Engagement rate is the share of people who interacted with an ad or post (clicks, reactions, comments, shares, saves) relative to reach or impressions. It is a useful creative signal and a weak business one, easy to optimize at the expense of revenue.
What it is good for
Engagement rate is a fast read on whether creative resonates: a version that earns more reactions and saves at similar spend is usually the stronger hook. On paid social it also feeds the signals that shape delivery.
Where it misleads
Engagement is not intent. A meme can out-engage a product ad and sell nothing. Chase engagement rate as a goal and you optimize for entertainment, not pipeline. Treat it as a creative diagnostic, then judge the money on CPA and ROAS.