Demystifying Cost Per Install: Understanding the Cost of Your Mobile Game
The landscape of marketing at mobile games companies is changing. Marketers used to focus on driving new users to their games in pre-launch and launch. But in 2022, performance marketers need to focus on growth to drive revenue, not just attracting new users. You have to focus your efforts on delivering revenue and delivering business outcomes. You’re faced with answering big questions like:
- What channel should I spend with?
- What are we focussed on?
- What are the costs per user?
- What’s the revenue coming in with that user?
- What is the quality of those users?
What is CPI or cost per install and how do you calculate it?
CPI (Cost Per Install) is specific to mobile apps. Basically, as the game app advertiser you pay a specific dollar amount every time a user installs your game from one of the served ads running in your campaigns.
The formula for calculating Cost Per Install is simple. It’s your total ad spend divided by the number of installs. (e.g. a $10,000 ad produces 6,500 installs for a $1.54 CPI).
You can also pick any date range you want for your CPI calculation. Likely you’ll be looking at CPI daily, if you’re in launch mode, then perhaps weekly and monthly. You’ll want to keep track of how your CPI fluctuates over time.
Why is CPI important?
Cost Per Install is an easy way to help you figure out if your advertising is working. Can you drive users to your game for a specific cost?
In a dream world a user would see your finely crafted advertisement, click on it and download your game. Okay, perhaps that happened with Bejeweled, but in 2022 your advertising is going to have to work really, really hard, like Dark Souls hard.
These days a user sees your ad on a Twitch stream, watches a game walk through on YouTube, sees a friend talking about the game on TikTok and finally they go to the app store and click download. That’s the journey you’re focusing on in 2022.
Takeaway: While you feel like you’re on an endless NPC escort mission at the end of the day you’re focusing on the magic number where your cost per user is less than or equal to your LTV. If you can’t crack this number you may need to reevaluate your game’s strategy.
How do CPM, CPI, CPA, and CAC work together?
Figuring out exactly how much it costs to get a user to your game can be figured out in a few ways, and they can all work together.
CPM – Cost Per Thousand
From CPM you can essentially figure out the number of views it takes to get a user to install your mobile game. For example how many times did a user view or interact with your brand campaign before installing your mobile game? CPM can be a good measurement of ad and brand performance showing you what is having impact.
CPI – Cost Per Install
Like we’ve spoken about, CPI is the total expense of your campaign spend divided by your game installs. For example a $10,000 ad produces 6,500 installs for a $1.54 CPI.
CPA – Cost Per Action
At this level you’re looking at the total expense of your campaign. For example, you spent $25,000 and you got 15,000 new users for a CPA of $1.70.
CAC – Customer Acquisition Cost
When you’re figuring out this cost you’re looking at everything that touches your customer like support costs to handle customer emails, social media costs and special live events you run. Any place you have a person in your company, or a tool interacting with your customer you want to calculate that cost.
Measuring the specific expense of onboarding a user for your app can be approached in a few ways. In the cost per install (CPI) model, you’re measuring the cost of one user installing your app based on your expense for creating that action (e.g. a $9,000 ad produces 6,000 installs for a $1.50 CPI).
By understanding all your costs at every level you can figure out where it makes sense to spend your precious advertising dollars and what is the most effective.
Benchmarking your CPI
When you understand the importance of measurement and benchmarking, you’re not a good marketer, you’re a great marketer. While marketing in the past has been positioned as lots of blue sky thinking and cigarette smoking (I’m looking at you Mad Men), these days you spend most of your time looking at data and making decisions.
It’s critical that you’re tracking your performance and understanding average industry costs per install. This will help you understand how you’re doing.
Average cost per install in 2020
Average cost per install varies all over the show. There are factors like the ad unit, the platform (iOS or Android) and the country where the app is being installed.
IronSource published the average CPI costs for iOS devices in 2020:
- $2.37 in the US
- $0.98 in China
- $0.22 in Brazil
- And the overall, the average global CPI for all platforms and devices is $2.24
What does your CPI look like in comparison? Are you way over the average or sitting near it? Are you doing better? Give yourself a standing ovation!
Keeping Track of Your CPI
Google sheets or Excel are your friends. Love them or hate them, it’s a key part of your day. Make sure you’re recording your CPI and comparing it to your customer acquisition costs and other acronyms. Over time you’ll start to see patterns emerge and it will become really clear where it makes sense for you to be spending your money and time.
Improving your CPI
Once you know what your cost per install is and you’re tracking how it fluctuates over time it’s time to start making some changes.
Ad Campaign Improvements To Drive Down CPI
Tweaking your ad campaigns is critical to driving down your CPI. I like to think of them as experiments – put on your scientist cap and, like Gordon Freeman, actually write down the changes you want to make and what your hypothesis is (but maybe try to avoid opening up a portal to another dimension). How will this change have an impact on your campaign and on your CPI.
