It’s often unclear whether online advertising is seen by its intended target audience. So, cost-per-engagement (CPE) is becoming an increasingly popular way to ensure brands’ messages are getting noticed—or at least that advertisers are only paying for those that are seen. CPE offers the precision of user initiation so marketers know that they’re buying actual interactions or engagements. It also has the added benefit of showing what works and what doesn’t.
As a pricing mechanism for brand advertising, CPE is arguably the most sensible format available for display. However, determining how deeply consumers are interacting remains a challenge for marketers. That’s where CPE—mixed with the right data—comes in. One of the beauties of this model is that you can figure out how much a user interacts with an ad.
Rather than the old standard of clicks or banners you hope are seen, many brands are looking for a hybrid performance of brand lift and engagement to determine brand effectiveness. The fact that many forms of CPE are sold on a guaranteed basis—where an advertiser only pays for the ads that a user hovers over for at least several seconds—shows that the ability to prove engagement is becoming crucial to the adoption of the format.
The key to determining the value and performance of CPE units is user initiation. By putting the control in users’ hands and letting them decide if they want to watch a video ad, see visuals, or get more information, a brand can immediately discern the worth of the impression they’re getting. Conversely, by making it easier for the viewer to back out if they’re not interested, a brand can avoid waste while achieving greater transparency that the engagement registered is real—e.g., not the result of “fat fingers” or the absentminded movement of a cursor across a screen. CPE creates its own demand by user initiation.
The economics of choice
User initiation is one of the biggest factors that define engagement. This has opened up larger questions about viewability and audience targeting. New technology allows brands to understand whether their ads are getting viewed and if what they’re buying is achieving their goals.
In the online world YouTube has influenced the direction for online video with the continued expansion of its three-year-old TrueView ad-skipping unit. By respecting users’ choice about when they want to interact with an ad and when they don’t, advertisers are most able to find their best audience, all without the fear of violating privacy or possibly alienating consumers who might be the right target at another time.
Simply flooding consumers with as many ads as possible hasn’t led to higher CPEs. In reality, it often results in record-low CPEs, further devaluing display because there’s not enough supply to meet the growing demand.
Receptive versus captive
To achieve more lucrative brand awareness, there must be simple measures to show that an ad is not only being seen, but that its message is being approved. After all, an ad that reaches its target only to turn them off to the product is worse than no ad at all.
The other common complaint about online advertising, apart from the issue of transparency, has been the lack of creative units. CPE, by its very nature, forces marketers, agencies, and tech providers to develop ads that are visually appealing and have greater resonance and relevance. They’re contextual in the sense that they not only reflect the content surrounding them—they enhance it. And that’s value that brand marketers are willing to spend more on.
At a time when social media and mobility are the vehicles for content discovery, users’ demand for personalization, choice, and control must be part of the creation of the ads that accompany their online activity. There can be no more pretending that there’s a captive audience anywhere along the media landscape.
User-initiated CPE units are easily the most consumer-friendly option available and should be considered a priority to complement an overall media plan. They address the real issues facing media planners and buyers: viewability being the most urgent of these. CPE allows brands to ensure guaranteed engagements; advertisers need to make sure to work with media partners who can transfer that engagement into brand lift and purchase intent. In other words, to develop a brand-friendly unit, it all starts with being truly “user-friendly” by giving customers the choice to engage.
Ariff Quli is SVP of global accounts and marketing at Vibrant Media
