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CPE, or cost per engagement, is a metric that measures the amount that an advertiser pays for each interaction (e.g. click, video view, etc.) with their ad. This metric is important because it allows advertisers to calculate the ROI of their campaigns and determine whether or not they are achieving their desired results.
CPE is calculated by dividing the total cost of a campaign by the number of engagements. For example, if an advertiser spends $100 on a campaign that generates 1000 engagements, their CPE would be $0.10.
CPE vs. CPM and CPC
CPE is often confused with CPM (cost per thousand impressions) and CPC (cost per click). However, these metrics are actually quite different. CPM measures the cost of an ad being seen by 1000 people, while CPC measures the cost of an ad being clicked on by a user. CPE, on the other hand, measures the cost of each individual engagement with an ad.
Advantages of CPE
There are a few key advantages of using CPE as a metric:
Transparency - CPE is a transparent metric that allows advertisers to see exactly how much they are paying for each interaction with their ad. This level of transparency is not always present in other metrics like CPC or CPM.
Easily calculable - CPE is also easy to calculate, which makes it simple for advertisers to track and understand. Although other metrics like CPR (cost per rating) or CPF (cost per follow) may provide more insight into the effectiveness of an ad, they can be more difficult to calculate than CPE.
CPE is action-oriented - Another advantage of CPE is that it focuses on interactions or conversions rather than impressions. This focus on action makes it easier for advertisers to track the success of their campaigns and make necessary adjustments.
Disadvantages of CPE
There are also a few disadvantages associated with using this metric:
Too narrowly focused - One disadvantage of CPE is that it can be too narrowly focused on conversions and clicks, rather than providing a broader view of customer engagement. In some cases, this narrowness of focus can lead to ads that are less effective overall.
Prone to gaming - Additionally, because CPE focuses on interactions and conversions, it can be prone to gaming by publishers who artificially inflate these numbers in order to earn more money from advertisers. Advertisers need to be aware of this possibility and take steps to ensure that they are working with reputable partners who will not engage in this type of activity.
Overall, CPE is a helpful metric for measuring the success of advertising campaigns. However, it is important to keep in mind its limitations in order to avoid potential pitfalls. By taking these factors into account, advertisers can use CPE effectively to track the progress of their campaigns and optimize their results moving forward.