Date First Published: 27th September 2022
Topic: Web Design & Development
Subtopic: Web Advertising
Article Type: Computer Terms & Definitions
Difficulty: MediumDifficulty Level: 6/10
Learn more about what CPL is in this article.
Stands for Cost Per Lead. CPL represents the amount of money an advertiser will have to pay to a publisher for each lead. CPL is similar to CPC (cost per click), but instead of advertisers paying a publisher each time a visitor clicks on their ad, they only have to pay for each potential customer. For example, if a visitor clicks on an ad, is directed to the advertiser's website, and chooses to sign up, it would generate a lead and it would cost the advertiser a small amount of money. The advertiser will not be charged if the visitor clicks on their ad and does nothing on their website.
Every lead is recorded by the advertising network and the cost per lead is determined by the advertiser as some will spend more per lead than others based on what they are advertising. Advertisers usually set a budget for their ads. Once they have enough leads to reach their budget, their ads are automatically removed from the publisher's website for the rest of the billing period. Leads cost no more than advertisers are willing to pay through a bidding system.
CPL may also be known as CPA (cost per action) since the visitor has to perform an action to generate a lead. However, it is more accurate to say CPL.
CPL is often incorrectly used to describe how much revenue a publisher will get each time a visitor clicks on an ad and generates a lead on the advertiser’s website. Technically, it is incorrect to use this measurement on the publisher's side because it does not cost them money to display other advertiser's ads on their website. They earn revenue each time a visitor clicks through an ad and generates a lead. There is no such thing as RPL (revenue per lead) as different advertisers spend more money per lead than others, so it cannot be estimated how much money a publisher will earn per lead. However, the average amount per lead can be calculated once they have earned some advertising revenue.
CPL can be calculated using this formula:
Total cost of the advertising campaign ÷ total number of leads
For example, if an ad got 40 leads, with all of them costing £2.50, the CPL would be calculated below:
£2.50 ÷ 40 = £0.06 CPL
CPL (pay per lead) and PPL (cost per lead) are not the same things. PPL is a paid advertising method and a pricing model where advertisers pay a certain amount of money for each lead, whilst CPL is a financial metric that gives a measure of the cost of each lead for the advertising campaign. CPL measures the overall cost of PPL ads, whilst PPL is simply a paid online advertising method.
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