Why Cost Per Install Is An Irrelevant Mobile App Metric

By TechZone360 Special Guest
Dennis Mink, VP of Marketing at Liftoff
June 03, 2015

There is a fundamental problem in the way mobile app advertising is bought today.

The vast majority of mobile marketers buy app installs ads on a cost per install (CPI) basis and focus their campaigns on one primary goal: getting the most installs at the lowest cost.

It’s an understandable focus given that most marketers work with the data most readily available to them, such as impressions, installs and cost per install. Yet when a marketer wants to drive actual mobile engagement in their app, measuring and optimizing against the cost per install just isn’t relevant. The more important metric to measure and optimize against is the cost per action (CPA), that is, the cost to acquire a user who engages in a high value, revenue-producing post-install event. 

Marketers prioritize mobile engagement differently, depending on the purpose of the app. While social networking apps focus on acquiring users who will create a profile and share content, travel apps are more concerned with finding users who will make a reservation. Retailers care most about driving purchases, and subscription-based services, like Dating apps, focus on attracting users who are happy to pay a monthly fee to find their companion. The cost of these post-install events vary widely, from just under $10 for a new registered user to over $200 for a new paid subscriber.

If buying low cost app installs doesn’t translate into engaged mobile users, how can marketers best plan their mobile advertising campaigns? Looking at the Liftoff Mobile App Engagement Index, based on an analysis of over 22.5 million app installs and 550 million post install events, we see trends that can help us better understand how to optimize our mobile advertising campaigns. For example, while it costs less to acquire an Android user who will register and share content, iOS users are much more willing to engage in transactional events, like making a purchase, booking a hotel, or subscribing to a paid service.

Gender also plays a huge role in mobile engagement. While the average Cost per Registration is similar between both genders at around $9.54, women show more interest in shopping and sharing content on mobile. Men, on the other hand, are more inclined to make travel reservations or subscribe to paid services, by a margin of 4 percent.

Each category of apps has its own behavioral benchmarks. While social apps convert a whopping 76.3 percent of installs into registered users, financial apps have a much harder time, with registration rates lower than 45 percent. Dating apps data provides an especially interesting look into human behavior. While men have a lower cost per install and higher install-to-registration rate, suggesting a very strong interest in dating, women are 6 percent more likely to convert to a paid dating subscriber than men.

As competition in mobile continues to grow, so too does the cost to acquire active users. This is a larger industry trend but one that marketers can control for to some extent by choosing the right times of year to advertise. In the seasonal-driven travel industry, increased holiday travel drove down the average Cost per Reservation as consumers booked more airline tickets, hotel rooms, and taxi services. And not surprisingly, in the run up to Valentine’s Day, the Cost per Subscription for Dating apps decreased 10 percent as more people sought a date to celebrate with.

By focusing on post-install engagement and optimizing ad spend against a target cost-per-action, marketers will have greater success in building an active, revenue-producing mobile user base. 

Dennis is the VP of Marketing at Liftoff. Prior to Liftoff, Dennis was CMO at Appoxee, a mobile marketing automation platform (acquired by TerraData), and Duda, the leading mobile website platform for SMBs. Born and raised in Los Angeles CA, Dennis is a avid film buff.

Edited by Stefania Viscusi
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