Mobile advertising campaigns are run using different business models. Some of these models, such as the CPM one is a darling of many web and mobile app publishers. With this model, it doesn’t matter if any ads placed in their inventory generate clicks or lead to actions or not – they are get paid by advertisers.
Now, being on a constant quest for new ways to increase their revenue, more and more advertisers prefer the CPA (stands for Cost-Per-Action) model, which really gives them a freedom to spend money only when ads they place in publishers inventory result in specific actions taken outside of the app, such as a sale, lead generation and so on and not views or clicks.
What is CPA advertising and what are its pros and cons?
To run a CPA advertising campaign mobile marketers use ad platforms that charge them only when app users take specific actions. With this payment model, they get flexibility to spend their ad budget on channels that do generate actions they are after. On the flip side, not all ad platforms support such model, you can find companies that do support CPA model in our directory.
A few examples when CPA advertising is effective:
- conducting a survey – often one of major obstacles for conducting an online survey is the difficulty to find and sign up participants. In this case mobile marketers pay publishers for every participant that comes from their web or mobile inventory;
- building an email list – email is one of the backbones of digital marketing but building an email list is yet another challenge that CPA ad campaigns are capable to help with;
- signing up for a free trial – this is about how software and SAAS company reach out prospective clients to sign up for a free trial they offer;
- placing an order – the spectrum of products that can be purchased online is getting bigger all the time, CPA advertising is often what helps mobile marketers to move the needle for their business. Direct-to-consumer companies run primarily CPA ad campaigns to sell their products globally.
- sharing content on social media – social media marketing is all about spreading the word and CPA advertising campaigns is one of the ways to reach out wide audiences, in this case advertisers pay for every instance their content was shared on a specific social media.
Another example when CPA campaigns are effective is such a value exchange model as the Offerwall that is quite popular and widespread in mobile games. A typical Offerwall allows gamers to acquire in-game currency in return for filling in a survey or watching a video in the app.
Now let’s take a close look at various costs associated with CPA advertising, starting with the list of the key stats.
Key Average Cost Per Action Statistics:
- 2020 (Purchase & Subscription) CPA rate – $40
- 2020 (Purchase & Subscription) App Install to Action rate – 4%
- APAC Purchase CPA rate – $33
- APAC Subscription CPA rate – $21.9
- EMEA Purchase CPA rate – $42.2
- EMEA Subscription CPA rate – $69.4
- LATAM Purchase CPA rate – $5.3
- LATAM Subscription CPA rate – $18.6
- NAR Purchase CPA rate – $74.7
- NAR Subscription CPA rate – $64.3
- Facebook Ads Cost Per Action rate range: $8 – $55
- Google Ads Cost Per Action rate range: $19 – $135
Having the terms defined and the key stats listed, let’s analyze one-by-one all major benchmarks that establish the Cost Per Action rates for the app industry.
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Mobile Ad Network Cost Per Action Rates
Among many actions that app users take via the app, there are several that are crucial for app marketers to know how much it costs to get users to take those actions and the most essential are Purchase and Subscription. Looking at the Liftoff, app marketing and retargeting company, data for the 2017-2020 period, we see the following picture. By 2019 e-commerce brands had to pay more to generate a purchase via mobile, $85 against $71 in previous years. The competition was on the rise and the dominance of such giants as Amazon certainly didn’t help to drive the cost down. But in 2020 the COVID-19 pandemic caused a tectonic shift in the demand and so CPA rate for Purchase dropped to $40.
For Subscription the dynamics were different, in 2017 it cost brands a whopping $162 to acquire a mobile subscriber, by 2018 the cost dropped to $90, which was a reflection of big increase in demand for subsection services (think Netflix, Spotify). On top of verticals that were running with the subscription before the pandemic, new ones jumped on this trend during pandemic such as food delivery, fitness, telemedicine and retail. All these newcomers created a halo effected that helped to drag the Cost-Per-Action rate for subscriptions down, people became more receptive to the notion of an online subscription for a wide spectrum of services, not just OTT.
Cost Per Action Rates, year-over-year
Apart from the actual cost for app purchases and subscriptions, there is another important metric that should be on the app brands’ radar – the Mobile App Install to Action rate.
Mobile App Install to Action Rates
To calculate the rate one needs to divide the number of either purchases or subscriptions to the total number of installs for a specific app. With this benchmark, app marketers can assess how well they manage to convert downloads the app is getting to the ultimate goal – generate sales.
The Liftoff’s research data for the pre-COVID period from 2017 to 2019 shows that the Install to Action rate for purchases placed via the app was on the rise, from 2.5% in 2017 t0 4.8% in 2019. But in 2020 people became a bit hesitant about mobile e-commerce purchases because their priorities shifted. With app subscriptions the situation was the opposite – prior to 2020 the Install to Action rate was in decline but when COVID hit the world it shot up to 4% from 2.2% in 2019. The demand for app subscriptions went through the roof for apps like Zoom, Peloton, Netflix, people had to begin working remotely, exercise at home and spent more entertaining themselves watching Netflix, Amazon Prime Video and alike.
App Install to Action Rates, year-over-year
Now, let’s see what are CPA costs for specific categories such as e-Commerce, Finance, Gaming, Social, Travel and Utility.
Mobile App Category Cost Per Action Rates
According to the Liftoff data, e-Commerce and Finance are two categories that offer app marketers the lowest Cost Per Action rates for app downloads and via app purchases. For e-Commerce an app install costs only $3 and roughly $8 to generate a purchase via e-Commerce app. For Finance category the numbers are similar, $2.3 for app install and $7.4 to get somebody make a purchase in the Finance app. For Gaming, Social and especially for Utility things aren’t that rosy, meanwhile a gaming app install costs only $1.6, to get people spend money inside the game you gotta pour about $69. For a Utility app it’s even worse – to generate a purchase inside the Utility app companies spend about $86 and to find a subscriber it costs them $113.
