As consumers change the way they interact with brands, so do the advertising strategies that market those brands. The most common model of advertising is still Cost Per Mille (CPM), in which the advertiser pays the publisher per every thousand impressions (viewings) the advertisement gets. Unfortunately, this model is becoming outdated. We’re bombarded with thousands of advertisements and brand exposures every day, all competing for our attention. With that said, the average person actively interacts with only 12 of those ads.
What is Cost Per Engagement Advertising?
Cost Per Engagement (CPE) is a combination between Cost Per Acquisition (CPA) and Cost Per Click (CPC) models of advertising. In CPA, the advertiser only pays the publisher when their ad leads to a sale (or acquisition). CPC works by paying per click on the advertisement. CPE acts as a hybrid between these two models, in which the advertiser pays per engagement with the advertisement.
Engagement refers to any active interaction with an ad. What counts as an interaction varies from advert to advert, and can be anything from pressing the pause button on an advertisement video to typing out a word.
Why use Cost Per Engagement Advertising?
- CPE motivates users to interact with your brand instead of merely passively glancing at it. Whether the interaction is answering a question or sharing a post on social media, you can be sure that they’ve recognized and connected with your advertisement on some level.
- CPE delivers accountability that other models cannot give. It guarantees you (the advertiser) that the user has interacted and connected with your brand, with no ambiguity.
- CPE ensures that you get your money’s worth. By paying per engagement, you can be sure that you’re getting value for publishing your ad. If users aren’t interacting, you don’t pay.
In essence, the publisher is offering something valuable to the user in return for their interaction with your advertisement. Hulu, for example, offers users the ability to watch their favourite television series for free in exchange for watching 90 seconds of commercials. This is a particularly attractive deal when considering broadcast networks show an average of 13 and a half minutes of ads per hour.
CPE advertising can be highly effective, especially when paired with audience targeting. By finding the right publisher and efficiently targeting your audience, you can reach users in an innovative way that counteracts the selective attention of consumers.