Marketing

What Is the Cost Per Lead?

What Is the Cost Per Lead?
Written by Lindsay Tigar

What is the cost per lead? The cost per lead is a standard metric used within digital marketing, measuring how much a brand or company must pay for a potential customer to provide their email address or other information. 

There are many ways a company can measure the success of its digital marketing efforts — from paid advertisements to social media strategies, and so on. But in addition to understanding what entices your audience to click or make a move, it’s also vital to know how much you’re spending to gather your goal data.  

As you can predict, the goal is always to have a low cost per lead, since that means your marketing language and imagery are aligned with what your customers want from your brand. When the cost per lead is higher, it signals a mismatch, encouraging teams to return to the drawing board.

For companies that work with investors, the cost per lead figure is vital information to their return on investment (ROI).

They ultimately want any business they believe in — and financially contribute to — to become profitable. By understanding what marketing is spending and what progress they are experiencing because of their spending, investors feel reassured. 

Some brands are also built for social media — while others don’t see the same amount of viral exposure. By measuring the cost per lead, a business can see where they are getting the most bang for their buck, so to speak.

Say, for instance, it costs $50 to gain a lead via Instagram, but a newsletter is $10. That’s a clear signal that a marketing team should either: A) shift their focus and dollars toward email. B) Rethink their social media approach or C) Probably a combination of both A and B.

It’s very rare that a company will spend equally across all platforms and/or mediums since they all offer various age groups and demographics. 

What can help to lower the cost per lead?

One of the most useful — and sometimes overlooked — benefit of content marketing is its impact on the cost per lead. Solid, smart writing can make a significant difference on a brand’s bottom line, but they have to be willing to set aside the funds to pay for it.

When a content marketer is given the ability to digest a business’s industry, sector, overall voice and mission, and goals, they can deliver copy that connects all of the dots. Potential customers — aka leads — who then visit a website will be met with content they relate to and understand, making them more likely to provide their email address. 

Another tactic to reduce the cost per lead in digital marketing is to utilize A/B testing. As defined, this is when a brand creates different versions of campaigns, homepages, headlines, newsletters, social media posts and so on to determine what resonates the best with their audience. By swapping out copy and design and analyzing each iteration’s results, it’s easier for a content marketer to understand the ideal customer better and/or lead. 

Common uses of cost per lead

  • To measure the success of various digital marketing campaigns across website, newsletter and social media platforms
  • To know where best to spend marketing budget to gain the most potential customers
  • To illustrate progress toward goals for investors and key stakeholders
  • To better understand a brand’s audience and what type of copy and creative entices a lead to give their email address or other information
  • To help a marketing team better organize their marketing budget for optimal spending 
Here's everything you need to know about the cost per lead and why it matters in digital marketing. #contentmarketing Click To Tweet

About the author

Lindsay Tigar

Lindsay Tigar is an experienced, established travel and lifestyle journalist, editor and content strategist. Since uprooting from Asheville, North Carolina in 2010 to Manhattan, Lindsay's work has appeared on several websites, including Travel + Leisure, Vogue, USA Today, Reader's Digest, Self, Refinery29 and countless others. While she is always up for the challenge of any assignment, her main areas of focus include travel, wellness, career, psychology, love and healthy living.

[if lte IE 8]
[if lte IE 8]
[if lte IE 8]
[if lte IE 8]