For anyone who owns a small business or online brand, the right digital marketing strategy is key to boosting revenue! Whether you’re trying to get more customers to buy your products, utilize your services, or purchase from your affiliate links, the internet has plenty of ways to market yourself effectively AND affordably.
One of the best ways to scale your efforts is by investing in search engine optimization for small businesses! Plus, you can try other digital marketing avenues to generate leads like social media marketing, email marketing, pay-per-click (CPC) ads, affiliate marketing, and more. But before you dive in, it’s crucial to understand two major performance-based marketing tactics: cost per acquisition (CPA) and cost per lead (CPL). In this blog post, we’re breaking down exactly what these marketing metrics mean to help you figure out which one is the perfect fit for growing your business and boosting your revenue. Let’s dive in!
CPA vs CPL: A Beginner’s Guide to Performance-Based Marketing
CPA (cost per acquisition) and CPL (cost per lead) are two of the most popular performance-based models in digital marketing used by businesses big and small. Knowing the difference between these two digital marketing strategies is key to choosing the one that best fits your brand goals and overall marketing plan especially when it comes to mapping out your customer journey.
What is CPA and CPL?
Jumping into the world of digital marketing means navigating a sea of acronyms and it can feel a little overwhelming at first! Let’s break down two big ones: CPA and CPL.
CPA is the amount a business or brand pays when a customer makes a purchase through an ad campaign or affiliate link promoted by an influencer. On the other hand, CPL is what you pay for each person who becomes a lead like signing up for your newsletter or joining a waitlist but doesn’t necessarily make a purchase. Understanding these terms is the first step to mastering your marketing strategy!
How Does CPA Marketing Work?
Cost per acquisition (CPA) is a performance-based affiliate marketing model where businesses pay a commission to an affiliate, like a blogger or influencer, when their referral leads to a purchase. For example, a beauty brand might provide a blogger with an affiliate link to share on their website or social media. Every time someone makes a purchase through that link, the brand pays the blogger a commission. In simple terms, CPA marketing means businesses only pay when a customer completes a purchase, making it a cost-effective way to drive sales.
How to Calculate CPA in Digital Marketing
Figuring out your CPA in digital marketing is super simple with this formula:
CPA = Total Marketing Costs / Number of New Customers Acquired
All you have to do is take the total costs of your campaign including ad spend, content creation, marketing tools, affiliate commissions, and even team salaries and divide it by the number of new customers the campaign brought in. This gives you the exact cost of acquiring each customer, so you can see how your campaign is really performing!
Is CPA Marketing Worth It?
CPA marketing can be a highly effective way to drive sales for your business, but whether it’s “worth it” depends on a few key factors, like your business goals, available resources, and how well your campaigns are executed. Typically, CPA marketing works best at the bottom of the customer journey funnel, as it’s directly tied to generating revenue. However, it can be more challenging to achieve and often comes with a higher cost.
To make CPA marketing successful, it’s essential to collaborate with the right influencers whose values and brand align with your product or service and to really push your SEO content marketing efforts to develop rapport with your potential customers. When done right, it’s a powerful strategy to boost sales and grow your business.
How CPL Works
Cost per lead (CPL) is a smart marketing strategy designed for lead generation. Instead of pushing for an immediate purchase, businesses focus on collecting contact information like an email address to send newsletters or email marketing campaigns. This approach works best at the top of the customer journey funnel, giving potential customers a chance to learn more about your brand, products, and values. It’s all about nurturing those leads and turning them into loyal, paying customers over time. Typically, these digital marketing campaigns take place on Google ads and social media.
To make this strategy even more effective, many businesses and online brands offer free lead magnets like eBooks, templates, recipes, or other digital products in exchange for contact information. It’s a win-win: you get a valuable lead, and they get something useful and engaging!
