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What is Pay Per Lead?

Aug 07, 2019 by Rachel Ramsey

If you’ve recently taken some of your first steps into the murky waters of lead generation services, we understand if you might find the whole thing to be a little, well, harrowing. Alternatively, perhaps you’ve had a negative experience with what you thought was a reputable lead generation company, only to find little value in what you may have invested.

All of the acronyms and seemingly subtle differences between the types of services and programs can make things in this field confusing, to say the least. To make matters worse, a lot of the posts you’ll find online that are meant to be digestible to the layman are actually filled with insider jargon. We’re going to try to clear some of that fog for you right now.

One of the most ambiguous terms in lead generation is pay-per-lead (PPL). This is a muddled term because, for one, it’s sometimes used incorrectly.

If you want to be exacting with semantics, a click, an impression, a sale, and lots of other vague digital actions in between could all be considered “leads,” but pay-per-lead actually does have a narrower definition.

PPL, sometimes referred to as cost per lead (CPL), is a pricing model specific to online advertising. Companies that advertise this way do so because they only pay for each explicit lead they receive. In many cases, this means that a potential customer left an email address, phone number, or some other type of information making it clear that they’re interested in learning more. As you probably already intuitively know, this is a valuable form of advertising for those who use it. It’s valuable because there’s not as much of a gap between the engagements an advertiser pays for and the conversions those engagements create.

 

But what exactly is a lead?

The very definition of a lead, as we’ve already begun to outline, can be vague. Even within what is absolutely considered to be PPL, there are different types of leads. The two main types of leads that advertisers seek—and are willing to pay for—are sales leads and marketing leads.

 

So what’s the difference between sales leads and marketing leads?

Sales leads are meant to identify potential customers. These customers are filtered and chosen based on any number of characteristics. Among these qualities, you will typically find a focus on general demographic information like location, age, and household income.

Members of a company’s sales team take these leads and follow up with potential customers via email and phone in most circumstances. These types of leads are especially popular in industries like real estate, lending, and home services.

Marketing leads have a different end-game than sales leads. While sales leads exist to help companies make a sale and increase profits in a direct way, marketing leads are meant to do this indirectly, via the marketing team. Marketing leads often focus on brand-specific ads. Sometimes these offer unique incentives to existing customers or other people who are interested in the company.

The goal, however, is to acquire information. Marketing leads must be transparent inherently (or else they wouldn’t be of value to a marketing department) and because they are transparent, they are only sold once. These are not leads that competitors might be bidding on. These belong to one company only. Additionally, marketing leads can be mapped directly back to their sources, from which valuable information on demographics, interests, and other details of a target market can be plucked.

 

What is the difference between PPL and pay-per-action?

PPL is decidedly different than a pay-per-action (PPA) or cost-per-action CPA) approach.

When a service is anchored to an action, the advertiser pays when a certain action is taken.

This action might be a purchase through a credit card or simply signing up for a mailing list. The upside of this method is that advertisers only pay when they’re getting exactly what they’ve asked for (but not necessarily what they want). Again, there are low-quality, low-potential leads and high-quality, high-potential leads. The latter is far more valuable because those leads have a high intent to purchase a particular good or service.

When considering your online advertising strategies, it’s important to understand the language behind standard marketing tactics. The cost of some leads may be incredibly low, so you’re able to acquire far more leads to the dollar. But, if none of those leads are closing, you’ve wasted resources on subpar leads. On the other hand, there are times that you may pay top-dollar for far fewer leads—but, those leads have a much higher close rate. Which kind of leads would you rather pay for?

If you’d like to discuss lead generation models in more depth and see if our services may be of benefit to your company’s growth, we’d love to hear from you.

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