Cost Per Lead (CPL)

What is "cost per lead?" Commonly referred to as "CPL," "PPL" (Price Per Lead) and "Cost Per Action;" also similar to CPA (Cost Per Acquisition), cost per lead is a direct marketing measurement model based on a high return on investment (ROI). How do we translate this? The CPL finds its measure on specific, required conversions (e.g., registration, sales, file download, etc.) that are weighed against goal-oriented advertising costs.

In laymen terms, the cost per lead can be calculated by using the total cost of an advertising campaign, and divide it by actual amount of positive responses. Let's say that you've spent $2,500 to advertise a particular product or service; out of this marketing campaign, 100 people responded. Now, based on these figures, one could determine that your cost per lead (for this hypothetical campaign) would be $25.

Why are cost per lead figures important? The CPL is a vital tool in accessing the actual value of a marketing campaign. One would not want to spend thousands upon thousands of dollars for a low yield, so cost per lead can inform us how much we are spending in relation to actual profits. In general, cost per lead is performance based, and commonly pays a commission on total conversions.

The CPL can provide advertisers with an effective marketing model that can assist them further by lending valuable data on how leads convert to actual sales and length of time involved in the closing of the sale. As an assessment tool, the CPL can be extremely effective in providing necessary data for future marketing campaigns.

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