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CPL (cost per lead) meaning and tutorial

CPL (Cost Per Lead) In Digital Marketing: The Complete Tutorial

Definition: CPL in Digital Marketing means Cost-Per-Lead and it is an advertising campaign strategy that focuses on how much it costs the advertiser to generate a single lead.

Now, let’s dig deeper.

To start with, a Lead, in marketing, is simply defined as a potential customer of any business. The basic information most advertisers get from leads are names and contact information.

Businesses go all out to get a lead because they strongly believe they have a chance to sell their product or service to the lead and make money.

So in theory, it makes sense that businesses or advertisers spend money to get leads or prospects. Hence, the amount it costs a business or advertiser to get one lead is called Cost-Per-Lead or CPL for short.

Why CPL Is Important

CPL or Cost-Per-Lead is super important to any business or advertiser because they help to gauge the success of their lead generation campaign.

Advertisers get to know if they are spending too much or too little to generate a lead.

How is CPL calculated in digital marketing?

See below the formula for calculating Cost-Per-Lead:

CPL = Total cost of lead generation campaign / Total leads generated

CPL Marketing Examples

Just so you understand the meaning and formula of Cost-Per-Lead, let us put the formula to use with some examples.

CPL (Cost Per Lead) In Digital Mark...
CPL (Cost Per Lead) In Digital Marketing: The Complete Tutorial

Example 1

Imagine Company A spends $5,000 on Facebook Ads to get leads and at end of the campaign, they generated 1,500 leads or potential customers.

Their Cost-Per-Lead is calculated thus: $5,000 ÷ 1,500 Leads =$3.33.

Example 2

Imagine Company B takes a diverse approach to getting leads. They spent $1,000 on Facebook Ads, and $500 on Pinterest, and launched a PR campaign that costs $1,500 all to get leads.

Thereafter, they promoted a new product video on TikTok for $700.

At the end of the all campaigns, they generated 3,000 leads. What is Company B’s Cost-Per-Lead? Let’s find out.

First, let’s get the total cost of the campaign: $1000 + $500 + $1500 = $3,000.

Take note that the amount spent to promote a new product video on TikTok is not added because it does not count towards the lead generation campaign. To get an accurate CPL, only costs that are incurred to generate leads are considered.

Therefore, Company B’s Cost-Per-Lead = $3,000 ÷ 3,000 leads =$1.

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From the two examples, it is clear that Company B has a better CPL. What this means is that they spent less money ($1) than Company A ($3) to get one lead.

What is a Good CPL?

To be candid, Cost-Per-Lead varies depending on industry and channels. Hence, there is no fixed figure for a good CPL.

So, to ascertain a good CPL for yourself, you’ll need to consider your industry and your advert channel.

The table below shows an overview of the average Cost-Per-Lead by industry and channel from which you can benchmark your own CPL.

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Cost-Per-Lead By Industry

IndustryLowHighAverage
Business Services$39$225$132
Consumer Products$24$182$105
Education$37$66$55
Financial Services$44$272$160
Healthcare and Medical$36$286$162
Industrial and Manufacturing$33$235$136
IT, Computer, and Technical Services$39$370$208
Marketing Agencies$22$173$99
Media and Publishing$21$191$108
Non-Profits$16$43$31
Retail$25$41$34
Telecom$24$64$45
Travel & Tourism$29$182$106
Source: linchpinseo.com

Cost-Per-Lead By Channel

Marketing ChannelLowHighAverage
Content Marketing$43$140$92
Display Advertising (Premium)$43$82$63
Display Advertising (Programmatic)$34$42$38
Email Marketing$33$72$53
Events & Tradeshows$180$1,442$811
LinkedIn Advertising$51$99$75
Online Retargeting$22$39$31
Public Relations/Earned Media$108$480$294
Referrals$54$92$73
Search Engine Advertising$38$181$110
Search Engine Optimization$14$47$31
Social Media Advertising$34$82$58
Social Media Advertising$21$73$47
Traditional Advertising (TV, Radio, Print)$38$1,200$619
Video Marketing$59$288$174
Webinars$45$98$72
Source: linchpinseo.com

CPL Profitability Margin

Instead of benchmarking your CPL against the industry standard or average channel cost, a better way to know if your CPL is good is by conducting what I call CPL Profitability margin.

What is CPL Profitability Margin? It is the margin of profit or loss on how much is invested to acquire one lead. The simple formula is Revenue Per Lead – Cost Per Lead.

The CPLPM is a better way to know if your Cost Per Lead is good or not.

Let’s continue with our earlier example of Company A which generated 1500 leads from $5000 at a CPL of $3.33.

Let’s assume they went on to make a total revenue of $3000 from the 1500 leads generated.

We have the CPL already, now let’s get the Revenue Per Lead (RPL).

[RPL means the average amount you make as turnover per lead. The formula is Revenue ÷ Total Lead (from the same campaign).]

RPL = $3,000 / 1500 Leads = $2.

Going back to our CPL profit formula RPL – CPL [Revenue Per Lead – Cost Per Lead] = $3.33 – $2 = $1.33 (profit). This means that Company A’s CPL is profitable.

However, if the CPL profitability is negative, it means the CPL is negative.

The Two Views of Cost Per Lead

There are two sides to Cost Per Lead: (1.) from the Advertiser’s point of view and (2.) from the Affiliate marketer’s point of view.

1. CPL in Display Advertising

All we have discussed in CPL thus far is Cost Per Lead from the advertisers’ perspective.

2. CPL Offers in Affiliate Marketing

The other side of CPL that needs attention is the Affiliate Marketing aspect of Cost Per Lead.

From the Affiliate Marketing perspective, CPL offers are promotions that involve generating leads on behalf of a product creator (company) in exchange for a commission.

Before the affiliate offer gets to you, the product creator or company involved must have set aside a certain budget for the campaign which can be broken down to Cost Per Lead.

Hence, they pay you (the affiliate) a fixed amount per lead you generate for them.

On some platforms, product creators pay to publish their offers.

Where to Get CPL Affiliate Offers

As you may know, Affiliate Marketing is one of the ways to monetize your blog. If you are keenly interested in CPL affiliate offers, these two platforms should be your best shot:

These two platforms are like the Google AdSense of all affiliate offers.

On Odigger, for example, you can look for CPL affiliate offers by searching for them.

CPA affiliate offers on Odigger

Offervault has a unique way to choose only CPL affiliate offers.

CPL Affiliate offers on offervault

Simply choose CPL from the categories option.

Watch this video to understand more about how CPL offer works:

Conclusion

CPL as mentioned earlier means Cost Per Lead and it has two broad perspectives:

  • Advertizer’s point of view
  • Affiliate’s point of view

From the advertiser’s point of view, CPL campaigns can either be profitable or not depending on the CPL profitability margin (Revenue Per Lead – Cost Per Lead).

CPL profitability margin is a better way to know if a CPL is good or not than the industry average CPL.

I’m sure you must have learned a few things from this article. You can also find out how to get free professional emails, Invalid traffic tutorial, and the difference between retargeting and remarketing.

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