An eCommerce app received 500 installs, resulting in $1,000 in revenue. What tCPI should they use to start a new Google App campaign for installs?
20
500
0.5
2
Explanation
This question tests your ability to calculate a suitable starting bid for an App campaign focused on installs. The key is to determine the historical value of each install.
Analysis of Correct Answer(s)
The correct answer is 2.
To determine a reasonable starting tCPI (target Cost Per Install), you should first calculate the average revenue generated per install. This is also known as Value per Install.
- Formula: Value per Install = Total Revenue / Total Installs
- Calculation: $1,000 (Revenue) / 500 (Installs) = $2 per install
Setting a tCPI of $2 aligns your acquisition cost with the historical revenue generated by each user. This is a common strategy to start a campaign with a break-even target, which can be adjusted later based on performance.
Analysis of Incorrect Options
- 20: This is an incorrect calculation. Bidding $20 for an install that historically generates only $2 in revenue would be highly unprofitable.
- 500: This is the total number of installs, not a cost-per-install metric.
- 0.5: This is the result of an inverted calculation (500 installs / $1,000 revenue). Bidding $0.5 might be too low to be competitive in auctions, especially when the value of an install is $2.