Cost per engagement (CPE) is a metric that measures the cost of each user engagement with an ad. Engagement is any action that a user takes with an ad, such as clicking a link, watching a video, or liking a post. CPE is often used for social media advertising, where engagements are common.
CPE is a type of performance-based advertising, where advertisers only pay for engagements, rather than for impressions or clicks. This means that advertisers can ensure that they are only paying for users who are actively engaged with their ads.
How to Calculate Cost per Engagement (CPE)
The formula for calculating cost per engagement (CPE) is:
CPE = 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.
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.