Getting started with digital advertising can feel incredibly overwhelming.
If you are just beginning your journey then you probably feel very confused. Many new people to the industry see things such as CPI, CPA, CPC and a lot of other jargon. What do they mean?
How are they used?
Luckily for you, we are going to explain some of these terms to you.
The online advertising industry is massive and on average a business makes $2 for every $1 they spend on ads.
This presents a big opportunity for companies and individual affiliates to make money online. With the rise of easy to use ad networks it is obvious to see why so many people are investing in online ads to boost the clicks on their offers and ultimately their sales.
What we are going to do today is explain what CPI and CPA means and if one is better to use than the other.
What are CPI offers?
CPI stands for cost per install and is an advertising model that is used to help promote free apps.
So, when someone clicks on a link and installs an app then it results in a pay-out. Does this sound strange? Why would someone pay-out in the event that someone installs a free app?
A lot of the time, CPI deals are used when starting a new campaign for example when an app is released. When a new app is launched then you want as many people to download it as possible to create a buzz and get people talking about it.
Let’s say as well that this app has in-app purchases which most apps do. When people download an app only a small percentage will actually use it beyond the first time they open it. An even smaller percentage will use it on a regular basis and only a fraction of those people will make an in-app purchase so getting as many people as possible to download it initially increases the chances of a higher number of people making a purchase down the line.
This is one of the main reasons why CPI exists.
What are CPA offers?
You have probably heard of CPA as well so it is useful to show the differences between the two models. What does CPA stand for in marketing?
CPA stands for cost per action. At a basic level it sounds like it is very similar if not the same to CPI.
After all, with CPI the advertiser is paying out whenever the person completes an ‘action’, in this case they install an app. So, what’s the difference?
CPI is a more specific version of CPA as it relates to an exact action (an install) whereas CPA is perhaps more general in that it corresponds to any action whether this is an install, sign up, purchases or a download. Cost per action has a more funnel approach in that many CPA offers related to subscriptions that bring in longer-term and more consistent income.
What is the best model to use?
Now that you are better informed as to what cost per install and cost per action is and how they both work, what is the better model to use?
With most things when it comes to marketing and advertising – it depends!
One thing that we should make you aware of is that the LTV or Lifetime Value will usually be higher with CPA models. What is LTV? Well, it is the amount of money that you will earn out of that user. CPI is very much focused on the initial install and as we said above, a small percentage will only go on to use the app and an even smaller percentage will make an in-app purchase. This percentage that makes an in-app purchase might only do that one time.
With CPA there is more potential for continued payments over a longer period of time as many CPA offers are focused on subscription services.
If you want to create buzz for an app and get initial installs then CPI is by far the better model. If you have a subscription service or an offer that is based around continual income then CPA will be the better fit.
Using CPI offers in affiliate marketing advertising
Cost per install is a very popular method of getting people to download apps.
It offers a good balance for both advertisers and publishers and it also offers a simpler and more straightforward purchasing method.
Many people use CPI to market their apps and incentivise people to install them. CPI traffic isn’t as high quality as other models and is more open to fraud however the use of CPI in affiliate marketing is widespread and won’t be going away anytime soon.