Cost Per Action Rates, by category
Next up is the benchmark that assess how difficult it is to convert an app install into a specific action, such as – register, purchase or subscription.
Mobile App Category Install to Action Rates
The app store structure is built on a set of categories for reason – every category meets specific needs of app users. Obviously, people value and prioritize their needs differently, hence the difference for on how many occasions they take action in the apps they download. The Install to Action rate for app store categories clearly illustrates this difference with numbers. Let’s look first at the Social category, because it features the most dramatic difference between this ratio for the actions we analyze – register, purchase and subscription. Hands down the Social category registrations enjoy the highest conversion rate – 84% of app users who download social networking apps open an account.
It is absolutely make sense – we people are social beings and if we download an app for social networking our intent is always clear to actually start using the app. Now that is not the case when it comes to making in-app purchases inside social networking apps and paying for a subscription. It can’t be helped – because historically apps like Twitter, Facebook, Instagram are being free to use – and to this day for the most they are – people have a hard time to accept the need to pay for any social networking apps functionality. Hence the numbers – only 1.1% of app users make in-app purchases and 2.5% pay for subscriptions for social networking apps.
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For other app categories Install to Action rates are the following, 31.5% of app users register in e-Commerce apps and about 37% make purchases via these apps, around 51% register in Finance apps and 31% make transactions. When it comes to gaming, only 12% actually register in games and only 2.3% pay any features in games, the last mobile games users cohort is known as Mobile Game Whales, for the record – it has nothing to do with actual whales, just a metaphor.
App Install to Action Rates, by category
Any mobile advertising rates analysis wouldn’t be complete without by platform analysis, so the next up is the Purchase Cost on Android versus iOS.
Platforms Purchase Costs
Across the board, it costs more for app marketers to generate a purchase on iOS than on the Android platform. For e-Commerce an Android purchase generation costs $6.6 against $12 on iOS, for Finance apps it’s only $4.3 on the Android side against $31 for iOS, $55 for a purchase inside an Android game against $91 inside an iOS game and finally $84 for a purchase inside an Android social app against $102 for its iOS counterpart.
There is one caveat for these numbers – historically and it doesn’t look like it’s going to change anytime soon, iPhone and iPad users are wealthier and spend more money via their mobile devices, the Android platform is being known for having more reach, being more popular, especially in Latin America and Africa.
Purchase Cost, by platform
Moving alone from platforms to geographies, let’s see how much does it cost to generate a purchase inside a mobile app in APAC (stands for Asia and Pacific countries), EMEA (stands for Europe, Middle East and Africa) LATAM (stands for Latin American Countries) and NAR (stands for North American Region).
Regional Cost Per Action Rates
Among four major world regions, Latin America stands out as the place where app marketers see the lowest rates for both purchases and subscriptions, specifically the purchase CPA – $5.3 and subscription CPA – $18.6. But as with any local price tag assessment, one would need always factor in how these figures correlate with a local economy, meaning $5 in countries like Argentina, Brasil has a different value as opposed to North America, where a single purchase costs app marketers almost $75 (the highest figure for all regions) and a subscription is slightly less – $64.
Cost Per Action Rates, by region
Moving from regions to specific countries, we see the following picture. On the high end is Japan with the purchase CPA rate almost $186 and subscription CPA equal to $98. Brazil is on the opposite side with the purchase CPA rate slightly above $6 and subscription CPA rate is about $13. For the United States the rates are somewhat in the middle, it takes app marketers about $75 to generate a purchase on mobile and $63 to acquire a new subscriber for an app.
Cost Per Action Rates, by country
After giving an extensive look at the CPA rates for mobile ad networks, let’s turn to how much does it cost to generate an action on the Facebook Ads and Google Ads platforms.
Facebook Ads Cost Per Action
For the last decade, Facebook Ads platform has been the leading place for digital marketers around the world to drive sales for their products and services. To this day, thanks to its best in class targeting capabilities FB Ads allows app marketers to connect their apps with app users from all walks of life. Let’s see how much it costs them to generate actions inside apps in different business verticals.
Among major verticals analyzed by WordStream online advertising platform this year, Education enjoys the cheapest CPA rate – $8 per action, on the other end of the pricing spectrum is Technology with $55 per action. Other verticals with high rates are Auto – $44 per action and Finance – $41 per action. The middle ground belongs to Legal – $29 per action, Beauty – $26 per action, B2B – $24 per action and Retail – $22.
Average Cost Per Action, by industry
And finally it’s time to give Google Ads due credit, as being the second part of the mobile advertising duopoly.
Google Ads Cost Per Action
There are two ways how marketers can drive actions on the Google Ads platform – either via Paid Search or Display. Cost Per Action for both for multiple business verticals look the following. No surprise that the Legal vertical features the highest rate – it costs $135 to generate a single action via search and $61 via display, the numbers align nicely with average hourly rates for legal services around the world. Cost Per Action rates for other categories are almost all within the same range from $30 t0 $70.
Average Cost Per Action, by industry
By now the initial focus of app marketers on the CPI (Cost-Per-Install) metric is shifted toward CPA (Cost-Per-Action). To make any app business sustainable it is paramount to be able to calculate its ROI and to do that you need to know your costs of acquiring such actions as purchases and subscriptions. CPA rates for both purchase and subscription vary by industry and platform and the 2020 global pandemic has significantly changed the rates thanks to its huge influence on the global economy.