Industry Forecasts, Marketing

CPI Increase Is Here to Stay – Your App Better Adapt or Die

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If you have been marketing your app long enough you must have noticed a CPI increase. Getting users to install your app used to cost a lot less than it costs today. This change can be noticed globally and across different platforms.

The reason behind CPI increase

One of the drivers of the CPI increase we are seeing is the brand budgets starting to pour into mobile. when the internet just emerged, users adopted it first and a few years later bigger budgets started to follow. Facebook story also shows a lot of resemblece – the social network first had 1 billion users and 3 years later it was making $25B in advertising. Mobile advertising also follows the trend of the money following the eyeballs. Recent report from eMarketer projects mobile advertising to reach $195B by 2019 with most of the increase coming from brand budgets.

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Ad spend per user is growing

Here is another way to think about it – if you devide the projected ad spend growth by the projected user growth you can see that the average ad spend per user has been increasing but will continue increasing even more.

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So apps who want to get users face 2 options:

  • Try to relay on organic discovery
  • Increase their LTV in order to afford higher CPIs

Relaying on organic discovery however has proven more and more difficult due to the app stores being overly crowded. Apps today have to invest in marketing to gain momentum. So that leaves us with only one option – increasing LTV.

Adapting to change in CPI prices

In order to increase LTVs app companies must adapt to the change quickly and make the brand budgets work to their advantage. In other words, your company needs to make sure some of this new money finds it’s way over to you. The most effective way to increase LTVs is to introduce a view-to-play model in your app and targeting the 98% of the users that don’t pay. This puts your app in a position to enjoy the projected increase in ad-spend per user and not suffer from it. From a unit economics perspective, monetizing a larger portion of your user base allows you to increase ARPDAU and LTV. Combined with an adequate ad revenue measurement tool, you would be able to increase CPI bids with confidence, remain compatitive in the market and keep growing your app.

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