Glossary | A | Advertising Pricing Models

What kind of advertising pricing models are there?

There are multiple advertising pricing models. The most common ones are CPM and CPC. Here is an overview of those as well as other relevant models.

 

Cost-Per-Mille, CPM and eCPM

Cost-Per-Mille (CPM) is a payment model that charges the marketer per mille (1,000) impressions delivered within the developer’s mobile app. This is the most commonly used online advertising payment model. Effective Cost Per Mille (eCPM), is a closely related metric that calculates how much revenue a developer earns per 1000 impressions.

CPM is an important KPI for both app developers and marketers, providing a monetary value for ad inventory. This allows developers to identify what they will get paid per 1,000 impressions, and marketers to determine what they will pay per 1,000 impressions. eCPM allows developers to identify whether the ads served within their app are effective and are generating installs.

Calculating CPM: Cost / impressions *1000

Calculating eCPM: Total ad revenue / total ad impressions *1000

 

Cost-Per-Click (CPC): CPC is a pricing model used in mobile advertising campaigns in which marketers pay each time a user clicks on their in-app ad.

Calculating CPC: advertising cost / clicks

 

Cost-Per-Install (CPI): CPI is a pricing model used that refers to the amount a marketer pays per install of their app on a mobile device. For example, if a marketer sets an app marketing campaign and acquires 1,000 new users at a CPI rate of $10, then they would pay $10,000.

 

Cost-Per-Action (CPA): CPA is a pricing model, primarily used in performance marketing. These campaigns are when marketers choose a user’s action to measure and only pay for users who engage in that action. The actions can include registrations, reaching the next level, milestones, and many more.