Mobile Advertising Business Models

All mobile ad networks provide users with several types of business models to run ad campaigns with. There are 5 major types – CPM, CPC, CPI, CPA and CPV.

With CPM (cost-per-mile) type, an advertiser is charged each time her or his ads are shown 1,000 times (so-called ‘a mile’). It’s the best business model for publishers, because it allows to make money every time an ad was displayed. If they have a stable predictable traffic, it allows publishers to forecast their revenue. The down side is that they may loose some extra revenue, if their app or website audience is really interested in a product or service they advertise. For that case CPC model would allow them to make more money.

With CPC (cost-per-click) model an advertiser is charged for each click made on her or his mobile ads. This model works better for advertisers, because it allows them to pay only for instances when an interest to their product or service is explicit (their ads were clicked) and, as mentioned above, in some cases may work for publishers as well. For a publisher this model always presents a certain risk of him serving lots of ad impressions for free.

CPI (cost-per-instal) model implies that advertisers are charged only when a click on their ads resulted into an actual mobile app install. It’s a specific case of a more generic CPC business model. Cost-per-install price has become one of the most important metrics for mobile app marketers to measure and keep track of, because essentially it represents a price they pay to acquire customers and hence it should be factor into ROI calculations.

CPA (cost-per-action) type is more advanced version of CPI, when an advertiser is charged for specific action (in-app sale, subscription, form submit, sign up and more) users take inside an app that is advertised on a mobile ad network. This type of a business model presents more opportunities for publishers to monetize their inventory on one hand and more options for advertisers to grow their business on the other.

And finally CPV (cost-per-view) type is applicable to mobile ad networks that provide advertisers with video ad campaigns. With this model, advertisers are charged for each instance their video mobile ad was viewed. With the current pace of a video advertising growth, this model becomes more and more popular.

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