Did you read the previous article in this affiliate marketing game series about all the things Advertisers expect from your CPA/CPL traffic?
I hope it was useful for you! If it wasn’t that helpful it’s probably because the models alluded to aren’t really related to what you’re doing.
Don’t despair, though! In this article, you’re gonna understand how to become a CPI connoisseur!
Stick around for the revelation of more great info that’s gonna make you a recognized, award-winning expert in the affiliate marketing field!
Here’s the second part!
Affiliate Marketing Game: Going Through CPI
Nowadays, most people use apps every day to perform various activities. It can be an alarm clock app, a weather app, or a social media messaging service. Whatever. Apps are now part of almost everything in our lives.
Advertisers are obviously aware of the volume of app users. That’s why they’ve decided to engage on a different advertising model, providing app developers, webmasters, and Media Buyers opportunities to make more money.
Cost per Install (CPI) consists in the advertiser paying the publisher every time a user installs and opens their app.
CPI is fast becoming super popular. In fact, it has been steadily stealing the thunder from both mobile subscriptions and PIN submits.
Just like what happens in CPA, developers are only paying when the user performs a specific action. This allows advertisers to measure their customer acquisition costs.
When an app developer decides to advertise their app in a performance marketing basis, they can either go for CPA or CPI.
Attention: bear in mind that the definitions of both CPA and CPI are very controversial and are always evolving. In order to save some of your precious time, I’ll assume CPI stands for the cases where the conversion happens when the user installs and opens the app.
As for CPA, let’s assume it stands for those offers where the conversion takes place when the user purchases something inside the app (as is the case in regular Mobile Subscription offers).
Ready to check an example of CPI and CPA that’ll clarify things for you?
Let’s use a game as an example, then:
- CPI occurs when the user installs and opens an app.
- CPA has to do with paying only when the user makes a purchase inside the app.
It’s important to understand why advertisers choose one over the other:
- CPA guarantees “instant revenue” users since volumes are substantially lower.
- In CPI, they’re paying for users that may never spend a penny on the app. Even so, due to the fact that the number of installs is much higher, they predict what percentage of those should turn into active users. This prediction of the highest number of active users is what can make advertisers choose the CPI model instead of CPA, where they’d get fewer users.
The way an advertiser approaches CPI differs from the way he perceives CPA. It may sound weird, but advertisers aren’t always looking for committed users.
When an app has a high number of installs, it goes up in the Google Play / App Store ranking. This gives advertisers what they’re ultimately looking for – visibility to reach organic users.
For the initial high volume installs, advertisers usually look for incentivized traffic. In this type of traffic, users need to install the app to either get some reward in a game they’re playing or be able to see some type of content.
Generally, these guys won’t become long-term users of the app they’ve installed.
What does this mean?
Basically, it means that incentivized users are a way to get to those cool, money making organic users that won’t be forced/lured to download an app.
Instead, they’ll decide to download it without seeing any advert because they’re genuinely interested in it. This way, developers will pay for the initial downloads only as bait for the real users they’re looking for and that’ll be acquired for free.
Nonetheless, if advertisers want real paying users instead of just many users to go up in the rankings, they’ll become more demanding with the quality of traffic.
They need to take the LTV (lifetime value of the user) each publisher delivers into account.
So they can select which ones they want to see promoting their products. At the beginning, advertisers may lose some money until enough time has passed for them to be able to analyze the long-term value of users they’ve lured via CPI.
Let’s take a look at this example. Here, the advertiser opted for a CPI of €10 after gathering enough data on their LTV. For every 10 app installs, only an average of 4 became active users of the app. From those active users, only an average of one user became a paying user.
Spending around €25/month on the app (Average Revenue Per Paying User or ARPPU) for an average of 4 months (user retention period), the users of this app have an LTV of €100 (spending €25/month during 4 months means a total spending during the “lifetime” of €100).
The LTV divided by the initial number of installs indicates how much the advertiser should spend on each CPI payout (€100 divided by 10 installs = €10 CPI).
Advertisers may want your users as pure bait. Even so, they’ll be happy if even those turn out to be active, paying users!
Good quality traffic is always the most important metric to take into account if you wanna make advertisers smile.
Happy advertisers = more good offers for you!
Advertisers usually want to see the affiliate IDs that generated each click on the banner. This way, they can ask the affiliate network to cut that specific source of bad traffic. They often also set a cap.
So they don’t go over the budget destined for that specific campaign.
Fraud: A Naughty Beast in Affiliate Marketing
Ever heard of fraud?
It’s a real nightmare and the thing that worries most CPI advertisers. They can decide to block you as a source of traffic if:
1) You bring incentivized traffic when it’s not allowed.
2) Your CR is abnormally high because advertisers believe there is a great number of installs created by a robot.
Important info to never forget: please be aware that many websites/companies that promise cheap app installs for apps are mere fraudulent schemes that can raise flags about the legitimacy of your traffic and get you banned from sending traffic to CPI offers.
Indeed, fraud is a gigantic bane upon us all. It has caused a lot of restrictions in the market and forced advertisers to start analyzing new indicators. One of these is KPI (key performance indicators). KPI can be a specific retention rate, reaching some level in a game, or purchasing something.
What About Volume?
If you’ve read the first part of this series, Affiliate Marketing Game Part 1, I’m sure you’ve been able to understand that volumes are a CPA advertiser’s first and only real love.
When we talk about CPI advertisers, it’s exactly the same thing.
Now let’s think about how CPI advertisers can get higher volumes.
CPI Advertisers can:
1) Create campaigns that allow incentivized traffic.
2) Increase payouts. Advertisers can increase or decrease payouts depending on the source quality.
3) Waive the need for KPI. This way, advertisers pay as soon as the user installs and opens the app.
The Secret Weapon: Quality
If they’ve got enough data, advertisers can start optimizing campaigns and increasing traffic quality.
What am I talking about? Users that install the apps and become paying users.
Advertisers can use KPIs such as:
1) Retention rate – The number of people who keep using the service/app for a specific period defined by the advertiser.
2) Registration rate – The number of people who register as users. For example, social networks such as Facebook or Twitter.
3) Buying rate – The number of purchased items.
4) CPA Apps – You get paid when a minimum amount purchase is made.
Advertisers are super important parts of the game and I know that – after you’ve read these two cool articles – you’ve become fully able to understand why!
I really hope this article helped you dig out the deepest secrets of the CPI game.
Remember: advertisers experience an endless, eternal quest for the best traffic quality!
In this honourable mission, they’re gonna need a whole lotta awesome affiliates such as yourself!
If you’re still asking yourself what’s the deal with CPI and CPA, don’t hesitate and check out our article regarding these two price models.
Wanna ask some questions about the advertising part of the game?
Do it now!
I’ll answer them all!
Maria Carvalho - Advertiser expert