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What Is CPI (Cost Per Install)?

When planning and prepping an online advertising campaign, you need to know how much your ad spend is relative to how much money that campaign makes. There are many metrics you can use to estimate ad price, ranging from cost per mille (CPM) to cost per install (CPI).

CPI is a favored pricing measurement to measure the effectiveness of marketing efforts that result in app installs. Today, we’ll look at what CPI is, how this metric works, and why your brand might consider using it within your marketing strategy.

What Is the Definition of Cost Per Install?

In a nutshell, cost per install is the estimated total ad cost that an advertiser pays an ad publisher each time one of their ad units results in a mobile app install. For example, suppose an advertiser pays a billboard publishing company \$100 per install of their app on the iOS App Store or Google Play. In that case, that means they pay the company \$100 each time someone downloads the advertiser’s app and says they were inspired to do so because of a billboard ad.

CPI is often confused or combined with effective CPI (eCPI). That’s the real price you pay for app installs as they occur or after your app marketing campaign technically completes.

In any case, CPI is an important metric for marketers to budget their marketing funds and for advertising publishers to price their ad spots, ranging from billboard spots to online ad spots (e.g., banner ads).

How Do You Calculate the Average Cost Per Install?

Calculating CPI is quite simple.

• Average CPI = Marketing campaign spend / number of new app installs

In other words, you take the money you plan to spend on a marketing campaign or have spent on a marketing campaign and divide it by how many new app users you saw as a result (or that you estimate you received from the marketing spend).

Since this can be tricky to get right, an estimate is usually okay for ad-pricing purposes.

Let’s take a look at a quick example.

Say you have a total marketing budget of \$10,000 to help you get new users on your Apple or Android app. You provide this number to your publisher. The publisher then places several banner and billboard ads around a city and several websites.

In the end, you get a large number of new installs: 5000. According to the above formula, your CPI for your marketing campaign was approximately \$2. You paid the ad \$2 for each application install.

What Factors Affect Cost Per Install?

CPI can be affected by a variety of factors, including:

• The country or region of the user. Generally, advertisers expect affluent countries to have consumers that spend more money in-app, so they offer a higher return on ad spend (ROAS). Therefore, more developed countries usually have higher CPI advertisement price tags based on the higher return on investment.
• Channel type. Online channels, such as Facebook or Instagram, that have larger audiences may have lower CPI costs because they can present ads to many people more easily. More niche ad networks might drive higher CPI prices, like billboards in a specific neighborhood.
• App genre. The CPI for very casual application games can be very cheap as they are expected to be downloaded often, then uninstalled shortly thereafter, thus cheapening the mobile user acquisition process. The CPI for more involved or intense games and applications is usually much higher since acquiring a customer costs more money, but those customers are more likely to stick around if they download the app.

Why Is CPI Important?

CPI is a key performance indicator (KPI) because it helps you determine the effectiveness of a given marketing campaign. It's not used to figure out how much money you'll pay in aggregate — you should already know this information by the time you approach an ad publisher to discuss marketing campaign specifics.

Instead, you should already start with a budget, talk to a publisher, and start publishing ads in different formats, such as mobile advertising or billboards. As application installs start coming in, you can use CPI to determine how well the marketing campaign convinced your target consumers to install your app.

In this way, it can measure customer acquisition costs (CAC), determining how effective your campaign was at its primary goal. If the CPI was high, it means that it was highly effective. The opposite applies if the CPI was low.

However, CPI can also be important because it is relatively low risk for advertisers compared to different pricing models. When a user installs an app, they usually have to go through several steps. As a result, the user has to really want an app; any user downloading your application naturally has high user interest.

Therefore, as an advertiser, you know that you only pay for users who want your app when you use the CPI pricing model. Compared to other models where you pay for people who see ads, a high CPI rate means you get a good value for the money you’ve spent.

Furthermore, CPI is excellent for creating buzz around your application. A strong CPI campaign may help lead to a surge in application popularity and help your application become more visible in its target app store, as visibility is usually driven by downloads or reviews.

CPI vs. CPM vs. CPA vs. LTV

CPI isn’t the only metric you can use for the above goals and needs.

• CPM is a popular measurement metric that estimates the price advertiser pays for every 1000 times an ad is displayed or viewed by a target consumer or site visitor. Prices for CPM advertisements are usually significantly lower, but they also result in generally less bang for your buck (since anyone can see an advertisement, but not everyone will install your app after seeing an ad for it)
• Cost per action (CPA) is a pricing model where the advertiser pays a publisher when another action is carried out by a user. This can include installing an app, but it can also include signing up for an email newsletter, signing up for a loyalty program, etc.
• Lifetime value (LTV) tells you how much a user is worth based on the money they spend from installing an app to churning or no longer using it. LTV should be used in conjunction with CPI since they aren't alternatives to each other; LTV needs metrics like CPI to calculate consumer expenses

Cost per install tells you the price you’ll pay an ad publisher each time a user installs an app from an ad served by that publisher. It’s a good way to estimate your advertising budget, whether you plan to primarily advertise online or out of home (OOH).

When it comes to OOH advertising and scooping up effective billboard spots quickly, AdQuick’s programmatic solution can help. In fact, we’re the best-equipped platform to help you maximize the effectiveness of your billboard ad campaign, especially when trying to drive consumer actions like app installs. We’re growing faster than ever, so contact us today to try it yourself.

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