this information to help you negotiate prices with a publisher. You’ll also be able to use these figures to see if what you’re currently paying is above or below the average rates.
Obviously, you want this number to be as low as possible. But if you’re paying more than average and your campaigns are successful, you don’t necessarily need to abandon them.
But here in the United States, it’s closer to an even split with Android controlling 54% of smartphone users. So depending on your target audience, you can’t just ignore Apple users when you’re marketing your app.
Here’s a look at the average cost per installation for mobile apps worldwide.
As you can see, the average cost per installation for Android devices is nearly half the cost of iOS devices. What does this tell you?
It’s less expensive to get Android users to install your app. So if you’re running CPI campaigns, the rates shouldn’t be the same for iOS and Android devices.
You can work out these details with the publisher. But if they are charging the same rate both, either the Android rate is priced too high (which you won’t want), or the iOS rate is too low (which is fine for you).
CPI campaigns are just one way to acquire new app users. As I said before, if you already have an existing business, this will be easier for you.
So where do installs rank in terms of the cost of user acquisition? Take a look at this graph and see for yourself.
As you can see, installs are the least expensive cost of acquisition. That’s why it’s such a viable advertising model for you to consider for your app.
But remember, installs don’t translate to usage. Once someone installs your app, it’s your job to give them an incentive to use it and continue to keep using it on a regular basis. Otherwise, you won’t be able to monetize your app effectively.
The reason why these other acquisition costs are so much more expensive is because they are tied to a specific action taken within an app that goes beyond the initial install.
We already talked about the differences between iOS and Android users. But that’s not the only difference with app installs.
Look at how the cost per install varies by device as well.
We already knew that iOS installs were more expensive than Android installs. So it shouldn’t be a surprise to see iPads and iPhones higher than Android tablets and Android smartphones.
But when you put these numbers on a graph like this, it really puts things into perspective.
The average CPI for iPads is roughly eight times higher than an Android smartphone. I know we’re not necessarily comparing apples to apples here, but it’s still worth noting.
What can you do with this information?
That’s up to you, but if you’re trying to save money, you could potentially stay away from CPI campaigns for iPads. You can still target iOS users with iPhones and save roughly 35% per install.
Let’s take a deeper look at how the cost of app installs varies by country. First, we’ll look at the average CPI for iOS devices. This data from Chartboost is updated as of February 2019.
I chose this list of 20 countries to show you how the pricing varies in different corners of the world. The average CPI in the United States is more than ten times higher than Brazil.
Chartboost keeps track of the average CPI in hundreds of countries. So if you’re looking to see a specific one that’s not listed above. Just navigate to their website to check it out.
Now let’s look at those exact same countries again. Except for this time we’re going to see the average CPI for Android devices.
As you can see, there is still a big discrepancy in terms of the cost based on location. Again, the US has an average rate that’s more than 13 times higher than Brazil. The average CPI in the United States is 20 times higher than Egypt.
But with that said, if you compare these numbers to the iOS averages, there is a huge difference as well. Clearly, the average CPI is less for Android devices. This confirms the data that we talked about earlier.
After looking at some individual countries, let’s compare what the average CPI looks like on a global scale with a visual representation of these figures.
Overall, the average CPI worldwide is $2.24. This takes platforms, devices, and locations into consideration.
But if you compare different regions, you’ll see there is a trend. South American countries have the lowest CPI rates by a landslide.
North America is the most expensive, with Europe, Africa, and Western Asia not far behind.
Now that you understand the basics and have some knowledge on deeper statistics, it’s time for you to pick a CPI network for your mobile app.
But with so many networks available, how can you decide which one is the best?
These are the factors that you need to take into consideration.
Obviously, you want to make sure you’re getting the best price for your CPI campaigns. But as you can see from the data we’ve looked at so far, the least expensive isn’t necessarily the best.
If you can pay $0.20 per install somewhere in South America, but your target market is in the United States, that low rate isn’t going to benefit you at all.
There are other times when you could be paying a premium rate, such as if you add an action contingency to the agreement, which we talked about earlier. In this case, you wouldn’t be charged until a user completed a specific action in the app after the install.
Regardless of what you decide, the pricing needs to match your budget.
There are certain publishers and networks that specialize in specific niches.
For example, are they working with all mobile apps? Or do they just focus on gaming apps?
It’s better to go with a niche network, assuming you fall into that category, obviously. This is much better than targeting a mass audience.
Again, installs don’t necessarily lead to usage. So you need to make sure that people will actually use the app or you’ll be wasting your money.
Certain advertising networks work with publishers in specific locations. So you’ll want to make sure that you’re getting a wide enough reach hit your target market.
When an advertising network displays your ads with publishers, where will they be seen? What advertising formats do they support? These are all important factors to consider.
For example, if you want to run video ads, you need to make sure you find a network that supports videos and can connect you with the right publishers to display those ads.
Cost per install is extremely important to the success of your app.
It’s an easy formula to calculate. Unlike customer acquisition costs, CPI can be tied directly to your campaigns.
But before you dive headfirst into a CPI campaign, there are certain statistics that you need to take into consideration. Use this guide as a reference to help you gain a better understanding of your costs.
As you’ve learned, CPI costs vary by device, operating system, and location.
The prices will also vary based on the advertising network you’re using. So make sure you find the right networks and publishers to meet your needs while staying within your budget.
Where do you plan on running CPI campaigns for your mobile app?