Cost models refer to the methods used to calculate the costs associated with mobile marketing campaigns. This includes Media costs, Creative costs, Campaign management costs, Infrastructure costs, Customer acquisition costs etc.
Types of Cost Models in Mobile Marketing
1. CPA – Cost Per Acquisition
CPA or cost per acquisition is one of the most popular mobile advertising cost models. It refers to how much a brand spends to acquire a new customer.
This helps brands track the effectiveness of different mobile ad campaigns and optimize towards channels that provide conversions at the lowest cost.
For example, if an ad campaign on Facebook provides conversions at $50 CPA and one on Instagram at $30, the Instagram one is more cost-efficient.
2. CPI – Cost Per Install
CPI or cost per install is relevant for brands using mobile apps as part of their strategy. It refers to the cost incurred to get a user to install the app.
This helps brands determine the right ad platforms and targeting to get the maximum number of installs for their budget.
For example, targeting Android users on Google Ads may provide lower CPI than iPhone users on Facebook. Tracking CPI helps optimize app install campaigns.
3. CPM – Cost Per Thousand Impressions
CPM or cost per thousand impressions is used to determine the cost-effectiveness of brand awareness and engagement in mobile ad campaigns.
It refers to the cost of showing the ad to 1000 viewers. A lower CPM indicates a higher reach for the brand.
Comparing CPM across channels and ad formats helps identify the optimal mobile advertising avenues for brand visibility.
4. CPC – Cost Per Click
CPC or cost per click measures how much a brand pays whenever a user clicks on their mobile ad. This model is optimized for performance marketing and is useful for driving site traffic, app installs, lead generation etc.
PPC ads on Google, Facebook, etc use CPC bidding where brands bid for what they are willing to pay per click. Tracking CPC helps optimize bids and targets.
5. CPV – Cost Per View
CPV or cost per view measures the cost incurred by a brand when a user views their video ad for a certain duration or to completion.
It is useful for video marketing campaigns on YouTube, social media, and other platforms.
CPV helps optimize video ad spending to get maximum views and engagement within budget.
6. ROI – Return on Investment
Measuring ROI or return on investment is crucial for determining the overall profitability of mobile marketing campaigns.
It is calculated by comparing the revenue or conversions generated to the total cost. Brands should analyze ROI across channels, campaigns, creatives, and more to identify the best-performing mobile marketing avenues that provide positive ROI.
Leveraging Mobile Cost Models to Boost Performance
The various mobile marketing cost models provide powerful data points for brands to track, analyze and optimize their mobile strategy. Here are some ways brands can leverage cost models to improve marketing performance:
- Set targets – Brands can use cost metrics like CPA, CPI, and CPM to set specific cost targets for their mobile campaigns. The targets help streamline decision-making.
- Compare across channels/platforms – Analyzing the cost metrics across different channels like Facebook, Adwords, Twitter, etc helps identify the best-performing platforms to focus on.
- Benchmark metrics – Maintaining benchmarks for cost metrics based on past performance and industry standards helps brands evaluate campaign efficiency.
- Attribution modeling – Attribute conversion and sales data back to marketing touchpoints using attribution to understand the true return from each platform.
- Experiment and iterate – Brands should regularly experiment by tweaking targeting, ad formats, creatives, etc, and track cost metrics to iterate and optimize mobile marketing.
- Calculate ROI – Cost metrics become more useful when tied back to revenue data to analyze ROI across funnels, campaigns, and platforms.
- Segment audience – Granular analysis of cost metrics by audience segments, geographies, demographics, devices, etc provides optimization opportunities.
- Optimize budgets – Cost data enables brands to adjust budgets to higher-performing platforms and the most efficient campaigns.
Optimizing Mobile Marketing With Cost Metrics
To develop an optimal mobile marketing strategy, brands need to continuously track cost metrics and use them to make decisions.
Here are some tips:
- A/B test creatives and messaging using cost metrics like CTR and CPM to refine ad effectiveness.
- Use CPI data to experiment with different targeting options and placements for install campaigns.
- Improve attribution modeling to identify platforms driving conversions vs just impressions.
- Analyze cost metrics by device types to optimize for platforms preferred by target users.
- Review metrics frequently and kill off campaigns not meeting cost targets quickly.
- Develop dashboards and reports for easy access to cost data by platforms, campaigns etc.
- Build in-house platform expertise by analyzing metric trends and patterns.
- Utilize ad testing and analytics tools to get granular visibility into cost performance.
- Keep optimizing for lower CPA/CPI and higher ROI over time as benchmarks improve.
- Tie cost metrics to brand KPIs for a holistic view of marketing effectiveness.
Continuous optimization using cost models is key for success with mobile marketing. By leveraging the right metrics, brands can maximize their return from mobile and make it a dominant driver for business growth.
Q1: Which pricing model is used for mobile ads?
A1. CPC and CPM are the most common pricing models used for mobile ads.
Q2: What is the cost model in marketing?
A2. Cost models refer to the pricing structure and metrics used to determine ad costs in marketing.
Q3: What is the cost model in digital marketing?
A3. Cost models help set and analyze the costs of digital marketing campaigns based on actions, clicks, or impressions.
Q4: What are the different cost models?
A4. Common cost models are CPC, CPM, CPI, CPA, CPV, CPO, CPL, etc.
Q5: What is the most used mobile marketing approach?
A5. Performance marketing with CPI and CPA models is most used in mobile.