With the cost per engagement (CPE) model, marketers only pay for certain user behaviors that show active engagement with an app. Marketers can use the CPE model to budget their financial resources wisely and ensure that their ads are producing tangible and profitable user behaviors. It is a low-risk tactic to use as the CPE model produces beneficial results of some sort for marketers without having to incur unnecessary losses.
When using the CPE model, “engagement” can be referred to as any user action that is desired by marketers. For example, on e-commerce apps, adding items to the cart can count as engagement, while commenting and sharing a post is a form of engagement on social media platforms. On gaming apps, it is user actions like in-app purchases, watching in-app video ads, or completing certain levels.
In the mobile marketing world, the CPE model comes into play during post-installation events. Once users install an app and enter the in-app engagement process, the CPE model allows marketers to determine which events are gaining the highest traction, and for the ones that don’t, they simply don’t have to pay.
CPE campaigns also come in the form of a rewarded model, which is most beneficial for incentivizing user action and bringing users further down the funnel. In rewarded CPE campaigns, users are provided with a reward valuable enough to increase their in-app engagement. This particular method has been proven to work best in gaming apps, as gamers can most easily be provided with a tangible source of reward, such as digital goods or in-game currency.
The formula for calculating cost per engagement (CPE) is as follows:
CPE = (Total advertising cost)/(Total measured engagement)
For instance, let’s say that you set up a CPE campaign that measures in-app purchases, which cost a total of $5,000. If you received a total number of 500 engagements, your CPE then comes down to $10 per engagement.
With rewarded CPE campaigns, users are incentivized to participate in in-app events as they are also rewarded with something valuable. Furthermore, CPE ads or events are typically put upfront in an app or online platform, which indicates that users who are interested won’t skip over the ad and interact with it, guaranteeing engagement and potential long-term user retention.
As mentioned above, using the CPE model prevents marketers from spending money on unnecessary campaigns that do not drive any engagement. Because marketers only have to pay for meaningful user behaviors, marketers can improve their budgeting while also generating revenue with increased user retention and engagement.
CPE campaigns are a post-install, opt-in form of engagement where users voluntarily participate in interactions. Therefore, they have the freedom of choosing which events they would like to engage with, which is beneficial for both users and marketers in determining the most effective and interesting ads.