Things You Need To Know About Cost Per Engagement (CPE)

CPC, CPA, CPM – We’re pretty sure by now all of you are exceptionally acquainted with these existing models, especially if you’re in the online media biz. But what about CPE? Despite being only introduced in 2005, CPE has been progressively gaining favorability among advertisers and publishers alike due to its unique capability of measuring quality engagements of a user. If you’re still uncertain about this model and its features, don’t fret, because we’re here to shed light on this nifty model.

What exactly is CPE?

It stands for Cost Per Engagement. This is a paying model that focuses on user engagement rather than clicks or impressions. So basically, advertisers only pay when users engage with their ad.

What challenges exist in the market that have spurred the need for innovative payment metrics such as CPE?

Well, according to comScore and Starcom USA, 84% of people NEVER click on an ad. CPM models don’t reflect the intricate details of target audiences. For that reason, advertisers need to constantly monitor their traffic sources, usage levels and ad consumption, to see how the campaigns are performing.

Additionally, CPC/CPA have problems of their own too:

• Clicks on display ads are a misleading metric, and one should only use clicks for
  direct response ad campaigns (or search).
• Clicks do not reveal information on brand building. Clicks don’t measure all of a
  campaign’s sales impact nor the impact of ads.
• Click-through rates continue to decrease as more content is created and more advertising
  inventory is available

All of the above has resulted in the increased importance of engagement as a key metric to measure the effectiveness of advertising.

What is considered as an engagement?

It is when a user experiences the features of the ad format though the following actions: roll-over to get more info, start a flash game, send a viral message etc.

So what if the user engages more than once with the features in an ad, will it be considered as 2 or more engagements?

Irrespective of the number of times the user engages on a particular ad, we will only count one engagement per user session (on a page) and charge accordingly. Also, the ads will be frequency-capped, to ensure that the user does not see it repeatedly, leading to annoyance.

Why does the CPE based ad, upon rollover, have a countdown page before the ad starts playing?

The main reason for this is to avoid accidental roll-overs, which results in false engagement for CPE based ads on the network. Of course, the user has the option of clicking on it to skip the countdown altogether!

What additional metrics are available for the engagement based model?

Here are some of the additional metrics used to measure CPE: average ad display seconds, time spent on each tab, total interactions, video play rate, video completion rate etc.

How is the engagement rate calculated?

The engagement rate is calculated as follows:

Engagement Rate = Engagements/impressions X 100

Additionally, the general industry benchmark for engagement is 2%

So how will this CPE model benefit my campaign?

It enables brands to achieve the following: 

a)      Awareness

Ads are placed at prominent locations of the page to attract the user’s attention. Most ads urge users to mouse-over/engage with the ad to get more info.

b)      Time-earned

Actions carried out by users are becoming one of the key ways to measure the success of an ad campaign and to determine the best way to capture maximum ROI as opposed to using passive metrics for e.g. how long a user viewed an ad, what the user clicked on the ad, how he interacted with the ad, etc. as opposed to only measuring whether someone clicked the ad.

c)      Beyond the Click

Advertisers only need to pay when a consumer engages with the content related to their brand thus providing a risk free means to delivering highly targeted rich media content.

d)      Brand Favorability

Users who interact with the ad already express initial interest in the brand thus increasing the chances of becoming potential sales leads. This guarantees interaction by genuine consumers.

e)      Ads = Apps

Social Sharing tools can be integrated onto the ad unit, allowing users to help spread the content of the ad, if they find it interesting. Additionally, apps like maps, locator, polls, etc can also be attached onto the ad to maximize engagement.

f)       ROI

Ads with a high engagement rate are more likely to have a high conversion rate as compared to ads with a low engagement rate.

What Innity ad formats are currently based on the CPE model?

Right now, the CPE ad formats are the Lightbox, Engagement Bar, Video Balloon, and In-Text Ad. We will be adding more ad formats that will be measured using this payment model overtime.

If you’d like to know more about our products and how we can help your business grow, write to us at sales@innity.com.