How to Calculate CPL in Digital Marketing
Calculating CPL in digital marketing is super straightforward with this formula:
CPL = Total Advertising Cost / Number of Leads Generated
Start by adding up all your advertising costs, including ad spend on platforms like Google or Facebook, content creation expenses, and even team salaries. Then, divide that total by the number of leads who took your desired action like signing up for your newsletter or downloading a free lead magnet. Boom! Now you’ve got your cost per lead and a clear picture of your campaign’s performance.
Is CPL Marketing Worth It?
If your goal is to build a solid follower or customer base, CPL marketing can be a game-changer, especially if you’re just starting out or need to boost your brand awareness. It’s also perfect for testing new markets or products, helping you gauge interest before going all in. Keep in mind, CPL marketing is a long-term play. The sales cycle is longer because it focuses on nurturing leads into paying customers over time.
Whether CPL marketing is “worth it” depends on your business goals. It takes careful planning and a solid strategy to nurture those leads effectively, (this is where blogging and other content creation strategies can be super helpful!) so it’s best for businesses that aren’t in a rush to make sales. Service-based or subscription models, e-commerce brands, and niche industries with a high customer lifetime value (CLV) tend to see the biggest wins with CPL marketing. It’s all about patience and playing the long game!
What is the Difference Between CPA and CPL?
CPA (cost per acquisition) and CPL (cost per lead) are both powerhouse strategies in digital marketing, but they serve different purposes. CPA is all about results it focuses on generating actual sales or conversions, meaning businesses only pay when a customer completes a purchase. It’s a bottom-of-the-funnel strategy perfect for driving revenue, but it can also be more expensive and challenging since it’s directly tied to the final outcome. If you’re looking to boost sales and work with influencers who can deliver measurable results, CPA is your go-to.
On the other hand, CPL is more of a long-term, relationship-building strategy. Instead of pushing for an immediate sale, it’s designed to generate leads by collecting contact information like emails for potential customers. It’s ideal for top-of-the-funnel campaigns, where the goal is to raise brand awareness and nurture relationships over time. Think of CPL as planting seeds: you’re building trust and setting the stage for future sales.
At the end of the day, choosing between CPA and CPL depends on your goals, whether you aim to drive immediate sales or build a long-term loyal customer base.
Step up your digital marketing efforts with CPA, CPL, and SEO!
In this blog post we talked about the difference between CPA and CPL, but there’s another digital marketing acronym you should know about SEO (search engine optimization)! By optimizing your business’s website for search engines and creating content that your customers are searching for, you can elevate your digital marketing efforts and brand awareness. And InfluencerSEO is here to help! With our SEO packages, we will ensure your website follows the most up-to-date SEO tactics including load speed, navigation, and, of course, content.
If you’re looking to scale up your digital marketing, make sure to check out our article about how content marketing drives sales too!
In this post, we broke down the difference between CPA and CPL, but there’s another digital marketing acronym you absolutely need to know SEO (search engine optimization)! SEO is all about optimizing your website and creating content your audience is actively searching for, which is actually proven to drive MORE CONVERSIONS than other forms of digital marketing . . . and at a lower cost to you.
A higher conversion rate at a lower cost? Sounds amazing, right???You can learn a lot more about how to build a brand via blogging on our blog. But, if you’d rather leave it to the pros, InfluencerSEO has your back! With our SEO packages, we’ll make sure your website is on point with the latest strategies.
Jordan Becerra, founder and Lead SEO Strategist at InfluencerSEO, has spent almost 15 years in the creator internet space, the last nine building InfluencerSEO into the go-to SEO partner for content creators, with 500+ creators served from pre-launch to massive publication. She learned creator monetization and community building strategy from the inside working for Lauryn Bosstick of The Skinny Confidential prior to founding InfluencerSEO, so she understands both halves of the game: how search actually works AND how creators actually build a strong community online and make money. Her job now is to stay ahead of where search engine optimization is going, especially as AI rewrites the rules, and to make sure the creators she works with get there first.
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