Cost per Engagement (CPE)
What is Cost per Engagement (CPE)?
Cost per Engagement (CPE) is a metric used in digital marketing to measure the cost incurred for each engagement with a user. Engagement can refer to various actions such as clicks, likes, shares, comments, and other forms of interaction with an ad or digital content.
The formula for Cost per Engagement (CPE)
How is Cost per Engagement (CPE) used by e-commerce businesses?
E-commerce businesses utilize the CPE metric to assess the effectiveness and efficiency of their marketing campaigns. By calculating the cost per engagement, businesses can determine how much they are spending for each user interaction. This helps in evaluating the return on investment (ROI) of marketing efforts and optimizing budgets.
What is a good result for Cost per Engagement (CPE)?
A good result for CPE varies depending on the specific campaign objectives and industry benchmarks. In general, a lower CPE indicates that the cost of each engagement is relatively low compared to the value derived from those engagements.
For example, if an e-commerce business runs a Facebook ad campaign with a CPE of $0.50 and generates 100 engagements (clicks, likes, shares, etc.), the total cost would be $50. If the average purchase value from those engagements is $20, the business would have generated $2,000 in revenue. In this case, a CPE of $0.50 would be considered a good result.
What is a common mistake when analyzing Cost per Engagement (CPE)?
A common mistake when analyzing CPE is solely focusing on the individual metric without considering the overall marketing objectives. While it’s important to aim for a low CPE, it’s equally important to assess the quality and relevance of the engagements.
For instance, if an e-commerce business is getting a low CPE but low conversion rates and low purchase values, it might indicate that the engagements are not leading to desired actions or revenue. In such cases, it’s crucial to dig deeper and assess other metrics such as conversion rate and average order value to gain a holistic understanding of campaign performance.