How much does App Advertising cost? This is probably one of the most common questions that arises when talking about Mobile App Promotion. Understanding how much an Ad Campaign costs is a tough nut to crack for advertisers. Therefore, in this article we’ll go through some crucial aspects you need to know about App Advertising Costs.
Set a Budget for your App Advertising Campaign
Investing in an App Advertising campaign has become more and more necessary to stand out among the huge number of competitors. Estimating how much budget you should set for your App Promotion Campaign is not easy because there are no fixed answers, however the higher the budget, the higher are the chances to reach positive results. Setting the right budget is therefore crucial for your App success, but there are some elements you should consider when trying to estimate it.
App Advertising campaigns perform well when optimized with artificial intelligence and machine learning, because they need a lot of data to be effective, and this implies to set a budget that allows to get the amount of data needed.
1. Market Research
Mobile App Advertising starts before the launch of your product. First of all, doing marketing research means assessing your marketing funnel, which is basically a 4 steps model (Awareness, Interest, Desire and Action) that analyzes how users become clients for your app. A marketing funnel will show you a defined picture of the journey users take from awareness to action, and this allows you to understand for example what influences a user to install your app, or at which passage users leak from the funnel. Assessing your marketing funnel is crucial because it will help you to properly invest your budget, without wasting it.
2. Set clear KPIs
KPIs are metrics that support your UA strategy, they are used to undertake a detailed analysis of performance. Establishing clear KPIs in line with your business goals can help you reach the most positive outcomes for your App Advertising Campaign.
A successful App Advertising campaign involves lots of testing. To give an example, creative A/B testing allows advertisers to assess several creative formats’ performances to optimize the campaign. Allocating high budget volumes on testing means to run more tests that will produce large datasets on which you can base your marketing decisions. Thanks to A/B testing you will be able to understand which ad is performing the best and you can decide to invest more budget on it, without wasting money on formats that drive no conversions. Testing is therefore important when setting your App Advertising budget because it helps you understand on which ad format you should invest more money.
Difference between Cost Per Install & Cost Per Action
When launching your app you must consider the two most common pricing models for an App Advertising Campaign that means: CPI and CPA.
What is CPI?
As an app advertiser you are probably very familiar with this term, CPI (Cost Per Install) is basically the sum of money an advertiser agrees to pay the publisher for each app install. CPI is a cost-effective pricing model because advertisers will only pay for concrete results (App Installs) app installs,not for media space filled with ads.
How can you calculate it?
What is CPA?
CPA (Cost per Action) is a pricing model similar to CPI. However, in this case the payable conversions are not the installs, but rather the actions users take within the app, such as In-App Purchases, Subscription etc. Therefore the advertiser pays the publisher a fixed amount whenever users perform such In-App actions.
How can you calculate it?
When choosing between a CPI or a CPA pricing model you should take into consideration the goals of your App Advertising Campaign. If CPI app campaigns are useful for gaining as many new users as possible and help you grow your user base, on the other hand, the goal of CPA campaigns is not only to gain new users, but high-value ones, who will actively engage with your app after the install. A higher number of high-quality users will drive more revenues and will help to increase the ROAS (Return on Ad Spend)
Anyway these two two goals aren’t exclusive, it is possible to combine them to reach an even more successful App Advertising Campaign.
Mobile User Acquisition Strategy for 2023
To better understand your App Advertising costs you should keep in mind that there are some variables that have an impact on them. When defining your Mobile User Acquisition strategy there are indeed some elements to consider, such as: Regions, App Categories, Creative Formats and Platforms.
The socioeconomic status of a specific population will influence the pricing. To give you an example, the average CPI price changes according to the regions in which the App Promotion Campaign is run: in 2022 CPI in the US was $5.11, in EMEA $4.96, whereas in LATAM it stands at $0.30.
It is possible to state that users from wealthier regions have the possibility to spend more In-App, therefore, they become the main target for a User Acquisition Strategy. These users will produce more revenues and for these reasons they will cost you more money.
The category of your app has a huge influence on costs, for example different App Categories have different CPIs. In 2022 Finetech had the highest one ($6.91), followed by Mobile Games ($6.60) and Shopping Apps ($5.00).
However, since a wide range of game genres fall under the mobile game app category, within this same niche there are different CPIs. For instance, since Action/Strategy games monetize primarily through in-app purchases (i.e. bonus health, in-game currency, extra-features etc.) tend to have higher CPIs than those that monetize through ads (ex. hyper-casual games).
Another element to consider that can affect prices is the ad format you choose for advertising your app. For instance, there is a difference between the average CPI for video ads, compared to the one of banners. The rationale behind this variation is that Video Ads will statistically attract a higher number of quality users for your app, who will produce more value.
The last features that can influence prices are platforms. Advertisers have to understand the differences between iOS and Android platforms in terms of cost. Apple users are usually more willing to spend money in-app, compared to Android users, this means that there are less chances that they will delete the app, therefore there will be a higher average cost per install for iOS platforms ($5.11 compared to Android $4.61).
Putting it briefly, when starting an app promotion campaign you need to keep in mind lots of costs, investing in your app advertising, means to have more possibilities to stand out among your competitors and to reach a wider audience. There are some crucial issues you must consider when building your App Advertising campaign:
- Establishing a budget from the outset is important for your advertising strategy, because it allows you to invest it as properly as possible without wasting it. Running market research and some testing will allow you to understand what your ideal audience is and what types of ad formats work best for your campaign, so as to invest your budget wisely. It goes without saying that the higher the budget is, the higher are the chances for your App success.
- The two most common pricing models for an App Advertising Campaign are CPI (Cost Per Install) and CPA (Cost Per Action). When choosing between a CPI or a CPA pricing model you should take into consideration the goals of your App Advertising Campaign. Is it to grow your user base? CPI is the one that will better suit your needs. Is it to gain more high-quality users? Then CPA is more suitable.
- To build a successful Mobile User Acquisition Strategy, you should keep in mind that when it comes to costs there are some variables you must consider. CPI is not a fixed price, in fact it can be influenced by the region your advertising campaign is aimed at, or by the app category, or the ad formats you are using to promote your app, and last but not least the platform used by your potential users.