A Mobile Ad Pricing Showdown: CPA vs CPM vs CPI

A Mobile Ad Pricing Showdown: CPA vs CPM vs CPI

As a mobile ad platform, the most common pricing requests we receive fall from three models: CPA, CPM and CPI.

In order to demonstrate which one best suits your needs as an advertiser, we decided to pit each model against the other and have ourselves a little mobile ad pricing showdown. For the cutting-edge analysis, breakdown, and results, see below:

CPA

What Is It?

Cost-per-Action (CPA), sometimes known as Pay Per Action or PPA; also Cost Per Conversion, is an online and mobile advertising pricing model, where the advertiser pays for each specified action. For example, an action after an initial impression and click, like an install, form submit (e.g., contact request, newsletter sign up, registration etc.), double opt-in or in-app sale.

How You Measure It

Here’s the formula: CPA = Cost/Number of Actions

How It Sizes Up

The CPA pricing model allows advertisers a bit more assurance that what they’re paying for actually ends up as quantifiable consumer engagement.

So in this sense, the advertiser isn’t risking as much with their money – as they know exactly how each action or sale will cost them.

However, the CPA pricing model does have a downside: the advertiser loses touch with the consumer journey.

It’s rare that a consumer sees an ad for the first time and takes the action you want them to take. Advertising requires repeated exposure across a multitude of touch points. By only charging for actions, and not impressions, the advertiser doesn’t have any sense of which touch points led to the final consumer action.

Advertisers ultimately pay for what they want to, but lose in ability to track consumers or generate large-scale brand awareness.


CPM

What Is It?

Cost-per-Mille (CPM) is a pay structure designed to generate brand awareness. The advertiser pays the publisher for every 1000 times the advertisement is displayed to a consumer.

How You Measure It

Here’s the formula: CPM = Cost X 1000/Impressions

How It Sizes Up

The CPM pricing model is all about massive scalability. With the cost of media a steady constant regardless of performance, the opportunity for high ROI presents itself.

CPM is particularly effective when you have high performing creative, as the cost of each action will go down as the total actions taken goes up.

This is one of the main reasons why the CPM model synchronizes quite ably with mobile advertising, as the rich media capabilities of mobile offer much higher levels of engagement than standard display and desktop advertising.

In short, the better your campaign performs, the more bang for your buck.


CPI

What Is It?

Specific to mobile applications, Cost-per-Install (CPI) is the price an advertiser pays whenever the consumer installs the advertised application.

How You Measure It

Here’s the formula: CPI = Cost/Number of Installs

How It Sizes Up

At face value, CPI seems like just a more specific version of CPA, which it is.

CPI emphasizes app downloads and installs so the advertiser gets what they pay for. However, this lower funnel activity can cost advertisers significantly more money (anywhere from $3-10 per action).

Also, by emphasizing only app installs, the ability to control the quality of traffic is ultimately lost.


Who Wins?

You probably saw this coming, but determining a winner is only possible given the context of the mobile campaign and what you’re looking to achieve as an advertiser. Here are a few final examples to help you determine what will work best for you:

  • Want to emphasize the final step on a consumer’s journey? Choose CPA.
  • Want uncapped impression scaleability and ROI? Choose CPM.
  • Want to incentivize users to download your app? Choose CPI.

Depending on the objectives of your campaign and the size of your budget, a combination of all three types may be best.


Now that you’re more familiar with pricing, it’s time to launch. Click the button below to begin building your campaign with one of our qualified Sales Planners.

 

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Cameron Fitchett

Cameron is a marketing manager at Gimbal, a mobile advertising and marketing platform designed to substantially improve the relevancy of marketing communications with data.
Cameron Fitchett
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