CPE vs CPV vs CPS: What is the right model for influencers' payout?

The era of compensating influencers solely on a cost-per-view (CPV) basis is fading away. The 2000 crore rupees Indian influencer marketing industry is now exploring the Cost per Engagement (CPE) payment model. While a balanced combination of CPE and CPV proves to be an effective model for brands, the future unfolds with Cost per Sale (CPS) as the focal point, shaping the narrative for content creators in the emerging landscape of New Bharat.

Praanesh Bhuvaneswar

Praanesh Bhuvaneswar, Co-Founder and CEO of Qoruz said that CPE (Cost per Engagement) offers a more targeted approach, ensuring that brands pay for actual interactions rather than just views.

He further said, “It aligns better with the brand's objectives, as engagement metrics provide a deeper understanding of audience interest and involvement.”

Sameer Kabeer, (VP - of Digital Strategy & Growth), Langoor, seconded Bhuvaneswar’s thought and said that the preference for CPE over CPV is gradually gaining ground in India, echoing global trends.

He said, “CPE is considered more valuable because it reflects actual user engagement (likes, comments, shares) rather than just views. This is crucial in the Indian context, where the influencer-audience bond is often based on trust and authenticity, making engagement a more meaningful metric than mere viewership.”

Vaibhav Gupta

However, Vaibhav Gupta, Co-Founder and CPO, KlugKlug, emphasised, that while CPE is a deeper metric than CPV, the case is not such that one replaces the other and even though CPE is believed to become another strong KPI, it cannot be at the centre of it all, transactionally.

He explained, “Always remember that engagement follows only after the view and it is the secondary reaction from a consumer. In the times of Swipes ups, the influencers’ content has to be really entertaining and provocative to actually get engagement. You cannot switch to a pure CPE model because that's not fair to the medium, or the influencer and could almost be misguiding the brand.”

Having said that, Gupta believes that while CPE is a game-changer, the industry is witnessing a shift from CPV to more performance-driven/Cost-per-sale models, particularly in sectors like FMCG, beauty cosmetics, and low-value products.

“In the longer term, it is the affiliate model where the nano, micro, and niche influencers of the new Bharat will start winning the battle because along with making content frequently, they are trusted heavily by their followers. Eventually, many will learn how to make content that is geared to make good sales,” elaborated Gupta.

Influencers across categories have mixed feelings about CPE model

The CPE model might be more beneficial for nano and macro-influencers given their higher engagement rate, but macro-influencers are a little reluctant to adopt this model.

Explaining the same, Gupta said, “A significant challenge lies in the fact that a majority of macro and mega influencers prefer charging based on their fame and content rather than focusing on engagement metrics. This limits the adoption of the CPE model among influencers, but the overall industry trend is favourable toward exploring this payment model.”

Bhawna Sethi

Bhawna Sethi, Founder of Let's Influence, commented, “While macro-influencers may show initial hesitancy, being more inclined towards reach-centric CPV models, micro and nano-influencers, who thrive on meaningful engagement, are proving to be more receptive to CPE. This shift highlights the changing dynamics in influencer marketing.”

Explaining how shifting to the CPE model will be beneficial for nano and micro-influencers, Kabeer of Langoor, shared with BuzzInContent.com that these, despite having smaller followings, often boast higher engagement rates. “If marketers shift towards CPE-based payments, nano and micro-influencers influencers could indeed command higher rates, reflecting their ability to generate more meaningful interactions compared to their macro counterparts,” commented Kabeer.

Gupta of KlugKlug went on to share that CPE varies across influencer categories, with macro and mega influencers commanding higher costs per engagement compared to nano and micro-influencers. “Industry-wise, CPE may be lower for FMCG or beauty cosmetic influencers compared to niche or premium categories. Despite assumptions, it doesn't necessarily mean that nano and micro-influencers would be paid more than macro ones, as the overall engagement rate influences the payout,” he commented.

Other nuances

While calculating compensation on CPE versus CPV, brands must consider the difference between influencer and content creator.

Bhuvaneswar believes that influencers have the power to influence the audience therefore CPE works there. Whereas, when brands expect creators to do the same, they may not they may be able to drive engagement. At the same time, they may be getting it because of the content they put out not the influence they have.

Giving an example, he said, “Like meme pages get massive engagement - but they may not be able to convert the engagement to business.”

While the CPE model of payments is booming, Let’s Influence’s Sethi pointed out that one must be cautious of misleading engagement figures by relying on trustworthy analytics tools and thorough influencer vetting.

She said, “Ensure clarity in communication by outlining campaign objectives and payment structures to both brands and influencers. Foster enduring connections with influencers to achieve sustained success for both parties. Regularly assess campaign performance, making necessary adjustments in the platform, content, influencer selection, and CPE rates to maximise your return on investment.”

To ensure fair CPE, a comprehensive analysis of data and benchmarks across categories, platforms, and target audiences is imperative. Sethi added, “Consideration of content type is equally important in this evaluation. Continuous tracking and optimisation of CPE rates based on insights gathered will contribute to campaign success.”

She also said that exploring hybrid options can further enhance campaign effectiveness. “This may involve combining CPV (Cost Per View) reach thresholds with CPE engagement bonuses or implementing a tiered CPE system contingent on engagement rates,” she added.

Is CPE the right model if the brand’s objective is to maximise reach?

If a brand’s objective is to maximise reach, a CPE-based model might not be the ideal approach, suggested Langoor’s Kabeer.

“For reach-focused campaigns, metrics like impressions or views (CPM or CPV) might be more relevant. However, in a market like India, where influencer authenticity plays a critical role, CPE can still be a relevant metric, even for reach-oriented campaigns,” he added.

However, Qoruz’ Bhuvaneswar pointed out that the adoption of the CPE-based model for brand reach is contingent on the campaign objective, influencing the metrics reported and subsequent payouts.

He said, “In campaigns focused on reach, metrics such as views or overall reach are crucial, representing the maximum exposure to the content. However, for marketers, the relevance of the target audience viewing the content and engaging with it is equally important. While CPE works ideally in certain cases, it may become more effective in the context of reach campaigns towards the end of the payout cycle.”

As per Sethi, for a more effective strategy, one might want to explore a combined approach. “This involves setting a baseline reach through CPV while incorporating bonus incentives to encourage higher engagement, utilizing the strengths of both metrics,” she added.

Conclusion

Bhuvaneswar then went on to point out that it is too early to predict a simpler formula for CPE-based compensation, yet. “The CPE model has to be evolved and the right formula is yet to be obtained for the payouts. The industry will move towards it eventually, as broader equations arrive for different categories and types of creators and also stronger ways to fight fraud among Influencers so that fair compensation becomes a norm,” he added.

To ensure fair CPE, a comprehensive analysis of data and benchmarks across categories, platforms, and target audiences is imperative, believes Sethi. “Consideration of content type is equally important in this evaluation. Continuous tracking and optimisation of CPE rates based on insights gathered will contribute to campaign success,” she added.

Kabeer of Langoor concluded that a deep understanding of the Indian consumer psyche, coupled with the strategic selection of influencers and platforms, is key to maximising the effectiveness of influencer marketing campaigns. “The focus should be on building genuine connections, leveraging the unique strengths of different influencers and platforms, and continually adapting to the dynamic digital landscape of India,” he said.