Pay per lead

From CEOpedia | Management online

Pay per lead (PPL) is a form of cost per delivery of a lead. It's Online and Offline advertising payment model in which fees are calculated only on the basis of deliveries of potential customers(leads)[1].

Pay per lead is a form of an affiliate program in which the commission is paid to the partner for each finalized lead that will be generated by him under the program. This type of partner program is one of the most profitable affiliate commission structures[2].

Pay per lead is created especially for particularly involved partners who want to take the time to acquire new, high-quality clients for the company while earning money[3].

Profits for Pay Per Lead program partners

In PPL, a profit for partner entities is a commission for achieving previously set goals. In order for a partner to receive a commission, he must generate a potential customer for the partner with whom he cooperated[4].

Usually, it is about registering on the site or leaving contact details in a different way with the permission to use them. The provided information may consist of an email address or may contain a detailed profile containing many contact points and answers to qualification questions. For example, company might pay for every visitor that clicked on link and then filled out registration form[5].

Leads can be delivered:

  • by phone in the payment model for a call,
  • by e-mail,
  • SMS,
  • data entry directly to database,

Affiliate programs offering this type of cooperation do not usually require any cash contributions from their partners. However, sometimes it happens that when joining the affiliate program and signing the agreement and terms, a small deposit and membership fee for participation in the program is required. However, they require an effort of high-quality work that, when acquiring prospects, will also create a positive company image[6].

There are many risks associated with the Pay Per Lead campaign, including the potential unfair activity of marketing partners. Some scams are easy to detect. Nevertheless, regular audit is recommended.

Alternative option for PPL

An alternative option for Pay Per Lead is Pay Per Call (PPC), characterized by exactly the same rules, with the difference in the fact that the potential customer instead of providing his contact details must independently contact the call center/branch of the company[7].

The Pay Per Lead program strongly competes with the Pay Per Click (PPC)program, due to the fact that it is much more difficult to involve a potential customer to take a specific action than to encourage him only to click on the link. Therefore, PPL generates much more profits for the partner compared to PPC, which are to be an incentive for partners to make an effort to get a potential customer[8].

In order to be effective in acquiring leads in this program, the partners must focus on identifying the target group that could be interested in the products or services of the company with which they cooperated. They must also determine the best way to reach customers, create a sufficiently strong incentive and call to action that will allow them to interest prospects[9].

Examples of Pay per lead

  • Online Advertising: PPL is often used in online advertising, where advertisers pay a certain amount of money for each lead that it generates through its advertisement. For example, if an advertiser is running a PPL campaign for a loan website, it will pay for each application form filled out.
  • Offline Advertising: PPL can also be used in offline advertising, where advertisers pay a certain amount of money for each lead that it generates through its advertisement. For example, if an advertiser is running a PPL campaign for a loan website, it will pay for each phone call or in-person meeting that results from the advertisement.
  • Referral Programs: PPL can also be used in referral programs, where an advertiser pays a certain amount of money for each referral that it generates. For example, if an advertiser is running a PPL program for a loan website, it will pay for each person that is referred to the website as a result of a referral.

Advantages of Pay per lead

Pay per lead (PPL) is a cost-effective online and offline advertising payment model, in which fees are calculated only on the basis of deliveries of potential customers(leads). The advantages of this model include:

  • Predefined cost: As it is based on a cost per lead, it allows marketers to accurately predict the amount they will pay for each lead.
  • Improved ROI: The advantage of this model is that you only pay for leads that are actually delivered, thus improving the return on investment (ROI).
  • Better targeting: As you are paying for leads, you can be more selective in the type of leads you are targeting, thus increasing the chances of conversion.
  • More accurate tracking: Since you are only paying for leads, tracking and monitoring the performance of your campaigns is more accurate and easier.

Limitations of Pay per lead

Pay per lead (PPL) is a form of cost per delivery of a lead, and while it can be a great way to generate leads and revenue, there are a few limitations to consider. These limitations include:

  • Difficulty in tracking leads: PPL campaigns can sometimes be difficult to track, as leads may not be accurately attributed to the correct source. This can lead to confusion over which campaigns are working best and where money is being spent.
  • Low-quality leads: In some cases, leads generated through PPL campaigns may be of lower quality than those generated through other methods. This can lead to lower conversion rates, and therefore lower returns for the advertiser.
  • Expensive cost per lead: Pay per lead campaigns can be expensive, as the advertiser must pay for each lead generated. This can make it difficult to generate a good return on investment, especially for small or new businesses.
  • Limited control over leads: As the leads are generated by third-party sources, the advertiser has limited control over the quality of leads and the type of leads generated. This can lead to lower conversion rates and reduced returns.

Other approaches related to Pay per lead

Pay per lead (PPL) is a form of cost per delivery of a lead. It is one of several online and offline advertising payment models in which fees are calculated only on the basis of the number of leads generated. Other approaches related to Pay per lead include the following:

  • Cost per Acquisition (CPA) - This model is based on a cost to acquire a customer, usually through a sale or registration.
  • Cost per Click (CPC) - This model charges a fee for each click on an advertisement.
  • Cost per Impression (CPI) - This model charges a fee for each time an advertisement is viewed.
  • Cost per Mile (CPM) - This model charges a fee for each thousand impressions of an advertisement.

In summary, Pay per lead is one of several online and offline advertising payment models in which fees are calculated based on the number of leads generated. Other approaches related to Pay per lead include Cost per Acquisition, Cost per Click, Cost per Impression and Cost per Mile.

Footnotes

  1. ↑ Cameron B., 2006, p. 213
  2. ↑ Gooder R., 2004, p. 94
  3. ↑ Moskel D., 2014, ch. 9
  4. ↑ Wright A.J., 2016, ch. 1
  5. ↑ Cameron B., 2006, p. 80
  6. ↑ Cameron B., 2006, p. 218
  7. ↑ Gooder R., 2004, p. 91
  8. ↑ Carroll J., 2001, p. 360
  9. ↑ Trika J., 2010, p. 70


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References

Author: Dominika Pszonak

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