Mobile Advertising Business Models: Pros & Cons [Cheat Sheet]
Cost per mille (CPM)
Pre-determined price for every 1,000 impressions (mille being the Latin term for one thousand)
| Pros: | Cons: |
| Maximal brand awareness and reach | Non-performance model |
| Lower cost | Greater chance of non-transparent networks sending low quality impressions |
Cost per click (CPC)
Pre-determined price paid every time a user clicks on an ad
| Pros: | Cons: |
| Easier to analyze user engagement through ad creative A/B testing | Fat fingers phenomenon = risk paying for unintended clicks and damaging brand with negative user experiences |
| Higher cost than CPI without resources to optimize click-to-conversion path, perform robust analysis, & protect against fraud |
Cost per install (CPI)
Pre-determined price paid every time a user installs the application
| Pros: | Cons: |
| Performance model | Risk of non-transparent networks driving a high volume of low quality, or incentivized, traffic |
| Lower cost | |
| Low risk |
Cost per action (CPA)
Pre-determined price for every in-app action defined by advertiser (revenue- or engagement-related)
| Pros: | Cons: |
| Pure performance model adopted by the savviest data-driven advertisers | Scale may be negatively impacted |
| Higher cost, but also higher value, so ROI only grows over time with higher LTV of acquired users |
