What is Cost Per Install (CPI)? A Key Metric for Mobile App Growth

As a mobile marketer in ecommerce or DTC, understanding your app acquisition costs is crucial for sustainable growth.

Cost Per Install (CPI) is one of the most important metrics to track when growing your mobile app user base. Keep reading and we'll explain all you need to know about this key metric.

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What exactly is Cost Per Install?

Cost Per Install (CPI) is a key mobile marketing metric that measures how much you spend to acquire each new app install. It's the average cost to get one user to download and install your mobile app through paid advertising.

This metric is especially critical for ecommerce and DTC brands with mobile apps because it directly ties marketing spend to user growth.

The less you spend to get users, the more profit you get from your app.

In a world where app users tend to be high-value customers, understanding and optimizing CPI is vital for launching apps that contribute real business results.

Want to know how much revenue your ecommerce app could add for your business? Our free Ecommerce App Revenue Calculator gives you an accurate estimate of what you stand to gain.

How do you calculate CPI?

Calculating CPI is straightforward. The formula is:

CPI = Total Ad Spend / Number of App Installs

For example, if you invest $10,000 in mobile ads and gain 3,500 new installs, your CPI is about $2.85 per install. This simple ratio tells you the average price of each acquired user.

In practice, marketers often calculate effective CPI (eCPI) after a campaign to evaluate performance. If you run multiple campaigns, you might compare their CPIs to see which channel or creative yielded cheaper installs.

A low CPI means you're getting installs efficiently, whereas a high CPI means each user is expensive to acquire.

Consider this practical example: Imagine a DTC skincare brand runs a Facebook app install campaign with a $50,000 budget. If that campaign brings in 20,000 installs, the CPI is $2.50.

If another campaign on TikTok costs $30,000 and drives 15,000 installs, its CPI is $2.00. The marketing team would note that TikTok delivered a lower cost per install in this case and could allocate more budget there to scale user acquisition.

Why does CPI matter for ecommerce and DTC mobile apps?

For ecommerce and DTC brands, CPI isn't just a vanity metric – it's a window into customer acquisition efficiency.

Mobile app users are often highly valuable: they engage frequently, have higher conversion rates, and drive repeat business. If your brand's app is a major sales channel, then scaling app installs can directly boost revenue.

But you need to acquire those users at a sustainable cost. This is where CPI guides your strategy.

Tracking CPI helps you ensure your user acquisition cost is in line with the revenue each user generates. It complements metrics like Average Revenue Per User (ARPU) and Lifetime Value (LTV) to ensure that revenue from app users exceeds the cost to acquire them.

For example, if your average customer spends $50 on your app over time (LTV) and your CPI is $5, you're in good shape; but if CPI creeps up to $50, you're paying as much as you earn, which is unsustainable.

CPI is also a diagnostic metric for campaign effectiveness. A relatively low CPI can indicate that your ads are reaching the right audience with the right message. A spike in CPI, on the other hand, might signal ad inefficiency or saturation of your audience.

Lastly, focusing on CPI can help drive rapid growth and visibility. A strong app install campaign can create buzz and propel your app up the app store rankings, leading to more organic downloads. This was important for many DTC brands launching apps – an early burst of installs improves app store visibility, which in turn attracts even more users without extra ad spend.

Learn more: Why LTV to CAC Ratio Is One Of The Most Important Metrics for Ecommerce Brands

What are the key benchmarks and related metrics for CPI?

When evaluating CPI, it's helpful to know industry benchmarks and related metrics.

What is a "good" CPI?

The answer varies by industry, platform, and region.

As of 2024, the average CPI for shopping/ecommerce apps tends to fall in the few-dollar range in mature markets.

For instance, North America's average CPI for mobile apps is around $5 (reflecting higher competition and user value), whereas in regions like Latin America it can be well under $1.

Globally, Android app installs often cost less than iOS installs – one analysis showed Android's average CPI around $1.2 versus about $3.6 for iOS apps.

These benchmarks underscore that what's "normal" for one market may be high or low for another.

Related metrics

Other key metrics to track alongside CPI include:

Install Conversion Rate: The percentage of people who see your app ad or app store page who actually install. A well-optimized App Store page might convert ~3-5% of viewers into installers. Improving this conversion means more installs for the same spend, effectively lowering CPI.

Post-Install Conversion (Activation Rate): In ecommerce, a crucial metric is how many of those installs become purchasers. Industry data shows that only about 5-10% of new installers make a purchase. This conversion to first purchase is vital – if it's low, even a cheap CPI won't save your ROI.