A few ideas to try are:
- Creating short form content with one clear message. Try creating short videos that range from 4 seconds to 10 seconds. Make sure they work for multiple formats and stick to your one primary message. It’s so tempting to try and put out as much as you can about your game, but stick to one key communication and make it simple. If you’re looking for a simple piece of software to help you make short videos give the Screenflow trial a try.
- Target people in smaller markets. Every mobile game wants to get users from the big markets like LA and San Francisco. But try tapping into the smaller markets. Smaller markets tend to be cheaper and it’s easier to create a network effect where your game will be shared. Looking at a smaller market is also a great way to test your short form content and one clear message for less money.
- Use Promoted Posts on Facebook. Promoting your new game to users who already know about your company on Facebook is a much more efficient use of your advertising dollars. It’s also a great way to increase engagement around your post, especially if you run a poll or ask a question.
- Use your own data to enhance your targeting. What else do you know about your mobile game users? How can your knowledge of your niche audiences help you lower your ad costs? Try brainstorming with your team and see what you can come up with to target niche interests, for less cost.
The first step to improving your CPI is to be tracking your key metrics effectively in a simple spreadsheet. Then by focusing on specific ad campaign changes while improving your CPI, you can track the effectiveness of what you’re doing. Remember to put on your scientist cap and do experiments where you change one element (variable) of your campaign at a time, so you know exactly what’s creating impact.
How to Choose a CPI Network
Just like trying to figure out what game to play next, choosing the best CPI campaign provider can be tricky. A well-targeted CPI campaign will often be successful but there are critical pieces of the Tetris puzzle to look at.
Does the company work with ad networks, or do they have a specific set of apps that they advertise across? A company with ad networks has a much wider scope, but a specific set of apps may allow you to target your users more effectively, especially if those apps belong to a particular category.
Does the campaign provider specialize in mobile games, generic apps or perhaps specific verticals? Do you want to be running a campaign with a wide reach? Or have you refined your message and you want to do precision targeting with your game? Answering these questions will help you determine the right provider for this mobile game and this stage of your launch.
If you’re working in the free-to-play space and rely on in-app transactions to monetize your mobile game, getting an install isn’t a guarantee that you’ll get an ROI. So think about tying your CPI metric to an action of value. What about the first time they make a purchase in your mobile game, or perhaps when they’ve reached a particular threshold of spending. Or what about when your game user has reached a particular level in your game? Make sure the platform you choose allows you to select different success metrics so you can make the smartest decisions with your payouts.
It makes sense that you want to get the most value for your advertising dollars. This means paying the best rates for location of your campaigns and who they are targeted at. Many of the key platforms allow you to see the market averages to help you make smart bids. However, some platforms will add a commission on top of your bid for the network or tapping into the auto-bid technology. You may not be able to avoid paying commission but at least it’s something you are aware of so you can track your metrics and budget successfully.
Choosing the right CPI network for your mobile game means you need to understand if they work in ad networks, specific niches or across a selection of apps. You also need to know how to precision target your mobile games users and tie into deeper actions like first in-game purchase. And don’t forget to find out if they take a commission so your budget reconciles!
Your CPI During Soft Launch and Hard Launch
Let’s be honest a lot of the hard work around CPI happens during the soft launch of your game. During Soft Launch your team is focused on early retention in tier 2 territories. You’re trying to gather statistically significant retention numbers.
If your numbers are looking good you start getting ready for the leap into tier 1 territories. UA teams and creative teams are working side-by-side to understand what the predictive LTVs will look like. You’ll be working together to figure out if your mobile game is viable.
This is where your critical work on bringing down the CPI matters. Let’s be honest, if you can’t get your cost per user to less than or equal to your LTV, then your game might need to be scrapped. Or put it on the back-burner until significant changes can be made to lower the CPI or increase the LTV.
If your mobile game has passed the critical threshold you’re ready for your hard launch. A key factor in your CPI will be if your game has IP or no IP. With an IP game it’s likely that you have low CPI at the worldwide launch and on the other side your non IP launch will start with very little momentum and a fairly high CPI. Your plan will need to be more calculated and nuanced.
Understanding significant retention numbers in your soft launch will help you understand where your CPI sits and if you can pass the critical threshold where your cost per user is less than or equal to your LTV. Your hard launch CPI will vary depending on IP tied to your game, meaning a low CPI at launch, or a fairly high CPI for a non IP game where you’ll need to get really nuanced in your ad strategy.
As a performance marketer you really need to understand what CPI for your mobile game is by tracking, measuring and improving the costs over time. It isn’t a quick process but the time you spend setting up your key metrics and investigating which CPI network you’ll use will pay off dividends in the future. And it will help you learn and make smarter decisions along your mobile games journey. Best of luck!