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Customer acquisition cost (CAC) is a crucial metric that can cause nightmares to app marketers. If CAC is equal to or higher than the lifetime value of the acquired user, it means the app marketing strategies have a negative return on investment (ROI).
Higher CAC does more harm than good and means it costs more to acquire a user than the total revenue the same user will contribute during their entire association with the app.
While spending on app install ads, advertisers have numerous pricing models to choose from. They can follow cost per mille (CPM) if they wish to pay for every thousand impressions their ad receives or cost per click (CPC) if they want to pay for each click the ad gets.
Out of these, one of the best pricing models is the cost per install (CPI). As the name suggests, you have to pay only when a user successfully installs your app. In this article, we’ll dig deeper into CPI, look at the average rates around the world, and see whether it’s the best pricing model ever or not.
What Is Cost per Install?
Cost per install or CPI for short is a pricing model used while running app user acquisition campaigns for mobile apps. It is safe to say that CPI is used only in the mobile apps business as the advertisers are charged when a user installs an application.
Since the advertisers have to pay only when users install their apps, the ad publishers or ad networks will be forced to serve the advertisement to the right target audience and in places where the conversion rates are the highest.
And as expected, CPI is usually higher than other pricing models as the action is highly specific and could be even as high as US$3.
Factors That Affect CPI
- Ad network
We’ll discuss how these factors affect CPI in a bit.
How Do You Calculate Cost per Install?
CPI is calculated by dividing the total ad spend within a specific time period by the number of new app installs from the advertisement within the same time period. Here’s the formula for calculating CPI.
Cost per Install Formula
Cost per Install = Ad spend / Number of new installs from an ad.
For example, if you spend US$1000 on app install ads and gather 200 new installs, then the cost per install would be calculated as, CPI = US$1000 / 200, which is equal to US$5.
What Is a CPI Campaign?
CPI campaigns are those marketing campaigns that use cost per install as their pricing model. In a CPI campaign, digital ads will be placed by publishers across multiple platforms in order to drive installs of the advertised mobile app.
However, many app marketers are still sceptical about CPI being the holy metric for measuring app marketing success. That’s because installing an app alone won’t do the trick – instead, users need to engage, retain, and perform the desired in-app actions. Only then can mobile app developers or businesses profit from their creation.
The same is not true for paid apps as users will have to pay to install the app in the first place. In that case, developers would have already reaped profits, and it wouldn’t make much difference if they uninstall the app.
Since more than 90% of apps available in both the App Store and Google Play are free, users will have to engage, watch in-app ads or perform specific in-app actions for the developers to gain profit.
In a simpler sense, app cost per install can be viewed as a pricing model that introduces users to an app and successfully makes them install it. Among all the other pricing models that require advertisers to pay when users install and perform a specific action, CPI is the most cost-effective.
To put that in perspective, the average cost to acquire a user who would make a purchase in an iOS app is US$87.31.
CPI vs Other User Acquisition Costs
Looking at other acquisition pricing models will give you a better understanding of why CPI is one of the best models available. Of course, there are numerous pricing models that are superior to CPI and require advertisers to pay only when a specific, desired action is performed. Let’s take a look at some of them.
- Cost per mille (CPM) – Advertisers pay a fee for every thousand impressions an advert receives.
- Cost per click (CPC) – Advertisers pay a charge for every click an ad gets.
- Cost per action (CPA) – Advertisers pay a fee if a user performs a particular in-app action after viewing the advertisement.
- Cost per registration (CPR) – Advertisers pay a fee for every user who registers for the app after viewing an advert.
- Cost per subscription (CPS) – Advertisers pay a cost for every user who subscribes to the app or a feature after viewing an ad.
Key CPI Stats to Know in 2020
The average CPI across the world is US$2.24. Of course, this figure takes into account multiple parameters such as region, platform, and devices. Let’s take a look at some of the cost per install statistics around the world.
General Cost per Installs Statistics
- Average CPI on Search Ads is US$1.
- The average cost per install on Facebook Ads is US$1.8.
- Average CPI on Instagram Ads is US$2.23.
- Average CPI on Twitter Ads is US$2.53.
Global Average CPI for Android and iOS Apps
The global average CPI for iOS apps is US$0.86. Whereas, the global average CPI for Android apps is US$0.44. The massive difference between CPI rates of both the dominant mobile operating systems is probably because of the number of users each OS has.
Since the number of Android users are more than the number of residents in China – the most populous country in the world – it makes sense that acquiring an iOS user will be more challenging and hence expensive.
Average CPI by Region
|Africa, Europe, and Northern Asia||US$2.46|
|Southern Asia and Australia||US$1.22|
CPI for Android Apps
Average CPI by Country
Take a look at the average CPI for Android apps across different countries.
Top 10 Cost per Install by Country and Category
CPI for iOS Apps
Average CPI by Country
Take a look at the average CPI for iOS apps across different countries.
Top 10 Cost per Install by Country and Category
|Northern Mariana Islands||US$3.03||US$0.35||US$0.37||US$1.50||US$0.60||–||US$1.42|
|Saint Vincent and The Grenadines||US$0.35||US$0.25||US$1.93||–||–||–||US$0.28|
Factors to Consider While Choosing a CPI Network
An ad network is a company that connects advertisers with publishers. If you’re a publisher, you can use ad networks to place your app install ads on other websites or apps. Google AdMob is an excellent example of an ad network.
Let’s take a look at some of the critical factors you need to consider while choosing an advertising network that lets you run app install ads with the CPI model.
Since the majority of apps in both the app stores are gaming apps, the majority of ad networks you consider will have most of their ad spaces for in-game advertising. If you’re marketing a mobile game app, then advertising inside games will be favourable.
But if you’re running app install ads for productivity or educational apps on game apps, then it may not be beneficial. As a rule of thumb, fully understand your app’s target audience and choose the CPI networks with the app categories your potential users are more likely to use.
Again, you must consider those ad networks that serve ads in regions where your target audience lives. Additionally, you must also find the ad formats (banner, video, interstitial, and more) your potential users interact with the most and choose the CPI networks that offer those formats.
Lower customer acquisition cost is an app marketer’s dream come true. But going behind the cheapest may do more harm than good. You must make sure the CPI network is known to deliver high-quality users that will engage and retain with your app for long. If a user installs the app and immediately churns, all your efforts will become futile.
Top CPI Networks in 2020
1. Google Ads
2. Facebook Ads
3. Twitter Ads
4. Snapchat Ads
Although the cost per install for mobile apps is currently considered as a vanity metric by many, it still is a better pricing model as opposed to CPM or CPC as there is at least the assurance that a user has installed your app.
If you want to pay only when a user performs a specific action such as in-app purchases, signing up for a subscription, or buying a product, you can always go for the cost per action model. But CPA is incredibly expensive as compared to CPI and may exhaust your ad budget in no time.
Also, the cost of any user acquisition campaign you run will depend on the advertising network you choose. Make sure you find the best CPI networks that fit your budget and succeed in delivering customers with high lifetime value.