Unless you have been advertising online blindly or spending too much time on TikTok, you have probably seen the acronym CPL. Cost Per Lead (CPL) is a metric that most media buyers track for the brands they advertise for.
But is CPL really all that important for measuring digital marketing performance?
We’re going to get to that.
But first, let’s dive into what CPL really is and how to calculate it.
Cost Per Lead is exactly that. It is calculated by totaling the amount of ad spend and dividing it by the number of leads acquired.
This can be done at the channel, campaign, or ad level.
CPL can be used as a general indicator of whether your advertising is working, if you are growing your email list affordably, or if you are really off the mark and need to make some major adjustments.
No one wants to bleed money, but you also don’t want to be buying tons of worthless leads.
You’ll notice that CPL does not include leads acquired from organic traffic or social media postings. Normally you only want to calculate CPL for paid advertising. Organic leads have a CPL of $0, which is basically free!... but you still want to consider the cost of time or labor to bring in those leads.
For example, let’s go over how you could calculate CPL for your Facebook advertising.
First, you must decide what time period you wish to know your CPL for. This could be:
Next, you want to look at how much total ad spend you had across all campaigns for that time period. Or, if you wanted to look at one campaign only, you would do that instead. Total Amount Spend in this example is $485.65.
Finally, look at how many leads you acquired.
Facebook likes to make this complicated. You might use the column “Leads” and end up with three categories, “Website Leads,” “Offline Leads,” and “On-Facebook Leads.” You can include any or all of these, the important part is that you count all the leads that Facebook attributes to an ad. To make it simple, you may just want to turn those columns off and stick with “Leads,” which is the total of all three.
The total number of leads can then be grabbed from the “Leads” column in Ad Manager. Total leads in this example is 54.
You would then use the formula to calculate your CPL. In this case CPL was $8.99 per lead.
Of course, you can do all this for each channel, campaign, or ad, and have a fancy pants spreadsheet that is a pain to keep up with.
Or you can get a Wicked Reports dashboard and instantly see your CPL at the channel, campaign, or ad level without having to manually transfer numbers from Ad Manager or pray that they are correct.
Here is an example of a Wicked ecommerce client's Mission Control, which easily shows CPL for each channel.
Wicked Reports also offers ROI reporting that provided CPL (as well as revenue, CAC, LTV and many other important metrics) right down to the ad campaign level.
This gives our clients a powerful leg up on their competition, because they can make marketing decisions based on accurate attribution data quickly and easily.
Media buyers often focus on CPL, because it’s an easy metric to measure.
Here’s the cave man version of tracking your performance by CPL:
✅ Lower CPL is good. 😊
❌ Higher CPL is bad. 😱
But experienced marketers know that lower CPL does not always equal higher sales.
In fact, lower CPL often means you are bringing in lower quality leads, which results in lower conversion to sales and a lot of frustration, especially if you are trying to scale. Don’t make this mistake.
Balancing CPL and lead quality is a tightrope. An experienced media buyer can help you to ensure you are optimizing your spend with purchases, instead of focusing primarily on CPL.
You want to be in the sweet spot between bringing in just a few unaffordable leads that aren’t enough to support your business and tons of worthless leads that are burning through your ad spend.
This number is going to be different for each niche and brand. Due to recent advertising cost inflation, CPL benchmarks are constantly rising, especially on platforms like LinkedIn and Google Ads where a CPL can easily exceed $50 to $100+ for high-quality, high-intent leads.
The trick here is to figure out if those leads are converting into profitable customers and whether you are seeing a healthy LTV:CAC ratio over time.
That's why at Wicked Reports we recommend you focus more on Customer Lifetime Value (LTV) rather than CPL. It’s a much more effective measurement of advertising effectiveness and the health of your brand.
Even though I've just told you that CPL might not be as useful as you thought, I know you're probably going to want to track it any way. And if your CPL isn't what you think it should be, you're probably going to want to take action to improve it.
Here are some of the best strategies to improve CPL on your advertising:
Thank you for coming to my "Ted Talk" about Cost Per Lead as a marketing metric.
Check out Wicked Reports and see how you can scale paid traffic! We have a great dashboard for tracking both CPL and LTV that will help your brand to scale with accurate attribution data.
FAQ
No. While a low CPL is an easy metric to track, it often means you are acquiring lower-quality leads who are less likely to convert into high-value customers. Experienced marketers prioritize lead quality and Customer Lifetime Value (LTV) over just a low CPL to ensure sustainable growth and profitability.
Wicked Reports strongly recommends focusing on Customer Lifetime Value (LTV) and the LTV:CAC ratio. LTV is a much more effective measurement of true advertising effectiveness and brand health, as it connects ad spend directly to the revenue generated by the acquired customer over their entire relationship with your brand.
CPL is the cost to acquire a lead (an inquiry). CAC is the total cost to acquire a paying customer. For sustainable growth, a healthy LTV:CAC ratio (typically 3:1 or higher) is the gold standard, as high CPLs can inflate your CAC and make your business model unsustainable, regardless of your LTV.