Why Cost Per Lead Might Be Going Up & What to Do About It

Cost per lead, or CPL, is the total amount it costs for your firm to generate one lead, calculated at its most basic level by dividing total marketing spend by number of new leads. 

Especially if you’re spending money on digital marketing, it’s important to keep a close eye on CPL creep and make adjustments to your strategy or your creative if costs continue to rise. 

Ways to Address the Issue

Market saturation: As more businesses enter your niche, competition for audience attention intensifies. This saturation can impact advertising costs across platforms as clients drive the cost per click and spend needed to reach your audience. 

Mitigation: Explore untapped or emerging markets where competition is less fierce. Consider expanding into new geographic areas or targeting different customer segments.

Algorithm changes: Social media and search engine algorithms are updated frequently, which can affect organic reach and ad performance.

Mitigation: Diversify your marketing channels to reduce dependence on any single platform. Develop a strong organic presence alongside paid campaigns to build resilience against algorithm shifts.

Ad fatigue: Your target audience may become desensitized to your messaging over time, leading to decreased engagement and higher costs.

Mitigation: Regularly refresh your creative assets and experiment with new ad formats. Implement personalization strategies to make your content more relevant to individual users.

Economic factors: Broader economic conditions or seasonal trends can impact consumer and business spending habits and the overall effectiveness of marketing efforts.

Mitigation: Adjust your value proposition and ad messaging to align with changing economic conditions and historical seasonal trends. Don’t expect 1000 in leads in the dead of summer for your B2B software. 

Click fraud and bot traffic: As digital advertising becomes more sophisticated, so do the methods to game the system. Competitors or malicious actors might use bots to click on your ads, driving up costs without generating real leads. It’s important to note that this is less of a problem than many people think, and doesn’t actually happen all that frequently. 

Mitigation: Implement robust click fraud detection tools. Some platforms offer built-in protection, but third-party solutions can provide an extra layer of security. Also, closely monitor your traffic sources and look for suspicious patterns.

Quality score declination: Many ad platforms use quality scores to determine ad placement and cost. If your ads or landing pages become less relevant or engaging over time, your quality score may drop, leading to higher CPL.

Mitigation: Continuously test and refine your ad copy, visuals, and landing pages. U Ensure your landing pages load quickly and provide a seamless user experience. Be clear and explicit in your Ad Copy and landing pages, stop using high minded language that sounds good only to executives.

Combat Soaring CPL With These Proven Strategies

• Enhance your lead qualification process to focus on high-quality prospects, potentially reducing overall volume but improving conversion rates.
• Invest in content marketing and SEO to generate more organic leads, reducing reliance on paid channels.
• Implement a robust lead nurturing program to maximize the value of each acquired lead.
• Explore partnerships or co-marketing opportunities to tap into new audiences at a lower cost.
• Optimize your landing pages and lead capture forms to improve conversion rates, effectively lowering your CPL.

If you have questions about ad spend, CPL, or your digital marketing strategy as a whole, don’t hesitate to reach out to our team.