Cost Per Engagement (CPE) – Really Useful Or Junky?

So, the latest buzzword in online advertising is CPE or Cost Per Engagement. In CPE, the advertiser pays only when their Rich Media Ad is engaged by the user. And yes, CPE only works for Rich Media Ads. Static text-link or banner ads do not qualify because users cannot engage or interact with them.

But will advertisers really want to pay for ad engagement? The conventional CPM (Cost Per Thousand Impressions) and CPC (Cost Per Click) models clearly target specific types of advertisers. Big brands with big budgets – Coca Cola, Volkswagen and Gucci – often adopt CPM because they want maximum exposure. Cost to them is hardly a consideration. That’s why we see big brands advertising on premium publishers with high CPM. Their main purpose is to get their brand out to as many viewers as possible.

On the other hand, CPC works very well with respond- or ROI-focused advertisers. They will only pay if a user clicks on their ad. CPC allows a cost-conscious advertiser to better control his ad campaign budget. Ads on the CPC model are usually placed in “long tail” publishers. Google AdSense/AdWords is a very successful “pay per click” network popular among these types of advertisers and publishers.

Then, what about the CPE model? Big brands with their Rich Media Ads on premium publishers would certainly like to know how effectively users engage with their ads. But do they really care about engagement cost if their goal is to expose their product to a large consumer base? Then we have the small businesses and individuals with specific products or services to sell. These guys are only concerned about results. Period. And CPC serves this objective very well. Like the big brands, they would be interested in how their ads are being engaged; however, paying for engagement is futile if the ad doesn’t generate any clicks.

Ad engagement by itself is an undeniably valuable measurement because engagement equals increased brand recall, awareness, favorability and purchase intent. But will advertisers prefer the “pay per engagement” (CPE) mode over the well-established CPM or CPC? Will CPE take off or will it become one of the flotsam and jetsam of the online advertising world?

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