What is Cost Per Interaction?
Cost per interaction (CPI), which is measured by total advertising cost divided by total engagements, measures the effectiveness of paid media initiatives at driving engagement.
At Brilliant Metrics, we focus on real interactions, not just any click. This means we’re looking at how many people really visit your website and engage with it, not just those who accidentally click on your ad.
Think of it this way: If you spend $5000 on an ad and it leads to 100 genuine interactions (like visits to your website or comments on a paid social post), your CPI is $5.00 per interaction. The goal is to lower this cost, while still attracting more people to interact with your ads.
Why is CPI Important?
CPI is crucial for evaluating the efficiency of your marketing campaigns. It helps you understand the value you’re getting from your advertising spend by accounting for factors like audience reach and media costs. This makes CPI a versatile tool, allowing you to compare performance across different content types and channels effectively. The lower your CPI, the more efficient your marketing program is in terms of the cost of reaching a prospect or current customer.
How to Improve CPI
A high CPI could be the result of one (or more) of the following:
- High CPMs
- Ad creative is not resonating with your target audience
- Service ad, product ad, or content angle is not resonating with your target audience
There are a few different ways to improve CPI.
- Increase the reach of your program: The more people you reach, the more likely you are to get interactions.
- Focus on targeting your programs more narrowly: By targeting your audience more specifically, you’ll be able to reduce waste and get more bang for your buck.
- Create better content: When you create high-quality content, you’re more likely to earn attention and interaction from potential customers. This means creating content that is more engaging, informative, and entertaining. It also means making sure that your content is targeted at the right audience.
What’s a Good CPI?
A good cost per interaction will vary based on your brand, audience, content type, and journey state. Different types of programs and audiences will have different levels of interaction. For example, we often see lower CPIs on blog content targeted at an Open audience than we see on Product Ads for that same audience. This is because the content at the top of the funnel often has more interactions than bottom-of-the-funnel content.
To know if your cost per interaction is good or not, you need to compare it to similar content targeted at similar audiences. We recommend developing a rolling 6-month baseline, so you can identify how a program or a specific piece of content is performing against programs and contents you have run in the past.
A Final Thought on CPI
While CPI can be a useful metric, it’s important to remember that it doesn’t take into account the quality of each customer interaction. For instance, a high-quality customer interaction (such as a sale) may be worth more than a low-quality interaction (such as a click on an ad). As such, CPI should be used with other metrics like Cost per Average Soft Conversion to get a complete picture of an advertising program’s overall effectiveness.