💯 What is Cost-Per-Lead (CPL)? | by Absolute Digital | 🏆 Top Google SEO Agency in Singapore 🇸🇬
In digital marketing, you need to understand the numbers in order to make sense of your campaign performance. While the average cost of digital marketing by industry is a good guide on what you should expect, to increase the effectiveness of your campaigns and overall digital marketing campaign ROI, we need to take a look and understand the numbers such as Cost-Per-Lead (CPL), Cost-Per-Click (CPC), as well as Click-Through-Rate (CTR).
Cost-Per-Lead: Cost of Generating Leads / Total Leads Acquired
The Cost per Lead metric measures how cost-effective your digital marketing campaigns are when it comes to generating new leads for your company. A lead is an individual that has expressed interest in your product or service by completing a goal such as submitting an enquiry form on your website or clicking on your Facebook Ad.
This metric is closely related to other key business metrics such as the CPC and CTR as mentioned above. The purpose of these metrics is to provide your marketing team with tangible insights for them to understand the suitable ad budget to acquire each new leads.
The Cost per Lead metric also provides important data to use in your return on marketing investment calculation. In fact, each stage of the sales funnel should have similar metrics associated with it, such as cost per view. Likewise, these metrics can be used to monitor individual campaigns such as Google SEM, Google Display Banner Ads, or Social Media Ads, or the sum of your digital marketing strategies.
CPL Benchmarks per Industry
Cost per Lead various significantly across industries. Here are some expert advice and rules of thumb based on the Madison Logic:
- Check out their infographic that provides industry averages for B2B businesses such as human resources, health, marketing and technology. Note that across all these industries surveyed, cost per lead is below $100/lead.
For more details on industry average campaign performance for CPL and other metrics, you can read this detailed article.
Why CPL Matters?
The CPL model helps share the responsibility for campaign performance between publishers and advertisers. Publishers are responsible for putting their ads in from of the right audiences in the right ways to generate a response in alignment with the business owner goals. Advertisers are responsible for maximizing the conversion of those leads into sales.
How to Calculate your CPL?
Calculating your Cost Per Lead…
You can calculate your Cost Per Lead by dividing your Marketing Spend by the total number of New Leads:
Step 1: Add up your marketing spend
Step 2: Add up your new leads
Step 3: Divide your marketing spend by new leads
Total Marketing Spend / Total New Leads = Cost Per Lead (CPL)
For Marketing Spend, it’s important to add up the sum of your time, ad spend, and any third party expenses.
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