Key Takeaways

• CPL stands for Cost Per Lead - you pay only when someone becomes an actual lead

• Calculate it by dividing total campaign costs by number of leads generated

• CPL rates vary wildly by industry ($5-$600+ depending on sector)

• Lower risk for advertisers than CPM, higher risk than CPA

• Great for lead generation campaigns but requires clear definition of what counts as a "lead"

In the alphabet soup of digital advertising pricing models, Cost Per Lead (CPL) holds a special place for marketers focused on building their prospect lists. But what exactly counts as a "lead," and why might you choose this model over others? Let's break it down.

What is Cost Per Lead (CPL), Really?

CPL is a pricing model where advertisers pay only when someone takes an action that qualifies them as a lead. Unlike Cost Per Click (CPC) where you pay for traffic, or Cost Per Mille (CPM) where you pay for eyeballs, CPL is about paying for potential customers who've shown actual interest.

A typical CPL campaign might look like this:

1. Someone sees your ad

2. They click through to your landing page

3. They fill out a form with their contact info

4. Ding! You've got a lead, and now you pay

The beauty is in its simplicity - you don't pay until you get something valuble. But defining what counts as a "lead" is where things can get tricky.

How to Calculate Your CPL

The formula is pretty straighforward:

CPL = Total Campaign Cost ÷ Number of Leads Generated

So if you spent $1,500 on an ad campaign that generated 75 leads, your CPL would be $20.

But dont make the mistake of thinking all leads are equal. A "lead" could be:

• Someone downloading your whitepaper

• A newsletter signup

• A webinar registration

• A trial signup

• A product demo request

Each of these actions represents different levels of interest and potential value. That's why many smart marketers track CPL by lead type.

CPL vs. Other Pricing Models: When to Use Each

Choosing between different pricing models depends on your goals and where your potential customer is in their journey:

Here's a simple rule of thumb: as you move down this list, advertiser risk decreses while publisher risk increases. Why? Because the publisher must drive more user action to get paid.

Average CPL by Industry: What's Normal?

CPL varies dramatically across industries, so what's "good" depends entirely on context. According to research from First Page Sage, these are some average CPLs by industry:

• E-commerce: $5-$15

• SaaS/Software: $40-$75

• Healthcare: $100-$250

• Legal (especially B2B): $200-$350

• Industrial IoT: Nearly $600 (!!)

These huge differences make sense when you consider the potential customer lifetime value (LTV) in each industry. A lead for luxury real estate is worth way more than one for a basic subscription service.

Pros and Cons of CPL Campaigns

Advantages

• Lower risk than impression or click-based models

• More qualified prospects than broad awareness campaigns

• Easier to calculate ROI since you know exactly what each lead costs

• Aligned with business goals of building a sales pipeline

Disadvantages

• Lead quality varies - not all leads are created equal

• Can be expensive in competitive industries

• Requires good tracking to attribute leads correctly

• May miss valuable brand exposure benefits

For publishers, the CPL model can be challenging because you take on more risk. You need to not just get people to see and click ads, but actually convert them. As ActiveProspect notes, this shifts financial risk away from advertisers and onto publishers.

When to Use CPL Campaigns

CPL works best when:

1. You have a clearly defined sales funnel

2. You know the value of different types of leads

3. Your product or service has a consideration phase

4. You're focused on building a pipeline rather than immediate sales

B2B companies often find CPL campaigns particularly effective because their sales cycles are longer and building relationships matters more than immediate transactions.

Making CPL Work: Best Practices

If your running CPL campaigns, here's how to optimize them:

• Define leads clearly - what exactly counts as a conversion?

• Track lead quality, not just quantity

• Test different lead magnets to see what converts best

• Optimize landing pages specifically for form completions

• Use lead scoring to evaluate the quality of leads from different sources

For publishers, the key is balancing user experience with conversion optimization. Forms should be simple enough to complete but detailed enough to generate qualified leads.

The Bottom Line on CPL

Cost Per Lead sits in that sweet spot between paying for traffic (CPC) and paying for sales (CPA). It's perfect for businesses with a defined sales process who want to build their pipeline without paying for mere impressions or clicks.

The catch? You need to be good at lead nurturing, or those leads you've paid for might never turn into customers. And in some industries, you'll need to be prepared for eye-watering CPL rates that can only be justified by high customer values.

What's your experience with CPL campaigns? Have you found them more effective than other pricing models for your business? Drop a comment below with your thoughts!

This article is part of our "Monetization Minis" series, designed to help publishers and advertisers understand key digital advertising concepts quickly and thoroughly.