So how does this work for paid apps? If you sell your app for 2.99 and you're paying 1.20 an install, aren't you making money? I know I'm missing something here because otherwise anyone could pay for infinite installs and make infinite money.
The idea is for 100k they'll put youre add in front of 800k users, and 80k will install if its free. but only 1k will install if it costs money. numbers totally made up.
The ones that do charge cpi, if your conversion rate isn't high enough that theyre profiting[since they're paying per impression or could show an ad more likely to convert], theyll just kill your app and not advertise it.
But in the end, it's just a mad rush to be on the charts to get organics. Without that, it's kind of difficult with apps to make your money back from ad spending. It's not like you are advertising a hotel room where one purchase through your adwords can net you a 100+ dollars (plus all the room service that person will consume!). In apps, typically, you lose money buying users (if you were only counting ad-spend vs revenue from those users that installed).
Maybe Apple will implement something similar to Steam, where this is still possible.