Cost per lead (CPL) is a key performance indicator used in digital marketing to measure the cost-effectiveness of lead generation efforts.

It is calculated by dividing the total cost of a marketing campaign by the number of leads generated:

CPL = Total Campaign Cost / Number of Leads

This cost per lead formula gives you the average cost to acquire a single lead. It enables marketers to evaluate the return on investment (ROI) of campaigns across different channels and optimize their spending on lead gen activities.

A lower cost per lead (CPL) is generally desirable, as it indicates higher marketing efficiency and lower customer acquisition costs.

However, the target CPL can vary significantly based on factors like deal size, sales cycle length, industry, and more. Marketers aim to balance generating high-quality leads at an optimal CPL given these variables.

Tracking CPL over time and experimenting across marketing campaigns allows marketers to identify the lead sources, offers, marketing efforts, and creatives that deliver leads at the lowest cost.

This allows for smarter marketing budget allocation toward the campaigns and tactics that provide the best ROI.