Definition: Cost-Per-Lead, or CPL, is a digital marketing pricing model whereby the advertiser pays a pre-established price for each lead generated. In ecommerce, CPL is often utilized by businesses who sell subscription services or high-value products.
The CPL pricing model is commonly employed by direct response marketers and brand marketers who are building a newsletter list, customer acquisition program, or rewards program.
Some businesses rely on CPL marketing to connect with customers who are particularly passionate about their brand, products, or even a social cause. These are potentially high-value customers who are candidates for repeat purchases. They are also likely to recommend the company's products to others who share similar interests.
CPL campaigns are often preferred for branding campaigns because a business has total control of their brand throughout the entire marketing process, as opposed to channels where another entity can misrepresent a company's messaging.
Customers demonstrate interest by opting in, as opposed to merely seeing an impression. These are “qualified leads,” showing an existing interest, need or desire for what a business has to offer. CPL leads are more likely to convert — and even develop into repeat customers — than prospects from impression-based campaigns.
Online businesses often use CPL campaigns with affiliates and display advertising. When a user clicks on the advertisement, he is sent to the business' website. Here, the customer is directed to opt-in to the marketing campaign in question, be it a discount, a mailing list with coupons or a sale that is available for a limited time only, etc. If he decides to sign up for the offer, the lead has been created and the publisher will then be compensated according to the previously established “cost per lead.”
To calculate the appropriate CPL, a business must determine what the value of a goal conversion is. For secondary conversions such as newsletter sign-ups, the CPL is tied to the LTV of newsletter customers. CPL demonstrates the need to understand the value of every channel and campaign medium: with this knowledge, businesses can confidently execute campaigns and accurately project ROI.