Cost Per Lead Definition & Meaning

In digital marketing, cost per lead (CPL) refers to a paid advertising model based on a prospective customer’s likelihood to advance through a sales pipeline. Similar to cost per action (CPA) models, a user becomes a lead when they have submitted their contact information to learn more about a product, service, or promotion. This is why CPL, pay-per-lead, and lead-generation are often used interchangeably.

Typically, publishers that offer CPL campaigns will deliver leads at a higher rate than cost per impression (CPM) or cost per click (CPC) models because emphasis is placed on quality over quantity. Whereas any user of a publisher’s site may constitute an impression or even a click, a lead is one that has actively indicated their interest in an advertiser’s offering and therefore more likely to return the investment. 

CPL campaigns have grown in popularity because it is much easier to measure the return on investment (ROI) and make adjustments to improve their effectiveness. Additionally, advertisers have more control over their brand, their audience, and how their advertising budget is spent with CPL campaigns than with CPC or CPM campaigns.

Calculating cost per lead

A CPL campaign starts with identifying an advertiser’s buyer persona and the most compelling value proposition—typically a discount, free resource, or another exclusive opportunity. Then the advertiser decides which publisher or affiliate is most appropriate based on factors like audience demographics, campaign cost, and targeting options. 

In general, CPL is calculated by dividing the total cost of the campaign by the number of leads it generates; typically the advertiser will set a fixed campaign budget and then optimize the targeting specifications and content over time to reduce the average cost per lead. Once the campaign is active, users who act on the call to action are sent to the advertiser either automatically using an API or manually using a lead generation form and exportable spreadsheet.

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