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.
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Contrary to cost per mille (CPM) and cost per click (CPC) pricing models, where advertisers are charged for impressions (a.k.a. "views") 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 receives. CPL advertising enables advertisers to generate guaranteed returns on their online advertising money.
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 (sold only to one advertiser) 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 Cost per action campaigns (CPA), 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 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.