SEO glossary: Cost per lead

In a nutshell: What is cost per lead?

Cost per lead (CPL) originates from online marketing and is a billing model. Advertisers only pay when a contact is made with a prospective customer.


What does cost per lead (CPA) mean?

While many advertisers pay by KLICKS or sales, cost per lead (CPL) is also a well-known method. Translated, this model means something like contact compensation and is charged whenever a user logs into a newsletter, for example.


Depending on the industry, product, and target group, this billing model is definitely interesting and economical for advertisers. It is primarily used when a sale is not immediately expected when a user visits the site. This is the case, for example, with the sale of insurance when questions are still open.


To explain the cost per lead model in more detail, the following calculation example helps:


(total expenditure for all leads generated) / (number of leads) = CPL in euros


(1,000 euros) / (100) = 10 euros


In this example, the total spend for 100 leads generated was 1,000 euros. This resulted in a CPL of 10 euros.


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How does cost per lead work?

If an advertiser is looking for interested parties and thus potential customers, the CPL model is quite interesting. This is because it is used to build up contacts, which are then forwarded to a company's sales team, for example.


A deal is made between the advertiser and the traffic supplier as to how high the price is for a fully completed lead. If both sides agree, the process can begin and the advertising partner sends the relevant visitors to the target page. If a user now signs up for a contact list and thus shows interest, the lead is completed and the advertising partner receives his payment.


Where is cost per lead applied?

The cost-per-lead billing model is always used when no direct purchase is expected from interaction with a potential customer. The primary aim is therefore to obtain customer data first. All the data collected is then passed on for evaluation and the relevant prospects are contacted by sales consultants, for example. Consequently, the aforementioned CPL method is frequently used, for example, for the sale of vehicles, insurance policies or real estate.


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Conclusion: What is cost per lead?

With cost per lead, advertisers pay whenever a prospect (user) wants to make contact. This model is often used when there is no immediate sale between the prospect and the provider. This is the case, for example, when agencies want to sell insurance or real estate. If the data was collected in the course of an advertising campaign, sales talks are held afterwards.

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