With the Cost per Engagement calculator, advertisers can understand the monetary value of post-install events to drive profitable behaviors for them. The payout is triggered every time a user engages with an ad, which is any kind of user interaction.
The engagement can be of different types, whether it’s clicking or liking a post, or high-value actions such as when the user submits their contact details or ends up making a purchase.
How is Cost per Engagement Calculated?
The cost per engagement formula is as follows:
Cost per Engagement = Amount Spent / Measured Engagements
Amount Spent: The total amount of money spent on any marketing activity
Measured Engagements: Total number of engagements measured by the server
Engagements: Any interaction with a piece of content such as clicking, liking, sharing, signing up, etc.
Currently, CPE campaigns are quite popular in terms of reward-focused user acquisition campaigns. For example, gaming apps frequently present app users with in-game rewards, virtual discounts, access to premium content, etc.
To be incentivized with such rewards, users often have to watch a video ad, complete tutorials, etc. Plus, being an opt-in behavior, CPE campaigns have a higher conversion rate.
By understanding how to calculate CPE and implementing it as an advertising campaign model, advertisers can understand the monetary value of their marketing campaign and drive targeted and profitable behavior. It may involve completing a registration form, earning a certain level in a game, or making an online purchase.
CPE vs CPC vs CPM vs CPA
A CPE measures the cost of someone engaging with your ad (in any way) compared to a CPC which measures only the cost per click. CPA calculates the cost of acquiring a user (often the cost of purchase) and CPM is the cost per 1000 impressions. Each pricing model offers a different metric to optimize for, and all can be used to tailor campaigns slightly differently. Understanding where your costs stand in comparison to the average in your niche can be helpful.
Why Does Cost per Engagement Matter?
CPE stats are generally calculated as the total amount you spent on advertising divided by how many engagements your ads received. How does this affect you?
Imagine spending $10,000 on specific advertisements to drive more traffic to your website. With all that advertising power, you end up with around 1,000 engagements. It is possible that some of these engagements were meaningful (the user clicked through the ad) or not meaningful (a user paused or muted your video).
In any case, if you divide 10,000 by 1,000, you will get 10. Therefore, every engagement for your ads is worth $10. Is this really beneficial for your business?
Are your advertising expenses really worth it? Bringing traffic to your website doesn't always require spending $10,000 on ads. Your ad campaign may require much more or less than that amount, depending on what you want to accomplish.