Should you use a pay-per-lead strategy?

Pay-per-lead (PPL) is a type of online advertising model where the advertiser pays a publisher or affiliate. For each potential customer or lead generated through their marketing efforts.

The basics: pay-per-lead model explained.

In this model, the advertiser sets a fee for each lead generated. They then pay this lead to the publisher or affiliate who promotes the advertiser’s products or services on their website.

PPL campaigns are usually more cost-effective than other online advertising models. The advertiser only pays for leads that are actually generated, rather than for ad impressions or clicks.

This model is commonly used in affiliate marketing, where affiliates promote products or services on behalf of the advertiser. In return, the advertiser gives them a commission on each sale or lead generated.

Lead generation is crucial for any public-facing business. It attracts potential customers and increases the likelihood of converting them into paying customers.

By generating leads, a business can build its customer base and increase its revenue. Lead generation activities can take various forms, such as online advertising, social media marketing, content marketing, and networking events.

Through effective lead-generation strategies, businesses can increase brand awareness, build trust with potential customers, and establish themselves as thought leaders in their industry.

Additionally, a strong lead generation program can help businesses to identify their target market. This means they can tailor their marketing efforts, resulting in more efficient use of marketing resources and a higher ROI.

In this blog post, we will discuss the pros, cons, and best practices for PPL advertising and marketing efforts.

Pros of pay-per-lead campaigns.

Man with thumbs up representing the pros of pay per lead.

Firstly, paying per lead can increase your ROI. With this model, you only pay for the leads that actually convert into paying customers.

This means that your marketing spend is much more targeted and focused on generating tangible results. By only paying for the leads that convert, you can increase your ROI and achieve a better return on your marketing investment.

This approach also allows you to better measure the effectiveness of your marketing campaigns and adjust your strategy as needed to improve results.

Paying per lead provides greater control over your budget. With traditional marketing models, it can be difficult to accurately predict how much you will need to spend to achieve your desired results.

This can lead to overspending or underspending on marketing, which can be a major issue for businesses with limited budgets. With a pay-per-lead model, you know exactly how much you will be paying for each lead, which makes it much easier to budget and plan your marketing spend accordingly.

This approach also allows you to scale your marketing campaigns up or down as had to stay within budget while still generating leads.

Lastly, paying per lead offers flexibility in payment options. Many pay-per-lead providers offer a range of payment options, such as pay-per-call, pay-per-click, or pay-per-lead. This allows businesses to choose the payment model that works best for them and their marketing goals.

Cons of pay-per-lead campaigns.

Woman with thumb pointing down representing cons of pay per lead.

While the PPL approach can be effective, it also has its drawbacks. One major disadvantage is the higher cost per lead.

Unlike other pricing models, such as pay-per-click, which only charge for clicks, paying per lead means that businesses pay for every potential customer, whether they convert or not. This can quickly add up. This results in a higher cost per lead, especially if a company is targeting a competitive market.

Another con of paying per lead is the risk of fraudulent leads. Unfortunately, some lead generation companies use fraudulent tactics to generate leads.

One example is purchasing contact information or using bots to fill out forms. This not only results in businesses paying for useless leads, but can also damage their reputation. This is especially true if they are associated with fraudulent practices.

While there are ways to detect and prevent fraudulent leads, it can be time-consuming and costly to implement these measures.

Additionally, paying per lead can limit a business’s scope for experimentation. Unlike other pricing models, PPL means that businesses need to be confident that their approach will generate a sufficient ROI.

As a result, companies can be hesitant to try new tactics. They avoid strategies that could potentially improve their lead-generation efforts, limiting their ability to grow and innovate.

Alternatives to pay-per-lead.

Laptop and tablet on a desk.

There are plenty of alternatives to the PPL model. Each method has distinct advantages and disadvantages.

Some companies choose to use multiple methods of payment for marketing and advertising efforts instead of just relying upon one kind. Here are some of the most popular models around at the moment.

Cost per click (CPC)

CPC advertising is a pricing model where businesses pay each time a user clicks on their ad. This strategy is commonly used in online advertising, particularly in search engine marketing (SEM) and pay-per-click (PPC) advertising.

The main advantage of CPC advertising is that businesses only pay when a user clicks on their ad. This means they can control their advertising costs more effectively.

CPC advertising can also be targeted to specific demographics and keywords, which increases the likelihood of attracting qualified leads.

However, the downside of this strategy is that not all clicks will result in a lead. Businesses need to be prepared to invest in additional marketing efforts to nurture leads and convert them into customers.

Related: Best online lead conversion tactics

Content Marketing

Content marketing is a strategy that involves creating valuable and informative content to attract and engage potential customers. This can include blog posts, whitepapers, videos, and other types of content. All this content needs to demonstrate a business’s expertise and offer helpful information to readers.

The main advantage of content marketing is that it can generate high-quality leads. And these will be people who are already interested in a business’s products or services.

By providing valuable information, businesses can build trust with potential customers and increase the likelihood of conversion.

However, content marketing can be time-consuming and requires a significant investment in creating high-quality content. It may also take time to see results, so businesses need to be patient and committed to this strategy.

Referral Marketing

Referral marketing is a strategy that involves encouraging existing customers to refer their friends, family, and colleagues to a business. This can be done through various incentives, such as discounts, free products, or other rewards.

