Cost per lead

Cost per lead, often abbreviated as CPL, is an online advertising pricing model, where the advertiser pays for an explicit sign-up from a consumer interested in the advertiser's offer. It is also commonly called online lead generation.

Contrary to cost per mille (CPM) and Cost per click (CPC) pricing models, where advertisers are charged for impressions and clicks, respectively, in a CPL pricing model advertisers pay only for a qualified sign-up regardless of how many impressions or clicks their advertisement received. CPL advertising enables advertisers to generate guaranteed returns on their online advertising money but, on the other hand, it provides no guaranteed revenue for publishers.

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 may be exclusive or non-exclusive (sold to multiple advertisers). Sales leads are typically followed up through phone calls by the sales force and are commonly available for a wide range of verticals including mortgage, insurance and home services.

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.

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:

• 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.

• 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.

References

• The B2B Refinery by J. David Green & Michael C. Saylor (ISBN 0-9768647-0-3)
• Lead Generation for the Complex Sale by Brian J. Carroll (ISBN 0-07-145897-2)
• Marketing Management by Philip Kotler (ISBN 0-13-033629-7)
• Database Marketing by Edward Nash (ISBN 0-07-046063-9)
• Marketing for Dummies (ISBN 0-7645-5600-2)