This term is associated with lead generation, a monetization technique that is used by a relatively small portion of sites but that has the potential to be very lucrative. Lead generation involves collecting contact information about a visitor likely to be interested in a specific product or service and selling that information either to a lead aggregator or directly to a company selling those products.
For example, Insurance.com operates as a lead generation site; it captures information such as name and phone number from visitors interested in auto insurance policies, and sells that information to agencies able to write those policies.
Under a CPL pricing model, the buyer of leads will pay a certain amount to partners for every qualified lead they are able to generate. Qualified leads refer to those that meet certain minimum standards that the buyer deems to indicate a worthwhile potential customer; non-qualified leads are generally removed during the lead scrubbing process.
Pricing Models 101
CPL is a relatively rare model for compensating site owners. Others more commonly used models include:
- Cost per Impression (CPM): Advertisers pay for every impression shown.
- Cost per Click CPC: Advertisers pay every time a visitor clicks an ad.
- Cost per Action (CPA): Advertisers pay every time a visitor clicks an ad and then completes an action (such as creating a membership or completing a purchase.
The lines between CPL and CPA pricing models can blur in some cases when the specified action involves a referred visitor creating a membership or filling out a form that includes contact information. In fact, many affiliate marketers will list their programs with the amount of money paid “per lead.”
Co-Registration CPL Models
Another example of a CPL pricing model is co-registration. This process involves presenting offers to visitors who have just completed some sort of signup process, and giving them the option to also register for these services. When they opt in, the contact information (often at least an email address and sometimes also a phone number or name) is passed to the advertiser. This contact information is a lead, and the publisher running the co-registration offers receives money every time this information is passed.
Below is an example of a co-registration form:
For each of these boxes that is checked, the contact information (which was collected in the previous step) is passed on to the newsletter provider. For each lead collected, the publisher and network split revenue.
The Details On How Cost Per Click (CPL) Works
There are two parties involved in the CPL advertising model, the advertiser is the product or service owner who wants to promote their brands, and the publisher is the one who promotes the advertiser’s brand through their online content or website and generates traffic to the advertiser’s website.
In this CPL advertising model, the publisher will place the advertiser’s ads on their website, blog or forum. And the publisher will get a commission whenever a visitor on their website clicks the ads or links and completes a certain action that is specified by advertisers.
Benefit Of Cost Per Lead
Many companies today are adding cost per lead advertising campaign into their marketing plan due to the effectiveness and many advantages over the traditional advertising method or digital advertising model.
Here some benefits by running cost per lead advertising model campaign:
- Measurable Performance
By setting a price for each lead, it’s easy to measure and monitor the return of investment (ROI). aside from generating leads, the CPL campaign also helps to increase the exposure and awareness of the brands.
- Low Risk
Using the CPL model campaign there is a low risk for the advertiser to get click frauds. As each lead requires an action, that means each lead must be unique. Aside from that, using CPL model will also reduce the risk of wasting the marketing budget.
- Cost-Effectiveness
With cost per lead, the advertiser pays for exactly what they receive from the publisher, which makes it an efficient advertising method for a brand without spending a large marketing budget to promote their product or service
FAQ
What does CPL (Cost Per Lead) stand for?
Cost Per Lead (CPL) is the cost that an advertiser pays for a qualified lead after marketing spend. This helps in determining profitability of campaigns once we understand the entire customers lifetime value.
How do you calculate CPL?
To calculate CPL is simple. It’s the total amount you spent on your marketing campaigns divided by total leads you get, this number will be the cost you paid per individual lead.
What is the difference between Cost Per Lead (CPL) and Cost Per Action (CPA)?
CPA is the cost that the advertiser pays for every complete action goal such as purchase, membership, etc. In some cases, the lines between CPA and CPL can be a blur when the goals include creating a membership or filling out a form.