What Is Cost per Lead?
Cost per lead is what you spend to get one enquiry from an advertising campaign, where an enquiry is a specific action such as a form, a call, a booking or a purchase.
On its own, the number tells you very little. A $40 cost per lead is a bargain for one business and a disaster for another. The difference is what one lead is worth to you.
Here is the calculation most businesses have never done. Take your average sale and multiply it by the share of leads that become customers. That is what one lead is worth. Set it beside your cost per lead and you can finally say whether the advertising is profitable. Skip it, and you are judging a campaign by a number you cannot interpret.
Decide what counts as a lead before you spend anything. Not awareness. Not traffic. Write down the action first, then measure what it costs to get it, because that definition decides how the campaign is optimised and whether anyone can tell afterward if it worked.
Where This Comes Up
Related Terms
More in PPC Guides & Insights.