Mobile advertising pricing models: CPA vs CPM vs CPI

As a mobile advertising platform , we most often receive applications for organizing campaigns in three price models: CPA, CPM and CPI.
In order to demonstrate which model best meets your needs as an advertiser, we decided to compare all the models with each other and thus reveal the pricing in mobile advertising. The definitions, analysis and results of this comparison are presented below.

CPA

')
What is it?

Cost-per-Action (Cost-per-Action) - sometimes also known as Pay-per-Action (PPA); and even as Price-Per-Conversion (Cost-Per-Conversion) is an online and mobile ad pricing model where an advertiser pays for each specific action. For example, the action performed after the first show and click - such as installation, subscription (please call, subscribe to receive letters, register, etc.), make a product / service purchase.

How to measure it?

There is a formula: CPA = Price / Number of committed actions

How to evaluate it?

The CPA pricing model allows advertisers to be sure that their money is not wasted, but ends with a measurable customer engagement indicator.
Therefore, in this sense, the advertiser does not greatly risk his money, because he knows how much a particular action or purchase will cost him.
However, the CPA pricing model has a flaw: the advertiser loses touch with the client. It rarely happens that the buyer sees the advertisement for the first time and immediately takes the action that you expect from him.
Advertising requires repeated exposure through multiple points of contact. If we evaluate only actions, and not impressions, the advertiser will not understand exactly which paths led buyers to commit the final action.

Advertisers end up paying for what they want, but they lose the ability to track consumer actions and create widespread brand awareness.

CPM

What is it?

Cost per thousand (CPM) is the price that the advertiser pays to create brand awareness. The advertiser pays the publisher each time for 1000 ad impressions to the consumer.

How to measure it?

There is a formula: CPM = Price * 1000 / Number of hits

How to evaluate it?

The CPM pricing model is designed to cover the maximum number of users. The cost of media advertising remains unchanged, and does not depend on its effectiveness. CPM is extremely successful when you have a highly effective creative, because the cost of each action will decrease, while the total number of actions taken will increase. This is one of the main reasons why the CPM model is quite successfully used in mobile advertising, because the possibilities of influencing consumers on rich-media advertisements are much higher than on standard desktop banners.

In general, the better your creative campaign, the more effective it will be.

CPI

What is it?

Designed specifically for mobile applications, Price-Per-Install (CPI) is the price that the advertiser pays when the consumer installs the advertised application.

How to measure it?

There is a formula: CPI = Price / Number of installations

How to evaluate it?

Its value on the surface, CPI, is a special model of CPA. CPI focuses on downloading and installing applications, so that the advertiser gets what he paid for. However, this narrowing of the funnel of action may cost the advertiser much larger amounts.

Among other things, focusing on the installation of the application, the ability to control the quality of traffic is lost.

So which model is better? Who is winning?

You probably already know the answer - determining the winner is possible only when the essence of the mobile campaign and the goals that you seek to achieve as an advertiser are known. Below are a few final examples that will help you determine which model suits you best:

Want to focus on the latest consumer action? Choose CPA.
Want unlimited scale and ROI? Choose CPM.
Want to encourage customers to download your application? Choose CPI.

Depending on the goals of your campaign and the size of your budget, a combination of all three models may be the best option.



BYYD • Mobile Advertising Platform