“Cost per lead” means something like “contact compensation” and is abbreviated to CPL in online marketing. Advertisers are paid for the generation of leads. In contrast to the CPC (Cost per Click) method, as an advertising partner you do not pay for a click on your website or a sale, but for a user contacting you. The CPL model is particularly popular for products and services that require a lot of explanation. This could be insurance, for example.
To understand the benefits of CPL, it is important to define what a lead actually is. In general, the term “lead” is used in online marketing to refer to a contact. When we talk about a lead in this context, it means that a potential new customer is led to your offer. You can gain a new lead in different ways. This can happen, for example, by registering for your newsletter or by filling out the contact form. The important thing here is that you, as the provider of the products or services, receive important and meaningful information about your lead.
Calculating the cost per lead is actually not that difficult 😉Just apply the following formula:
Here is an example for you:
Before you calculate your advertising budget based on cost per lead, it’s important for you to know how leads are defined for you and your business. Only then can you be sure that you are getting consistent scaling of your costs and results. The focus of the CPL model is clearly on capturing customer data. This data is used, for example, to target new customers.
CPL is often used for products or services that require explanation, such as buying insurance, hiring a specialist, or consulting on financing products. The cost-per-lead model is typically used in affiliate marketing, where advertisers convert their traffic into leads for the advertising partners on their websites.
If you want to generate qualified leads and sell products or services that may require explanation, the CPL model is worth considering for you. Here you sign a contract with an advertising partner. At the beginning you determine the budget and goals of the campaign. Once the agreement is made, the advertising partner provides the necessary traffic on your corresponding landing pages or solicits customers with banner advertising and other advertising media. Finally, the advertising partner receives compensation for each successfully generated lead, the so-called “qualified lead”.
By using the CPL model in online marketing, the goals of the advertising measures are more scalable. Similar to other billing models, such as cost per order (CPO), you only pay for the successful generation of a lead. You invest exclusively in potential new customers. How much advertising is needed to generate a single lead is not your concern with the cost per lead model, but that of your advertising partner. Another advantage of the CPL approach is that it generates new prospects who are potentially more likely to buy than those generated by mere clicks. Moreover, the CPL method is usually better suited for services and products that require more consultation or are more expensive.
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