What Is CPL? Understanding Cost-Per-Lead Marketing

In the dynamic landscape of digital advertising, maximizing return on investment (ROI) while minimizing costs is a delicate balance every marketer strives to achieve. In recent discussions with both clients and prospects, a shared concern has emerged: an increase in Cost Per Lead (CPL) within video marketing efforts.

Even slight fluctuations in CPL can impact the success of a campaign. Recognizing the importance of every marketing dollar, we’re here to share valuable insights and strategies to help you overcome hurdles and optimize your video marketing campaigns.

What is Cost-Per-Lead (CPL)?

Cost-per-lead is a marketing metric that measures the cost-effectiveness of generating new leads for a business by assessing the amount of marketing spend compared to the number of leads generated. CPL is calculated by dividing the amount of money your business spends on a marketing campaign by the number of leads you generated from that campaign. 

For example, if you’ve run a paid ad campaign using a tool such as Google Ads, your cost-per-lead would be the full cost of the ad campaign divided by the number of site visitors it generated. 

Cost Per Lead Formula

The CPL formula is expressed as: Number of Leads Generated/Total Marketing Spend. Here’s the CPL formula in action:

Let’s say a company spent $10,000 on a social media video marketing campaign over the past month. During that period, the campaign generated 500 leads. ​In this case: CPL=$10,000/500​=$20

So, the cost per lead would be $20. This means the company spent $20 for each lead generated from that particular marketing campaign.

CPL vs CPA (Cost Per Action) vs ⁠CPM (Cost Per Mille)?

CPL isn’t the only valuable metric for evaluating marketing performance. CPA (Cost Per Action) and CPM (Cost Per Mille) also provide important insights, and choosing the right one depends on your specific goals. While CPL focuses on the cost of acquiring leads, CPA measures the cost associated with a specific consumer action, and CPM evaluates the cost of ad impressions. 

• CPL is crucial when your primary objective is cost-efficient lead generation.
• CPA is important when the campaign’s goal is specific actions, such as sales conversions, sign-ups, or downloads.
• CPM is ideal for brand awareness initiatives, where reaching a broad audience matters more than specific conversions or lead collection.

Understanding when and why to focus on each metric can greatly enhance your campaign strategy. Here’s a breakdown of each metric:

Metric	Use Case	Pricing Model	Example Calculation
CPL (Cost Per Lead)	Building a database of potential customers for future engagement.	Action-oriented; performance-based.	If $10,000 generates 500 leads, CPL = $20 per lead.
CPA (Cost Per Action)	Measuring efficiency of campaigns focused on specific actions or conversions.	Action-oriented; performance-based.	If $15,000 yields 300 actions (sales), CPA = $50 per action.
CPM (Cost Per Mille/Thousand Impressions)	Increasing brand visibility and awareness to a broad audience.	Impression-based.	If $5,000 results in 1,000,000 impressions, CPM = $5.

CPL (Cost Per Lead)

CPL measures the cost associated with acquiring a lead, which is typically a potential customer who has expressed interest in a product or service by providing their contact information. It’s often used in campaigns where the goal is to build a database of potential customers, such as email marketing or sales follow-up. 

• Example: As calculated earlier, if a campaign costs $10,000 and generates 500 leads, the CPL is $20 per lead.

CPA (Cost Per Action)

CPA is the cost incurred when a specific action is completed by a consumer, such as making a purchase, signing up for a service, or downloading an app. CPA is particularly relevant for performance-based marketing, where advertisers pay only when the desired action occurs.

• Example: If you spend $15,000 on a campaign and gain 300 sales through it, your CPA would be $50 per sale.

CPM (Cost Per Mille/Thousand Impressions)

CPM is the cost of serving 1,000 ad impressions. An impression occurs each time an ad is displayed to a user. CPM is used primarily for brand awareness campaigns, where the goal is to reach as many people as possible rather than encouraging specific actions like leads or sales.

• Example: If a campaign costs $5,000 and delivers 1,000,000 impressions, the CPM would be $5.

What Is A Good CPL?

A good Cost Per Lead (CPL) is whatever generates the most leads for the lowest price.  

