How much should I charge for leads

Cost per lead

The term cost per lead (German: contact remuneration, short: CPL) describes a billing model in online marketing. Advertisers are paid to generate leads. In this case, advertising partners do not pay for a sale or a click on the website that comes about through advertising measures, but for the contact of a user. The cost-per-lead model is mostly used when a direct purchase by a visitor on the web is not expected because the product offered requires explanation, such as life insurance.

Calculation of the CPL [edit]

The cost per lead can be calculated very easily. The formula for this is:

Expenditures for advertising of all leads / number of all leads = CPL in EUR

Example [edit]

The advertising expenditure for the acquisition of 100 leads is 2,500 EUR.

EUR 2,500 / 100 = EUR 25 = CPL

In this example, the cost per lead is EUR 25.

What is a lead?

To explain the CPL, it is important to define the term “lead”. It is used more often in marketing and means something like contact. It is derived from the English verb "to lead", which means "to lead" in German. When speaking of a lead, it means so much that a customer / user / potential buyer is literally "led" to the offer.

A lead can be a subscription to a newsletter as well as filling out a contact form. The lead provides the webmaster or the provider of a service or a product with meaningful data on his potential customer.

How it works [edit]

If an advertiser wants to generate high-quality contacts that can then be used by a company's sales team, for example, he can use the CPL model. Before concluding a contract with the advertising partner, a fixed price or a commission is set for each lead generated that the company is willing to pay for a contact.

Following this, the advertising partner ensures the necessary traffic to the corresponding landing pages or advertises for the customer with banners and other advertising materials. The advertising partner finally receives remuneration for each successfully arranged contact, the so-called "Qualified Lead".

Areas of application [edit]

The billing model per lead can be used as an alternative to other modes such as CPO or CPA, i.e. whenever a direct purchase is not expected due to the interaction of a potential customer with advertising material. The focus of the CPL method is therefore on acquiring customer data. Following the evaluation, this data can either be used for targeted acquisition of products that require a lot of advice, such as insurance or real estate.

CPL methods are ideal for billing in email marketing as well as for downloads of computer software.[1] Integrated contact forms on other websites can also be billed using CPL.

If leads are linked with corresponding tracking methods, the CPL are also used in the context of affiliate marketing.

As part of their own evaluations, a company's marketing team can also use the cost per lead to evaluate how expensive the advertising effort is, for example to get customers to fill out a contact form.

Benefits for online marketing

Setting cost per lead has the advantage that advertising measures are more scalable. Similar to other billing modes such as cost per order, companies only pay for successful referrals of potential customers and not for the advertising material such as banner placements themselves. How much advertising is ultimately necessary for the generation of individual leads is no longer up to the client, but to the client Publishers who have agreed to the amount of the CPL.

Another advantage of the CPL method is that it generates customers who are potentially more willing to buy than just clicks. The CPL method is usually more promising, especially for more advice or cost-intensive services and products.

However, the higher chance of success is associated with higher costs for a lead than with other billing modes such as CPO or CPA.

References Edit]

  1. ↑ The 10 most important trends in B2B lead generation Retrieved on August 11, 2014

Web links [edit]