Mobile Advertising Pricing Models: CPA vs CPM vs CPI

As a mobile advertising platform , most often we receive applications for organizing campaigns in three price models: CPA, CPM and CPI.
In order to demonstrate which of the models 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 - sometimes also known as Pay-per-Action (PPA); and even as Cost-Per-Conversion is an online and mobile advertising pricing model where the advertiser pays for each specific action. For example, an action performed after the first show and click - such as installation, subscription (please call, subscribe to receive letters, registration, etc.), making a purchase of a product / service.

How to measure it?

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

How to evaluate it?

The CPA pricing model allows advertisers to be sure that their money is not wasted, but ends with a measurable indicator of customer acquisition.
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 drawback: the advertiser loses touch with the customer. It is very rare that a buyer sees an advertisement for the first time and immediately takes the action that you expect from him.
Advertising requires repeated exposure through many points of contact. If you evaluate only actions, not impressions, the advertiser will not understand exactly what paths led buyers to complete the final action.

Advertisers ultimately pay for what they want, but lose the ability to track consumer behavior and create widespread brand awareness.

CPM

What is it?

Price Per Thousand (CPM) is the price an advertiser pays to create brand awareness. The advertiser pays the publisher each time for 1000 impressions to the consumer.

How to measure it?

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

How to evaluate it?

The CPM pricing model is designed to reach 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 reach of consumers on rich media advertising is much higher than on standard desktop banners.

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

CPI

What is it?

Designed specifically for mobile applications, Cost-per-Install (CPI) is the price 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 CPA model. CPI focuses on downloading and installing applications so that the advertiser gets what he paid for. However, this narrowing of the funnel of action can cost the advertiser much larger amounts.

Among other things, by focusing on installing 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 strive to achieve as an advertiser are known. The following are some final examples that will help you determine which model is best for you:

Want to focus on the last consumer action? Choose a CPA.
Want unlimited impressions and ROI? Choose CPM.
Want to get customers to download your app? Choose a 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