As CPL can vary widely depending on several factors, including industry, business type, target market, and specific campaign goals — there is no one-size-fits-all “good” CPL. However, there are some things to consider when evaluating whether your marketing campaign CPL is efficient: 

1. Industry Standards: Different industries have different benchmarks for CPL. For example, highly competitive sectors like finance or insurance might have higher CPLs due to the greater value of each lead and the competition for those leads, while other sectors might have lower CPLs.
2. Business Goals: What constitutes a good CPL depends on how much a lead is worth to your business. If a lead conversion typically results in high revenue, then a higher CPL can be justified. Businesses should aim for a CPL that ensures a good return on investment (ROI) based on their customer lifetime value (CLV).
3. Campaign Performance: A good CPL should align with your specific campaign performance expectations. If your campaigns are optimized and consistently delivering high-quality leads that convert to sales or other desired actions, then you may accept a higher CPL.
4. Comparative Analysis: It’s useful to compare your CPL against historical data from your own campaigns. Consider trends over time and any improvements in lead quality, not just quantity.
5. Geographic Considerations: CPL can also vary based on the geographic location of your target market. Leads from certain regions might be more expensive than others.

What Is A High CPL?

A high CPL is any CPL that drives the fewest leads for a high price and a low ROI. Here are some things to consider if you’re concerned about your marketing efforts generating a high CPL:

1. Industry Benchmarks: Compare your CPL to industry averages. Some industries naturally have higher CPLs due to factors such as competition and lead value:

• High CPL Industries: Finance, insurance, legal services, and healthcare often see higher CPLs because the value of a converted lead is substantial, and competition is fierce.
• Lower CPL Industries: E-commerce and consumer goods may have lower average CPLs due to broader audiences and lower lead values.

2. Conversion and Revenue Metrics: A CPL might be high if the leads generated are not converting well into customers or if the revenue per conversion is not adequate to cover the cost of acquisition.
3. Historical Data and Trends: Examine your previous campaigns. If your current CPL is significantly higher than what you’ve historically experienced without a corresponding increase in lead quality or conversion rates, it might indicate inefficiencies or increased competition.
4. Geographic Markets: Costs can vary by region. Certain geographic markets naturally have higher CPLs due to varying market conditions, regulations, or competition levels.

How to Improve CPL Marketing Strategies

Improving your Cost Per Lead (CPL) involves balancing strategies that capture existing demand while simultaneously generating new interest in your brand. By combining demand capture and demand generation techniques, you can optimize your lead acquisition efforts. This integrated approach fosters marketing efficiency by  boosting conversion rates, building brand awareness, and lowering CPL. 

Leveraging Demand Generation To Lower CPL

Demand generation involves creating new interest and awareness for a product or service among audiences who may not yet recognize their need for it. 

This approach uses strategies to educate and engage prospects throughout their buyer’s journey, ultimately cultivating demand where none previously existed. Here are some key demand generation tactics to help improve your CPL.

• Awareness Campaigns: Establish a foundation for future lead generation by creating educational and engaging content to introduce your brand. This proactive approach can gradually lower CPL by widening your pool of potential leads.
• Consideration Campaigns: Provide in-depth information and resources that nurture prospects, positioning your offerings as solutions to their needs. By informed nurturing, you encourage higher conversion rates, which helps to reduce CPL over time.
• Decision Campaigns: Offer compelling incentives and personalized experiences to convert nurtured leads into customers. This targeted effort directly influences conversion efficiency, thus contributing to a lower CPL.

Optimizing Demand Capture To Reduce CPL

In contrast to demand generation, demand capture focuses on engaging and converting individuals who are already aware of their need or interest in a product or service. It employs strategies to efficiently capture existing interest and guide potential customers toward making a purchase or taking action. Here are some key demand capture strategies:

• Targeted Advertising: Utilize platforms to precisely reach audiences most likely to convert into leads, thus enhancing conversion rates.
• Landing Page Optimization: Design compelling and user-friendly pages with clear video CTAs to boost lead generation from visitors.
• SEO Content Marketing: Improve visibility and attract searches with well-optimized content that addresses specific needs or queries.
• Social Media Advertising: Engage potential leads through dynamic content and promotions on platforms where they are most active.
• Partnerships and Affiliates: Collaborate with brands to tap into their audiences and capture interest effectively.
• Track CPL Analytics: Regularly analyze campaign performance to identify and refine successful lead-capturing tactics.

Reduce Your CPL With A Strategic Video Marketing Partner

Team up with a creative, strategic team to take your marketing efforts to the next level with content that drives leads without breaking the bank. At Covalent, we leverage our knowledge and expertise to help you gain a competitive edge in the ever-evolving digital landscape. Our approach focuses on delivering tailored solutions that resonate with your target audience, optimize CPL, and ultimately boost your bottom line. 
By partnering with us, you’ll have access to innovative video marketing strategies and fresh creative that speak directly to the needs and preferences of your prospects, ensuring your marketing efforts are both impactful and cost-effective. Let us help you transform your video marketing campaigns into powerful tools for business growth.