Learning Balance: When More Ads Actually Mean Less Revenue?
The mobile platform is especially ripe for this type of analysis, because the space for ads is quickly becoming tight with smaller screens and bigger competition. Using CPI is an incredibly effective way to maximize your ability to include direct ads without upsetting your target. Let’s take a look at why CPI far outpaces more traditional CPC and CPM methods of marketing, especially in the mobile space.
CPM – The Machine Gun
Cost per thousand, or volume advertising, no longer brings the stable conversion rates that it once did on mobile. Performance based advertising has finally found full mainstream acceptance. Instagram’s recent announcement of business profile analytics means that social influence can now be quantified on all major platforms. Why would a company pay for a spray gun when it can precisely outsource its production to a proven entity and its payment to a CPI structure?
Traditional ad performance is also down. The Internet continues to find its voice through social influencers and content, not direct ads. Companies experienced a 133% higher retention rate from customers for apps downloaded through an “organic” source [read: no CPM ads]. Android users retained their apps at a 156% higher rate if the company engaged them organically as opposed to directly using a CPM spray tactic.
CPC – The Blind Shooter
The cost per click model threatened to end the traditional volume based advertising structure in 2013. Although this first step into performance based advertising did not replace CPM, it certainly began to open some eyes in terms of how precisely an ad campaign could be structured. However, CPC statistics are also falling in the face of new technology, because CPC still has no built in focus mechanism to force an advertiser to hone in on a market niche. CPC also leaves the door wide open for underhanded tactics – it’s really nothing for a competitor to click on ads to reduce a budget and waste impressions, even with Google’s tough talk on ‘invalid activity impressions.’
If CPM is the machine gun, CPC is the blind sniper. A company may get clicks, but clicks do not equal revenue. Overall, CPC still sends ads to people who do not want them, wastes money and reduces revenue when compared to CPI.
CPI – The Professional Hitman
CPI naturally focuses the efforts of a marketing company. The purpose of an ad campaign under CPI is no longer volume (CPM) nor imprecise action (CPC), but true conversions. The result is less ads and more revenue. CPI currently has an overall conversion rate of just under 33%, meaning that one of every three people who see an ad from a company who really knows CPI downloads an app.
From this point of connection, a company has many options to continue the relationship with a customer. That company also has much longer to engage: About a quarter of downloaded apps stay on the user’s mobile device for a day. Compare this to the four seconds that the average consumer gives to an unsolicited ad, and you have much more solid ground for an increased revenue generation.
Learning how to properly tap your potential customer on the shoulder just enough is an art form that you must learn to succeed in the modern business landscape. Make sure to cultivate the right partnerships and employ the right strategies to make this happen.