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Cost Per Engagement

What is Cost Per Engagement

Cost Per Engagement (CPE) is an advertising pricing model where advertisers pay for a specific model when users perform predefined actions within an app. This approach ventures beyond the pay-per-click model and focuses on user behavior that aligns with advertisers' goals.

The users' actions can encompass various activities like filling out forms, completing registrations, and reaching specific game levels to make purchases. CPE campaigns manifest as user acquisition strategies meant to entice consumers. Here, users can leverage rewards, offering users virtual incentives, premium content, and discounts in exchange for engagement."

As users opt to perform these in-app actions, Cost Per Engagement campaigns drive conversions and deliver impressive Returns on Ad Spend (ROAS).

Cost Per Engagement campaigns typically use rewards to incentivize user actions and maximize ad budget. The CPE model is the perfect option for low-friction engagements such as completing game levels or registering for in-app engagement.

How to calculate CPE

Cost Per Engagement can be calculated with a simple formula which is as follows.

CPE = Total Advertising Cost/ Total Engagements

Let’s illustrate this better with an example.

Total Advertising Cost = $40,000

Total number of Engagements = 4,000

CPE = $10

Importance of CPE

Cost Per Engagement has several noteworthy advantages, as follows.

Enhanced flexibility and creativity: The CPE model aligns its campaigns with evolving market trends, helping advertisers stay responsive and dynamic. In doing so, it fosters creativity.
Increased engagement: Cost Per Engagement models amplify engagement by raising brand awareness, driving users closer to campaigns.
Improved budgeting: The CPE models ensure cost-effective budget allocation as they charge only for ads with proven and relevant interactions.
Prioritizes user choice: In the Cost Per Engagement model, users opt to perform specific and incentivized in-app actions. This ensures an unintrusive experience for users.

CPE vs Other Ad Campaign Models

Cost Per Engagement: In this campaign, advertisers pay for specific interactions post-installation.
Cost Per Action: Under this model, advertisers pay for several specific actions such as app installs. This campaign is typically connected to purchase events.
Cost Per Click: Advertisers pay for each click under this campaign.
Cost Per Install: Under this campaign, advertisers pay for every installation done by a user.

Related Terms

App retention rate

App retention rate is the percentage of users who use an app over a specific period. It is one of the important app metrics and can be calculated for 1 month, 7 days, or even 1 day after the users install the app. Retention rate also helps app developers to track how long the users continue using the app and how many users have discontinued it.

User acquisition

Advertisers use the process of user acquisition to create and deploy advertising campaigns that generate app installs.

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