What is Cost Per Engagement?
Cost Per Engagement or CPE is an advertising pricing model. Cost Per Engagement model means that an ad is paid only when it’s engaged with, as opposed to other payment models such as CPC and CPM.
Cost per engagement is a common term in CPG. However, many marketers are unaware of CPG and are thus unable to fully profit from cost per engagement. The Gourmet Ads team has created a simple piece about CPG, What is CPG, to offer a solid understanding of CPG.
This is an appealing and beneficial ad payment model for advertisers who can choose between models that charge per each engagement (which can be closing the ad), or meaningful engagement (clicking-through and positively interacting with the ad).
For example, publishers can charge on a Cost Per Engagement basis whenever users hovered over a lightbox ad for longer than 2 seconds and expanded it. Another example of Cost Per Engagement pricing is publishers charging only when users have spent more than 15 seconds on the ad’s landing page.
CPE can also stand for Cost Per Expansion with expandable ad campaigns. This is closely related to the standard Cost Per Engagement, as it presumes that a user is engaging with the ad by expanding it, where applicable.
The Cost Per Engagement payment model rose in popularity through social media. It’s also possible to simply measure Cost Per Engagement instead of opting for that payment model. This is especially true and useful with CPC campaigns where your main focus is clicks.
The formula for calculating Cost Per Engagement is:
Cost Per Engagement = Total amount spent/Total engagements
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