For any marketing strategy featuring ads running in mobile apps, teams have a variety of mobile marketing metrics they can buy against. But which ones are capable of actually yielding a positive return on investment? Are marketing campaigns based on vanity metrics or metrics that matter for the company at large?
Over the past decade plus, the kinds of mobile app metrics that marketers buy against has evolved significantly. But, many of the current pricing models in place today could use an overhaul. Let’s dive into the current problems, and what a potential solution looks like.
At first, all advertising on app screens was just based on media. Marketers paid just to show their ad to a set number of users. This is where the ubiquitous CPM (cost per Mille, or cost per 1,000 impressions) comes into play. Ad partners were there just to show ads. That’s it.
From there, pricing models evolved to put more onus on the user. Now, ad networks are beginning to take a little responsibility for what people are doing once they see an ad. CPC (cost per click) is perhaps the most popular user-based pricing model; another common example is CPVV (cost per video view).
One step further than both is a pricing model based on the outcome. Here, the ad network is actively invested in customer engagement and a final, desired action. In performance marketing, this concept is most commonly manifested in cost per install (CPI) campaigns. For app-centric businesses, CPI pricing has become the de facto model thus far.
In some instances, the aforementioned metrics and models are great. For brand awareness campaigns, for example, CPM is still highly valuable and useful. But, in other instances, are other options like CPI actually indicative of an app’s success?
For example, let’s say a quick-service restaurant (QSR) wanted more delivery business, and decided that releasing its own app would be a useful way to drive more business. A CPI-based campaign would indeed be a great way to get app users, but how could they determine if those installs would later turn into active users? What is the retention rate on people who download the app thanks to paid advertising? After all, just because someone installs an app doesn’t mean they actually use it regularly.
This is why many mobile marketers are now turning to cost per action (CPA) or CPX bidding. What does the X stand for? It can stand for any metric that actually impacts the business. Here are a few examples:
Ultimately, the business is likely very interested in knowing its cost per loyal user (CPLU). Regardless of the specific metric used, CPX-based campaigns are beneficial because they tie back to material business benefits.
However, it’s important to note that some advertisers use a buying mode that is different from the bidding mode. For example, an e-commerce firm doing a three-day burst campaign to promote a big sale may prefer maximum reach for this particular effort, but pay only for conversions. So, they might bid on CPI or CPFT, but buy (or pay) on CPM.
Here’s an example that really highlights the benefits of CPX bidding compared to other models. Let’s say a rideshare app wanted to drum up more business in California. CPM bidding would ensure that everyone in the state saw their ads, no matter where specifically they lived. A campaign based on cost per first ride (CPFR), however, would help them better understand and target their audience within California; likely, it would show that people in or near major urban centers to be more frequent users of the rideshare service - and thus more valuable - than those in rural areas.
Unlike other pricing models, there is no one-size-fits-all approach to CPX bidding. What works well for one organization may be totally wrong for another. But, regardless of the specific metrics a company chooses to target, ultimately CPX bidding is often ideal because it is directly tied to concrete business results.