What Is Cost Per Engagement Advertising?

Engagement is a major factor in gauging the success of a mobile ad campaign. User acquisition managers increasingly turn to Cost Per Engagement (CPE) to ensure user quality and maximize return on ad spend. With the right optimizations, it’s possible to drive in-app engagements at scale — just ask our partner, DHGames, who recently beat its ROAS goal by 85%. Read on to find out what makes this low-risk pricing model so effective.

 

What is Cost Per Engagement Advertising?

Cost Per Engagement advertising is a campaign model in which advertisers only pay when users complete a desired engagement (or what we call events) within the app. That means initial impressions and actions are free, but once a user reaches a specific in-app milestone, the advertiser incurs a cost. In this pricing model, advertisers ensure they’re getting something in return for their ad spend. It’s considered a low-risk way strategy: Either a user engages with the ad (mission accomplished!) or doesn’t (you don’t pay).

To incentivize user actions and maximize ad budget, CPE campaigns typically use a rewarded model. However, some ad networks and DSPs charge on an impression basis (CPM) and use machine learning to hit engagement objectives. In such cases, advertisers can set targets or ceilings for CPE, but they will still be charged for impressions, regardless of whether they result in the desired engagement. This model can still be very effective, but usually for low-friction engagements, such as registering for an in-app account. Rewarded CPE is the best option if your goal is to drive deeper funnel engagements, such as completing key game levels.

 

How do rewarded CPE campaigns work?

Rewarded CPE campaigns are typically delivered to audiences via in-app mobile offerwalls . The mobile gaming space is home to some of the most successful CPE campaigns ever run. The reason CPE works so well in mobile games is because they are a natural environment for rewarded ads. Rewarded Cost Per Engagement provide users with virtual currency in return for engagement, increasing the odds of interaction.

 

What is the difference between CPE and CPA?

At Tapjoy, we use CPE when an advertiser requires an engagement within an app, such as reaching a certain level in a mobile game, signing up for a music subscription app, or taking your first ride on in a rideshare app. Mobile app advertisers use CPE to acquire high-quality users who prove their value upfront.

Not to be mistaken with Cost Per Action or CPA advertising when an advertiser wants a user to take an action outside of an app — typically on mobile web. Such actions may include signing up for a subscription, making an online purchase, or taking a survey.

Various traffic providers use the terms CPE and CPA differently. This discrepancy arises, in part, because social media networks and programmatic partners charge per 1,000 impressions (cost per mille) and optimize targeting to meet performance goals. In this context, traffic providers use the term “cost per action” or “cost per engagement” to calculate the amount of ad spend needed to produce the desired results.

 

What counts as an in-app engagement?

An engagement, or events, can be defined as any action that the user takes once the app is downloaded. Advertisers define these events in advance of their campaigns and pay only when users complete the desired milestones.

Examples of in-app engagements: An engagement could be any of the following:

  • Playing to specific levels in a mobile game
  • Registering for an in-app account
  • Completing an in-app demo or tutorial
  • Designing a personal avatar
  • Completing a specific in-app challenge

Because engagements are tied closely to ad budget, it’s imperative that app marketers choose events that correlate to return on ad spend (or ROAS). The best way to identify which events will yield ROAS is to analyze the behavior of existing users. For example, if your users typically make their first in-app purchase after reaching the third level of your game, you may choose “reaching level three” as the target event.

Target engagements vary considerably depending on app genre. This is chiefly because different apps have different monetization strategies. For example, an app that relies heavily on ad monetization may emphasize engagements that lead to more sessions and longer retention. Apps that rely on in-app purchases, on the other hand, will target engagements that typically convert users to payers. When in doubt, start with a test!

 

Is it possible to target multiple events in a single CPE campaign?

Yes! App advertisers can leverage Multi-Reward Engagements for CPE to target multiple in-app milestones. The benefit of the Multi-Reward format is that it encourages deeper user engagement with progressively greater rewards. This offer type is particularly effective for RPG, strategy, and casino games that get the most value from deeply invested users though we do see casual apps and idle clickers get the most value from the format when milestones are selected strategically. Read more about choosing the right in-app milestones.

 

What are the benefits of Cost Per Engagement advertising?

  • Performance-based pricing . Cost Per Engagement campaigns ensure that advertisers don’t blow their budget on ads that never gain any traction with their intended audiences. New users are required to interact with their app before being charged — if they simply install and don’t engage, the advertiser doesn’t have to pay. Because every user is more than an install, advertisers are also insulated from some types of mobile ad fraud, including organic poaching.
  • Promotes user choice. The app market is incredibly crowded, and quality users are increasingly harder to come by. Rewarded in-app engagements are opt-in, which means users self-select and engage only with the offers that interest them.
  • Guaranteed ad engagement. Putting ads for your gaming app in front of users who like mobile games emphasizes your app’s value upfront, increasing the likelihood of long-term retention.

 

How is Cost Per Engagement calculated?

what is cost per engagement advertising

The basic formula for finding CPE is simple. Just divide your total amount spent by the number of measured engagements, and voila: you’ve got your cost per engagement! So for example, if you spent $10,000 for 5,000 engagements, each engagement cost about two dollars.

 

Is Cost Per Engagement advertising right for my app?

If you’re wondering whether the time is right to implement your own Cost Per Engagement campaign, ask yourself a few questions:

  • Are you marketing an app, or a product or service that is supported by an app?
  • Do you have an understanding of which in-app events correlate with ROAS?
  • Would your target audience respond well to a value exchange ad model?

If so, CPE ad campaigns could be a great way to push your marketing forward. No method of advertising is foolproof, of course, but knowing you’ll only pay if specified engagements certainly lowers the risk factor. And if you need help managing your CPE campaign — or just want more advice on where to start — reach out to the team at Tapjoy to set up your first CPE campaign!

Set up a test campaign today!

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