What does CPE mean?
CPE stands for Cost Per Engagement. The CPE price is the price that gets paid when an ad is engaged with. An engagement can be anything from pausing or muting a video to submitting contact details. So depending on what the ad is about, these campaigns can pay either very poorly or very well.
For example, imagine you build an ad which can show three different cleaning products when swiped by a user, and then book an ad campaign with a $0.20 CPE for 100,000 engagements. This means that every swipe or click a user makes costs you $0.20 and in total you will owe $20,000 for the campaign.
CPE means Cost Per Engagement and is a strange combination of a CPC and CPA campaign (and not in fact a mega-romantic subsection of advertising). An engagement is a catch-all term which means any interaction with an ad, and therefore is a strange thing to be paying out on. The theory is that the biggest hurdle for advertisers is to get users to notice their ads in the first place, so if they are clicking on ads and taking any action at all, that is a positive.
Some advertisers are very careful with this sort of campaign, and will only pay for engagements with some sort of meaning (like playing a video). Others will pay for all engagements including pausing, muting or closing an ad.
CPE can also stand for Cost Per Expansion (on expandable ad campaigns), but this is really just a subset of Cost Per Engagement, as the CPE price is paid out on user expanding an ad in this case, which is a type of engagement.
Cost Per Engagement Formula
The CPE equation is:
Click to enlarge
Cost Per Engagement = Amount Spent / Engagements
Cost Per Engagement can mean too many things to many people, so there isn’t really enough data that is comparable to average out. It’s usually not much however. According to Quora it can be about $2, and according to Reddit, you can pay around $0.01. Both of these answers are problematic however as it depends on what engagements you are paying for.
As is always the case, you should test to see what works for you. Going for the cheapest engagements you can find is almost certainly not the answer though. If you pay for cheap engagements, you’re probably going to get them from bad leads. And that is ultimately what engagements are about – getting leads to start to be interested in you.
Measuring Cost Per Engagement has become more popular due to the rise of social media. The important thing to note is that you are measuring cost per engagement rather than paying it. Gaining engagements is now often seen as a side-effect rather than a goal.
If you are paying on a CPC basis, you may see a column saying you have a CPE which is lower than your CPC. This is because all clicks count as engagements, but engagements aren’t necessarily clicks. Your Cost Per Engagement will always be equal or lower than your Cost Per Click because of this.
For example if a user clicked the like button under your ad, they will have created an engagement. It’s probable that a user who liked your ad on social media, will then also click on it. This creates two engagements but only one click. As you only pay for the click, in this case your CPE will be half as much as the CPC.
|Total Cost||Clicks||Cost Per Click||Engagements (inc. Clicks)||Cost Per Engagement|
|Example Ad 1||$2.50||1||$2.50||2||$1.25|
|Example Ad 2||$25.00||10||$2.50||25||$1.00|
Due to this, it can look tempting to try CPE advertising instead of CPC. However if what you really want is the click, then paying on a Cost Per Engagement basis may mean you end up paying for lots people pause your ad instead!
It’s best to think of it this way:
- With a CPE campaign you have no control over how many clicks you get.
- With a CPC campaign, other engagements with your ad come for free!
Note: If the only engagement you are tracking on a CPE campaign is clicks, then you are actually running a CPC campaign.
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Author: Justin Driskill
Justin is the founder of The Online Advertising Guide and a freelance Digital Projects Manager.