From Facebook To iPhone: A Brief History Of Cost Per Install

Offerpal is promoting their latest mobile promotion where users are able to earn virtual currency by installing mobile applications. This new offering is reminiscent of the cost-per-install (CPI) campaigns which first proliferated on Facebook weeks after the Platform launched in 2007. While SocialMedia was the initial impetus for CPI campaigns, all ad networks quickly jumped on board. In this article we’ll examine how Offerpal’s CPI campaigns differ on mobile applications.

The Evolution Of CPI Campaigns On Facebook

Prior to examining the new mobile campaigns, it’s important to understand the primary way that CPI campaigns run on Facebook. The vast majority of installs initially ran through banner ad campaigns within Facebook applications. This would work such that publishers would post banner advertisements for other advertisers’ applications, and when a user clicked through and installed the advertisers’ app, the advertiser paid a certain amount to the ad network, who then paid the publisher. While some advertisements were relevant, many of the campaigns were simply aimed at getting users to click on the ads, reducing the actual average interest of players who installed new applications.

The model became so popular that all ad networks were eventually running CPI campaigns and the vast majority of ads on the Facebook Platform were simply cross-promoting other applications. CPI campaigns have since moved beyond traditional banner ads to an offer rewards system, where players that install advertisers’ applications get virtual currencies or rewards. This is provided by companies like Offerpal and Super Rewards. So while the medium has shifted from banners to offers, CPI campaigns continue to proliferate on Facebook.

Without the efforts of sales teams in the markets, there was no way to attract large brand advertisers. Since the early days, the model has evolved a bit and companies like Appssavvy are looking to bring brands to the application space. Other companies like Buddy Media and Context Optional are offering custom social media solutions for brands. Most parties, however, are jockeying for a chunk of the brand advertising dollars as they pay far more than CPI campaigns, which tend to generate somewhere around $1 CPMs. Even with brand advertising dollars and other companies continuing to run CPI campaigns, there is plenty of excess inventory left over which fetches pennies on the dollar.

CPI Moves To The iPhone

This new model, provided by Offerpal, is a natural extension of the CPI campaigns that run on Facebook. The way it works is that the mobile application developer will pay $0.45 per install to Offerpal (or any install provider) for the service, and Offerpal will pay a small portion of that to the game publisher. Multiply this activity with Offerpal’s massive network of over 100,000+ mobile downloads per day, and this quickly becomes big business.

When looking at other advertisers, we can see there are charges to advertisers of up to $2.25 per install. Offerpal has certainly positioned itself strongly, and with the company already reaching over 30 million mobile devices, there is clearly plenty of inventory to fuel new install campaigns. According to Offerpal, the effective CPM of competing install campaigns are somewhere in the range of $0.50 and $0.70.

While CPI is an extremely attractive model to developers, as the feeling of thousands of users installing your application is a powerful one, many question the sustainability as well as the effectiveness of install campaigns. The problem is that players who install the applications are not necessarily engaged and in many cases will not return.

TrialPay did some analysis of the CPI model recently, and had this to say:

Incentivized CPI advertising, in which a user earns virtual currency in one application by installing another application, has resulted in even poorer lead quality and retention. A top Facebook application recently told us that they ran two separate incentivized CPI campaigns and found that not a single user that they acquired from these two campaigns ended up staying with the service. The “users” that had installed the application were motivated primarily by the offer of free virtual currency and cared very little about engaging with the newly-installed application.

While some continue to debate the effectiveness of install campaigns, it’s clear that in a rapidly evolving space, any money generated by applications is better than no money. At the end of the day, eCPM continue to be the primary deciding factor for many developers. While some have decided to avoid ads all together, concerned that they degrade the overall user experience, most developers continue to optimize a mixture of install campaigns, banner ads, and virtual goods transactions.