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Apps Mobile Advertising Mobile Marketing

It's time to get engaged: Mobile's maturation and the key to your advertising success

By Cristina Constandache, chief revenue officer

April 28, 2015 | 4 min read

A few short years ago, app developers could demonstrate success to advertisers just by counting installs. Today, however, marketers also demand evidence that installed apps are driving revenues through specific user actions.

Cristina Constandache

Let’s say you have a successful localized personal transportation app. You’re still seeking installs, especially as you continue to roll out in additional cities worldwide. But you also want those installed users to make transactions on a regular basis. In the end, after all, such transactions should eventually replace installs as your primary revenue base.

That’s the sign of a maturing medium. Do established TV networks, for instance, charge advertisers based on how many homes they’re available in? No. They use audience ratings to estimate the number of actual viewers.

Guess what? Recent reports show that mobile users now spend more time using their devices than they do watching TV. It’s no secret, though, that mobile still lags well behind TV in ad revenues.

How can mobile get its rightful share of ad revenues? The answer, we believe, is found in Cost-Per-Engagement – or CPE.

In a great advantage over TV, mobile not only has the ability to stop selling based just on potential users (your installed base), but can actually set rates based on real audience figures, not estimated ones. Even better, you can charge advertisers for ads only when they lead to defined actions, such as in-app purchases and sign-up rates – all made possible by tracking user behavior in real-time after installs.

Okay, so what’s the formula for measuring CPE? Advertisers, after all, like hard numbers.

Sorry to say, but unlike other still-important metrics like CPI (cost per install), CPM (cost per impression) and CPC (cost per click), the formula for CPE varies based on each advertiser’s specific needs.

One advertiser, for example, may put a heavy emphasis on watching a video all the way through. Another may look to in-app purchases, another to social media sharing.

Yes, providing a CPE means a bit more work for publishers, who will need to focus more and more on the post-install user experience. But the results will be well worth it in the form of higher ad revenues.

Publishers can’t optimize for advertisers, though, without transparency from the latter. Advertisers must be willing to share such data as number of in-app purchases and sign-up rates.

In the end, CPE will be in everyone’s best interest, leading to higher per-user ad rates for publishers and higher payouts for advertisers.

So publishers should do whatever it takes, using whatever model works best, to acquire engaged users.

Mature markets place as much emphasis, or more, on reducing churn as they do on acquisition of new customers. In mobile, engagement is directly related to such customer retention – as well as to increased ad revenues. It's the quality, not quantity, of your users – or how they actually use your app – that’s key to your future success.

Call it a sign of maturation.

Cristina Constandache is chief revenue officer at MobPartner

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