Retention & Engagement: How many of your acquired app users stick around? Many brands monitor metrics like Day 7 or Day 30 retention rate for installs from each channel. CPI must be evaluated in context of user quality.

Cost per Purchase (CPP) or CAC: Some teams calculate a downstream metric like cost per first purchase or customer acquisition cost for app users. For instance, if your CPI is $4 and 10% of installers buy something, the cost per purchaser is $40.

In summary, know your baseline CPI for your sector and region, and keep an eye on how those installs translate into engagement and revenue.

The key is tracking a holistic set of metrics so you don't optimize for cheap installs at the expense of business outcomes.

Strategies to optimize CPI

Tracking and improving CPI requires a strategic, data-driven approach. Here's how seasoned marketing teams approach CPI optimization:

Set clear CPI targets aligned with ROI

Determine the maximum CPI you can afford while still making a profit per user.

For example, if an average app customer is worth $100 to you in lifetime revenue, you might set a target CPI of $10 or $20 to ensure a healthy margin.

Channel and campaign selection

Different advertising channels yield different CPIs. Social platforms, search ads, display networks, and influencer partnerships can all drive installs – but their cost efficiency varies widely.

Many businesses use a mix: broad reach channels for volume and niche channels for cost-efficient pockets of users.

Precise audience targeting

To lower CPI, focus your spend on audiences most likely to install (and eventually purchase).

Use lookalike audiences based on your best customers, retarget website visitors who haven't downloaded the app, and tailor demographics to your buyer persona.

Companies can significantly reduce CPI by honing in on high-intent users.

Compelling creatives and app store optimization

Ads need to grab attention and clearly sell the value of your app.

Test different ad creatives – videos, images, copy – and see which drives more installs per impression.

App Store Optimization (ASO) is another crucial piece: ensure your app store pages have high-converting visuals, clear messaging, and strong social proof.

Leverage social proof and urgency

Highlighting positive reviews, user testimonials, or download counts in your ad or app store listing can nudge more users to install.

Similarly, creating a sense of urgency (e.g., "Limited-time 20% off first order in-app") can improve conversion rates, effectively reducing CPI by increasing the install rate.

Retarget and re-engage

Don't forget about those who showed interest but didn't install, or those who installed but haven't made a purchase.

Running retargeting campaigns can be a cost-effective way to boost installs and conversions.

Monitor and adjust bids and budgets

Keep an eye on CPI in each channel and campaign.

If one campaign's CPI starts creeping up, adjust your bids. If another channel is delivering CPI below your target and users are high quality, consider scaling up budget there.

The goal is to find that sweet spot where you're getting the maximum number of high-value users for the lowest cost.

MobiLoud is more than just a website to app tool. We're a full partner for your mobile app. We even help you craft a launch and promotional strategy to get app users, to ensure your app delivers actual results. Want to know more? Book a consultation now.

What can we learn from real-world DTC brand examples?

Real-world examples illustrate how CPI drives growth for DTC brands:

Aggressive user acquisition by new market entrants

In recent years, fast-growing shopping apps like Shein and Temu have exploded in user numbers by aggressively driving app installs.

They poured budget into mobile ads and referral incentives to acquire users at scale, accepting a higher CPI because they know a percentage will become big spenders.

Their example shows that if the LTV is there, even a substantial CPI investment can be profitable.

Boosting loyalty through app-only perks

Many DTC and retail brands use their app to foster loyalty.

Consider a brand like Sephora – they've promoted their app by integrating their loyalty program and offering app-exclusive deals and content.

While they might incur a cost per install in ads or promotions, those users typically have higher lifetime value due to repeat engagement.

Referral-driven growth campaigns

Some DTC brands have turned their customers into marketers by using incentivized referrals to drive app installs.

For instance, fashion resale platform Poshmark ran a "give $10, get $10" referral program. Many brands have used referral credits or friend-invite bonuses to successfully lower their effective CPI.

Looking ahead: Mobile acquisition trends to watch

The landscape of app user acquisition and CPI is evolving.

Future CPI optimization will demand that app marketers be more data-savvy and privacy-conscious in how they drive app growth.

CPI will remain a north-star metric for user acquisition, but the tactics to optimize it will evolve with technology and policy changes.

As you build your mobile growth strategy, remember that CPI is just one piece of the puzzle – it needs to be paired with user quality metrics and long-term ROI analysis to drive truly sustainable growth.