When should I be buying ads on a CPL basis?
The simple answer is: when you want a list of potential customers.
There are other ways to do lead generation, but there is nothing like an online ad campaign to give a cheap boost to lead generation campaign. There are many companies which focus on lead generation, so if you are using one of them then just follow their lead (tee hee).
How do I manage a CPL deal?
The key is to support the sites/ad networks you are working with as much as possible (by implementing their pixels and providing reports). CPL deals are usually quite cheap, so difficult to get sites to accept. Therefore if you want to keep paying that cheap rate, you should want to make it as easy as possible to gather those leads!
The simplest way to manage a CPL deal is to set up a landing page for each site you are running the campaign with, so they can optimise as simply as possible. If this is not possible, follow our advice on CPA campaigns.
On top of this you are going to have to qualify your leads as far as possible. This means trying to make sure that the leads you get are actually very likely to convert. You can do this by adding questions to your landing page which ensures that the users you are picking up are as valuable to you as possible. For example if you are gathering leads for a training course, you could ask users on that page what profession they are in, and what area they live in so as to ensure they are good candidates to sell to. Qualifying a lead is a whole industry, so do some research on how to get the best results before you get stuck in.
The CPL equation is:
Click to enlarge
CPL = Cost / Leads
What CPL price should I pay?
You should pay whatever price gives you a good return on investment. If you are selling a £200 training course, then your CPL will have to be much less than that to make a profit as not nearly all your leads will turn into sales.
You have to work backwards to calculate how much you are willing to pay for a lead by first working out how many leads turn into sales.
For example, if as above you are selling a £200 training course, and 1% of your leads turn into sales, then you should pay maximum £2 for a lead. This is because on average you will need at least 100 leads to get one sale.
On top of this you want to subtract your advertising overheads from running these ads to the £200 so that you are actually working towards a profit! Those overheads would include admin (ie time managing the ads and results and any agency fees), the designing of the ad and landing page, and the actual cost of serving the ads if you are using a third party server (as these are unlimited and you really should use a third party ad server).
In terms of the maths this would mean you want to pay less than:
[(Product Price) + (Design costs) + (Ad Serving Admin) + (Cost per impression x Impressions)] / Number of leads it takes to make a sale
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