App install campaigns are run based on different goals and one of the most important aspects of managing a successful campaign is measuring the performance and evaluating its effectiveness. The metrics used can be numerous (impressions, clicks, installs, conversions, etc.) and not all are equally relevant to any campaign. For this reason, it is extremely important to properly choose the Key Performance Indicator (KPI). In this article, we will particularly delve into Cost per Install and Cost per Action.
Cost per Install (CPI)
Cost per Install is the amount of money an advertiser pays each time a user clicks on an ad and installs the app. It is a price that can be determined by many factors such as the region of the world where the app is installed, the operating system, or the category of the app. Specifically, Cost per Install campaigns aim to acquire a large user base, allowing you to evaluate the effectiveness of your campaign in generating installs.
Advantages:
- It is a performance-based model that ensures advertisers don’t spend money on impressions and clicks that do not generate concrete results.
- It is useful to build interest around your app.
- It is easy to monitor and thus allows you to optimize the campaign strategy and budget. Advertisers can identify which campaign or platform is more efficient and profitable and adjust their strategy and budget accordingly to maximize the return on investment (ROI) of their campaigns.
- It is a good indicator of the initial interest and awareness of the app since it reflects how well the campaign attracts and convinces users to download the app.
Limitations:
- Cost per Install merely measures the quantity of installs, not the quality and value of users.
- Cost per Install campaigns provide little information about user behavior after install, making it more difficult to measure long-term user engagement.
- Cost per Install can also be influenced by external factors such as seasonality, competition, and market conditions.
Cost per Action (CPA)
Cost per Action is a payment model in which the advertiser pays the publisher only when a user takes an action within the app after interacting with the ad. In this case, the desired action may be a registration, a purchase, a subscription, or any other post-installation event. Similar to Cost per Install, factors such as region, operating system, or app category have the same effect on Cost per Action.
In particular, Cost per Action is primarily used in campaigns that aim to grow the user base through the acquisition of high-quality users, who are more likely to take an action within the app.Typically, the action taken by users corresponds to an event that generates revenue for the app developer and consequently leads to an increase in ROAS.
Advantages:
- This model is less risky for advertisers, allowing them to optimize budget or ad spend to achieve more positive ROI/ROAS outcomes.
- Cost per Action campaigns focus on acquiring users who are likely to engage with the app and perform actions, leading to higher user quality.
- Cost per Action campaigns provide detailed information about user behavior by allowing advertisers to track any post-install event within the user journey. This approach highlights the effectiveness of in-app actions, helping advertisers refine their strategies.
Limitations:
- Cost per Action campaigns are more complex to set up and manage since they require more sophisticated tracking and optimization.
- Cost per Action campaigns can be more expensive as advertisers are paying for more valuable user interactions.
- It may take longer to gather sufficient data for meaningful analysis since the desired events may occur long after installation. For instance, a subscription may be completed after a 7-day free trial, taking seven days for the desired action to happen and for the user to be considered valuable.
Formulas
Cost per Install (CPI) is calculated by dividing the total advertising spend by the number of paid installs during a specific time period, obtaining the average cost of each new app install.
CPI = Total Advertising Spend / Number of Installs
On the other hand, Cost per Action is calculated by dividing the total ad spend by the number of completed actions.
CPA: Total Advertising Cost / Number of Desired Actions
Main differences
CPI and CPA are both performance-based pricing models, which means that the advertisers only pay for concrete results, such as installs or actions. For this reason, they are a safer choice for advertisers compared to models like Cost per Mille (CPM) and Cost per Click (CPC), which are commonly used by most Demand-side Platforms (DSP) and Self-Reporting Networks (SRNs) such as Google, Facebook, TikTok, and Snapchat.
However, knowing the differences between them is crucial for you to work towards a successful app install campaign.
- Different purposes: Cost per Install aims at enlarging the user base, meanwhile Cost per Action targets high-quality users.
- Monitoring: CPI is easier to monitor because it focuses only on install number. On the other hand, CPA is more complex since it requires tracking of specific actions.
- User quality: CPI converts faster but does not guarantee quality users. In contrast, CPA ensures quality users because a specific action is required, indicating higher engagement.
- Cost: CPI is generally less expensive, whereas CPA involves a higher cost.
Despite this, bear in mind that during an app install campaign, you can always switch between the two depending on the campaign phase, the results achieved, and the goals set.
How to improve your mobile app campaign performance
If you want some general tips on how to optimize your mobile app campaign performance, here are some:
- Identify your target audience and their preferences.
- Select the most appropriate ad formats and creatives for your app, choosing between video, interactive ads or rewarded video ads. You can also test all of them or combine two formats, such as video and playable ads, into a single format (multi-page ad), then refine your approach based on the results.
- Monitor the performance of your campaign by measuring Cost per Install and Cost per Action in relation to other metrics such as ROI/ROAS, LTV and ARPU.
Conclusion
In conclusion, choosing between Cost per Install and Cost per Action depends on your campaign goals and desired outcomes. While CPI is ideal for growing your user base, CPA focuses on acquiring high-quality users who engage meaningfully with your app. Keep in mind the differences, advantages and limitations of each model to make an informed decision.
