One of the business metrics you will certainly come across when developing your mobile ad monetization strategy is CPI or Cost Per Install campaign. A CPI campaign involves publishers placing ads across various media with a goal to drive installation of the advertised app. In the CPI campaign, the brand pays a fixed or bid rate only when the app is installed. Calculating CPI is not complicated at all – you just take your total ad spend and divide it by the number of installs.
The purpose of calculating CPI is measuring your advertising budget. However, CPI is not the only metric used for this purpose. Another one is CPM, or Cost Per Mille model, where the advertiser is charged when the ad is viewed, as opposed to CPI where installs are the only thing that matters. In the CPM model, ad networks assume the task of putting the ad in places where conversion rates are high and target the ad to the right audience.
CPIs are more valuable since installs are better than just views. Therefore they are also higher than CPMs. Although some mobile marketing companies are not so enthusiastic about CPI, this metric is nevertheless more important than the CPM, at least when advertising the app itself and not an eCommerce product. CPI is still a go-to campaign for mobile games, especially so because you can set the payout to happen when the user reaches a specific achievement in the game instead of just when the app is installed.
CPIs will keep growing
Aside from the overall increase in CPI’s year over year, seasonal fluctuations is something that occurs as well. Be sure to check out our recent post about the post-holiday drops in eCPMs that is super relevant to this topic as well.
And while this number may vary depending on circumstances, mobile app install advertising is growing. Global app install ad spend had grown from $27.1 billion in 2017 to $38.9 billion in 2018, with a predicted rise to $51.6 billion in 2019 and $64.1 billion in 2020.
The increase in install ad spend can be attributed to the rise of gaming and shopping apps which make up around 44% of all non-organic installs combined. Moreover, newer devices with more storage are being rolled out constantly, increasing the number of apps people install, and app commerce and IAP (in-app purchases) are on the rise, as are video and music streaming apps.
Adapt by increasing LTV
Adapting to these trends and rising CPIs while still bringing in new users can be a daunting task but it can be done. There are two options at your disposal:
- Try to rely on organic discovery;
- Increase LTV (lifetime value) in order to afford higher CPIs.
Due to the fact that relying on organic discovery is becoming progressively more difficult due to the overcrowding of the app stores, increasing LTV is certainly the better option.
The best way to increase LTV is introducing a view-to-play model in the app and targeting the 98% of the users that do not pay. This will result in your app relishing in the projected increase in ad spend per user instead of being hurt by it. Monetizing a larger chunk of your user base will allow you to increase ARPDAU (Average Revenue Per Daily Active User) and LTV.
Higher Ad LTV = higher traffic
Tracing Ad LTV or simply put “counting the ads” will consequently lead to doubling your traffic. To be more specific, it can modify your ARPU (average revenue per user) / LTV analysis by 25-30%. Higher LTV means you can afford to pay higher CPI, which inevitably leads to twice as much traffic. This is nicely illustrated by Kongregate’s Jeff Gurian, who wrote that the correlation between how much traffic you can get and the bids you place was not linear but instead a power function:
In Jeff’s example, acquiring traffic with bids of $12.5 in comparison to $10 will result in doubling the traffic, so the bid increase of just 25% equals a 100% volume increase.
We’ve Got You Covered
Although CPI campaigns may have lost some of their initial appeal, they can nevertheless help you achieve multiple goals, like growing your app’s user base, boosting the app’s ranking on the app markets to give it more visibility, and so on. It is paramount to remember that increasing your Ad LTV can help you bring in more traffic as it allows you to spend more on CPIs.
Since the process of measuring your Ad LTV is often complicated, time-consuming and sometimes inaccurate, Soomla can provide you with an automatic Ad LTV measurement solution which will deliver accurate calculations with no effort on your part, as well as allow you to increase CPI bids with confidence, double your traffic and continue growing your app.