Cost Per Engagement (CPE) is an advertising model where advertisers pay for specific user actions within an app. This model is essential for driving targeted and profitable behaviors, ranging from completing a registration to making in-app purchases. CPE campaigns, often reward-focused, incentivize users to engage in desired activities, leading to high conversion rates and a greater return on ad spend (ROAS).
What Qualifies as an Engagement?
Engagement in mobile advertising is any user interaction within the app post-download. This includes actions like signing up, reaching a certain level in a game, or making a booking. In broader advertising contexts, engagement can refer to interactions with content, such as comments, reactions, and shares on social media.
Cost Per Engagement Calculating Formula
Cost Per Engagement = Total Ad Spend ÷ Total Engagements
For example, if an advertiser spends $500 on an ad campaign and receives 100 engagements, the CPE would be calculated as:
CPE = $500 ÷ 100 = $5
This means that each engagement cost the advertiser $5.
How much is Ideal CPE?
The ideal CPE varies widely depending on the platform, audience, and specific engagement being measured. It can range from a few cents to hundreds of dollars. The key is understanding the potential value of a user who takes the desired action.
Advantages of Cost per Engagement (CPE)
Cost per engagement (CPE) has several advantages for advertisers:
- Targeted advertising: CPE allows advertisers to target users who are most likely to engage with their ads, increasing the effectiveness of their campaigns.
- Low risk: Since advertisers only pay for engagements, they can limit their risk and ensure that they are only paying for results.
- Cost-effective: CPE can be more cost-effective than other types of advertising since advertisers only pay for users who are engaged with their ads.
CPE in Comparison with Other Models
- CPE vs CPA (Cost per Action): Broader than CPE, covering a range of specified actions including installs.
- CPE vs CPC (Cost per Click): Advertisers pay for every click.
- CPE vs CPI (Cost per Install): Payment is made for every app installation.