The main advantage of referral marketing is that it can generate high-quality leads. These are people who are already familiar with a business through their existing relationship with a customer.

Referral marketing can also be cost-effective, since businesses only need to offer incentives to those who refer new customers.

However, referral marketing requires a strong customer base and a loyal customer relationship to be effective. Businesses also need to ensure that their incentives are attractive enough to encourage customers to refer others.

Now comes the tricky part: choosing which lead generation method to go for.

Each has benefits and drawbacks, so it should come back to your personal business goals. You might decide the pay-per-lead is the preferred option, and if so, how do you finalize that decision?

Should you pay-per-lead?

Outstretched hand holding a dollar, giving it to someone.

Choosing a pay-per-lead model for your business can be a smart decision, as it provides a way to generate leads without the high costs associated with traditional advertising.

However, before making this decision, there are several factors to consider.

What is your budget?

Budget constraints are an essential factor to consider. While the pay-per-lead model may be cost-effective, it is important to determine how much your business can afford to pay for each lead.

Understanding your budget constraints will help you decide whether the pay-per-lead model aligns with your financial goals.

Additionally, you should consider the cost per lead and the number of leads required to achieve your business goals. This information will help you determine if pay-per-lead makes sense for you.

Understand your target audience.

The target audience is another important factor to consider. Understanding your target audience is critical for creating effective lead-generation strategies.

Before using a pay-per-lead model, you should ensure that the model aligns with your target audience’s interests, needs, and behavior.

It is important to identify the channels your target audience uses to access information and engage with brands. This information will help you tailor your strategies to effectively reach and engage your target audience.

Read more: Voice of customer best practices

Is it right for your industry (and competition)?

Industry and competition are important factors to consider. The industry and competition can influence the cost per lead and the quality of leads generated.

Before choosing a pay-per-lead model, you should research the industry and competition to determine the cost per lead and the quality of leads.

Does it align with business objectives?

Business objectives should always be one of your top considerations when making marketing and advertising plans.

If your marketing and advertising plans do not contribute towards your broad strategic objectives, then you should not be spending money on them.

As with all decisions in business, it pays to take a step back and look at your strategic aims when making any kind of commitment.

Best practices for pay-per-lead.

Google on a desktop.

You should not just pay blindly for leads. This will waste your advertising and marketing budget if you simply throw money into PPL. Instead, consider how you are going to proceed, first.

Here are some of the best practices that can help you maximize the effectiveness of any PPL campaign.

Set clear goals.

Establishing clear goals is an essential aspect of maximizing the effectiveness of a PPL (pay-per-lead) campaign.

Before embarking on any lead generation efforts, it is crucial to fully understand what you hope to achieve. This means setting specific, measurable, and realistic goals that align with your overall business objectives.

For example, if you are looking to increase your customer base, you may set a goal of generating a certain number of leads per month. Clearly understanding your goals will enable you to tailor your PPL campaign to meet those objectives, ensuring maximum effectiveness.

Identify and target the correct audience.

Identifying and targeting the right audience is another critical factor in maximizing the effectiveness of a PPL campaign. It is important to know who your ideal customers are and where they can be found.

This means conducting thorough research to identify your target audience’s demographics, interests, and behaviors. Once you have identified your target audience, you can develop targeted messaging that speaks directly to their pain points and motivates them to take action.

By ensuring that your PPL campaign is focused on the right audience, you can improve your chances of generating high-quality leads that are more likely to convert into paying customers.

Select reliable lead-generation partners.

Selecting reliable lead-generation partners is also essential to the success of a PPL campaign.

When choosing a lead generation partner, it is important to look for a company with a proven track record of success. This means researching the company’s reputation, reading customer reviews, and checking references.

A reliable lead-generation partner should have experience working with businesses in your industry and should be able to provide you with a steady stream of high-quality leads.

Additionally, they should be transparent about their pricing and lead generation methods, so you know exactly what you are paying for and what you can expect in return.

Conclusion of pay-per-lead.

Wrapping up this article is hard. Why, you ask? It is genuinely hard to give advice on whether you should pay-per-lead as part of your advertising and marketing efforts.

The fact of the matter is that you should consider your exact position and complete research on any providers you might choose before jumping into making payments. By far, the most important factors to consider relate to overall strategic business objectives.

Paying per lead can be a genuinely cost-effective marketing and advertising method – if it is used effectively and is backed up by a great deal of market research.

There is no magic bullet for marketing success. Research should be at the core of all of your decisions in the field. The rise of PPL makes sense.

In theory, this model ensures that very little money is wasted on marketing ‘to nobody’. In practice, it all falls apart if an adequate amount of research has not been completed.

You may also like:

Ready to Automate Your Market Research?
Get exclusive access to GapScout prior to release!

Share this:

Justin Ferriman
Justin Ferriman
Justin is the founder of GapScout, the easiest way for solopreneurs and small businesses to find profitable gaps in their market. Follow Justin on Twitter→

The Best in Market Research

Market research tips & tools sent to your inbox.

By clicking Subscribe, you agree to our Terms and Conditions.

Get Early Access!

Sign up to get early beta access to GapScout before it becomes publicly available!

We use cookies to give you the best possible experience on our website.