Learn the main differences between mobile ad payment methods cost-per-click and cost-per-action to determine which one (or two) is right for you.
If you provide free content for mobile devices, you have most likely planned on using advertising to help monetize your efforts. With several billion dollars being expected to be spent on mobile advertising in 2012, you can expect a lot of vendors to be competing for your attention.
To take hold of these revenue opportunities, it helps to understand the difference between different payment methods; in particular, I'll talk about cost-per-click (CPC) and cost-per-action (CPA).
I recently spoke at AnDevCon III, and not only was the trade show floor packed with ad networks and ad mediator companies, but the main sponsor of the conference was an ad network. Content providers (app developers — that's you!) must choose not only a vendor, but also ad formats.
Sometimes the vendor does just one type of payment (per click or per action), but other times they mix it up. Some ad formats are exclusively one or the other. You'll have to do a little checking to see what you're getting into.
So, what's the big difference between CPC and CPA?
- CPC: More people are familiar with CPC than CPA. Users see an ad or other offer, and if they click the ad, you get a few cents. This is very similar to AdSense ads that are used on most websites; however, the revenue per click is usually much lower than for the highly targeted ads used on websites. The good news is that you're paid as soon as the user clicks — it's up to the advertiser what happens after that. This means that revenue will trickle in as users click, giving you a fairly predictable income throughout the day.
- CPA: This method only pays when a specific action (e.g., installing a different app or signing up for a credit card) is completed. The reward for completed actions can be much higher than for clicks — the advertiser has achieved a guaranteed result. Not every click will result in the required action - some users will realize they aren't actually interested, for example. Revenue varies widely from day to day, and you may see clicks but no revenue. This can be disconcerting at first.
How to choose
I use both systems. Ad revenue has plenty of ups and downs just with CPC systems, but CPA networks can bounce around enough to test your stomach. On some days, I can see a $4+ eCPM from CPA networks, and on others no revenue at all. I combine the two systems depending on what works best for each app and to smooth out income levels.
You may want to start with CPC networks to make things simpler and easier to track in the beginning. Good luck!