CPL

CPL (Cost per Lead) is the cost of acquiring a user who has shared their contact information, allowing you to evaluate the effectiveness of your chosen advertising strategy. CPL is calculated by dividing total marketing expenses by the number of leads generated.

A lead is anyone who has shown interest in your product or service and has left their contact information for further communication. Measuring CPL allows businesses to track the performance of their marketing campaigns and optimize promotional spending.

Why Measuring CPL is Important

Measuring CPL helps better control your marketing budget and allocate it efficiently. CPL is important for:

Cost optimization — It helps select the most effective promotion channels within a given budget.
Expense forecasting — CPL allows you to predict future costs and assess the profitability of marketing campaigns.
Channel comparison — CPL helps analyze the effectiveness of various advertising platforms like Google, Meta, TikTok, YouTube, and choose the most suitable ones.

This metric is especially relevant for businesses that offer premium products or services, such as real estate, financial services, or the automotive industry.

How to Calculate CPL

To calculate CPL, you need two key figures:

Total marketing expenses — the total amount spent on the campaign over a given period.
Number of leads — the number of users who provided their contact information.

The formula for calculating CPL is as follows:

CPL = total marketing expenses / number of leads.

For example, if your total budget was $100, and you attracted 500 potential clients, your CPL would be $0.20 per lead.

The Importance of CPL for Different Industries

Each industry has its own CPL evaluation criteria. For instance, if the average lead-to-purchase conversion rate is 10%, then with a CPL of $0.20, each real customer will cost the company about $2.

CPL vs Other Marketing Metrics

CPL is a more accurate tool for evaluating the effectiveness of marketing campaigns, especially when compared to other metrics like:

CPM (Cost Per Mille) — the cost of 1,000 ad impressions. This is useful for branding campaigns, but CPL better reflects the actual cost of acquiring customers.
CPA (Cost Per Action) — the cost of one user who makes a purchase or takes another targeted action. In contrast, CPL only tracks the cost of acquiring leads.
CPC (Cost per Click) — measures the cost of each click on an ad, but this metric doesn’t take into account whether the click resulted in a meaningful action.

Conclusion

CPL is a key metric for building a base of potential customers interested in your product or service. Even if a lead doesn’t convert immediately, their contact information allows you to continue communication in the future. Measuring Cost per Lead helps optimize expenses, assess the effectiveness of channels, and adjust marketing strategies to improve business results.