Cost per Lead

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Cost Per Lead or CPL is an online advertising pricing model, where the advertiser pays for an explicit sign-up from an interested consumer interested in the advertiser offer.

In a CPM (Cost-per-Thousand) pricing model, advertisers are forced to pay for wasted impressions. CPC (Cost-per-Click) pricing models, commonly found on search engines, compel advertisers to pay for clicks from people that might never sign up on the advertiser landing page. In complete contrast, advertisers can pay only for qualified sign-ups using CPL pricing models. CPL pricing models are at the pinnacle of the online advertising ROI hierarchy.

CPL advertising enables advertisers to generate guaranteed returns on their online advertising dollars, which is especially useful in a tough economy. It's no surprise that CPL advertising has shown explosive growth in recent times - in fact, IDC projects CPL advertising to be the fastest growing segment of online advertising.

CPL advertising is also commonly called online lead generation.


Sales Leads and Marketing Leads

There are two types of leads that advertisers can buy in the lead generation market: sales leads and marketing leads.

Sales leads are generated on the basis of demographic criteria such as FICO score, income, age, HHI, etc. These leads are resold to multiple advertisers. Sales leads are typically followed up through phone calls by the sales force, and are commonly found in the mortgage, insurance and finance markets.

Marketing leads are brand-specific leads generated for a unique advertiser offer. In direct contrast to sales leads, marketing leads are sold only once. Because transparency is a necessary requisite for generating marketing leads, marketing lead campaigns can be optimized by mapping leads to their sources.

In recent times, due to the growth of transparency in the online lead generation market, the marketing leads segment of online lead generation segment has grown rapidly. Fortune 500 marketers, non-profit organizations and political candidates such as the 2008 Obama campaign are using CPL advertising to build e-newsletter databases, community sites, and other acquisition programs with consumers that are passionate about their brands/causes.

The Difference Between CPL and CPA advertising

In CPL campaigns, advertisers pay for an interested lead - i.e. the contact information of a person interested in the advertiser's product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints - by building a newsletter list, community site, reward program or member acquisition program.

In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction. CPA is all about 'now' -- it focuses on driving consumers to buy at that exact moment. If a visitor to the website doesn't buy anything, there's no easy way to remarket to them.

There are other important differentiators:

1. CPL campaigns are advertiser-centric. The advertiser remains in control of their brand, selecting trusted and contextually relevant publishers to run their offers.On the other hand, CPA and affiliate marketing campaigns are publisher-centric. Advertisers cede control over where their brand will appear, as publishers browse offers and pick which to run on their websites. Advertisers generally do not know where their offer is running.

2. CPL campaigns are usually high volume and light-weight.In CPL campaigns, consumers submit only basic contact information. The transaction can be as simple as an email address. On the other hand, CPA campaigns are usually low volume and complex. Typically, consumer has to submit credit card and other detailed information.

CPL advertising is more appropriate for advertisers looking to deploy acquisition campaigns by re-marketing to end consumers through e-newsletters, community sites, reward programs, loyalty programs and other engagement vehicles.

See also

  • [1]IAB Lead Generation Guidance


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