What Is Pay Per Lead Marketing?

July 2, 2024
Jack Hahn

Pay per lead (PPL) is a marketing model where a client pays a marketing agency for delivering qualified leads. These leads are potential customers who have shown interest in a product or service.

Marketing agencies favor PPL programs because they lower their clients’ costs. This cost reduction makes it easier for agencies to attract new clients. Offering pay-per-lead programs lets agencies present a more appealing option compared to traditional marketing methods. These usually rely on retainers instead of pay-per-lead or pay-per-result models.

There are several different PPL models. But none of them will succeed unless your marketing agency is effectively generating leads.

This means the agency must focus on attracting high-quality leads that are more likely to convert into paying customers.

The success of a PPL campaign hinges on the agency’s ability to generate leads that meet the client’s target audience criteria.

PPL vs. PPC vs. CPA: Understanding Different Lead Models

As a client, pay per lead (PPL) marketing gives you a way to pay only for results. When your marketing agency delivers qualified leads, you pay. If there are no results, you don’t.

This guarantees that the marketing agency you work with spends money effectively and that you get maximum value for each dollar spent.

Pay per click (PPC) involves paid search campaigns where you pay for each click on a set of ads. PPC can drive website traffic, but there is no guarantee that these clicks will turn into qualified leads. Which means you might end up paying thousands of dollars without gaining any customers.

Cost Per Action (CPA) is another model where you pay only when leads take a specific action. This could be signing up for a service, making a purchase, or joining a mailing list. CPA offers a middle ground that brings engagement beyond just clicks, but it’s still different from the direct lead delivery of PPL.

Why Choose PPL To Find Qualified Leads?

PPL is extremely cost effective. It makes a direct impact on your business’s growth. Working closely with a lead generation provider with a proven track record will help you reach more leads that match your ideal customer profile.

Choosing the best pay-per-lead service means your business can attract new customers who have expressed interest and are ready to take action, ensuring that your marketing strategy delivers real results.

Pay Per Lead Model And Channels

Now that you know the basic differences between PPL, PPC, and CPA, let’s clarify the different ways you can use Pay Per Lead marketing to find qualified leads.

Advertising

In the advertising model, you wouldn’t cover the ad spend. Instead, you would pay a fixed amount when a customer fills out a form.

The beauty of this model is that you (usually) don’t need to worry about the cost of running ads. Your lead generation agency manages the ad campaigns to capture leads at the best cost-per-acquisition possible.

That said, some marketing agencies will ask you to cover the ad spend and set a budget before you begin. This is most likely to happen if you work in a niche or industry where finding qualified leads is harder.

Your marketing agency is incentivized to keep your spending as low as possible, but they need to make money, too. They can’t always justify spending thousands of dollars on ads for your business, especially if the money spent isn’t leading to conversions.

A graphic render of a cursor clicking on a search engine advertisement

Cold Outreach

With cold outreach, there’s no need to set a budget for ad spend. But often, you’ll have to pay for the tools your marketing agency uses to generate leads. Then, you pay only when they deliver leads using those tools.

Email outreach is a great example.

As the client, you don’t usually pay a retainer. Instead, you might cover the fixed price of the tools each month. Then you pay extra for each lead generated.

This model is great for businesses seeking to keep their costs low, but Google is in a constant battle with marketing agencies. Their goal is to keep as much spam as possible from reaching the inbox, which means they’re always updating their algorithms. The goal is to make it harder for promotional messages and sales offers to reach the inbox.

This is why cold outreach works well, but it doesn’t work well for everyone. Especially if you’re in an industry like finance, accounting, or IT. It’s extremely difficult to write clear messaging about services in these industries that won’t trigger spam filters. In fact, many pay-per-lead agencies won’t sell their services to clients in these niches for this exact reason.

A business owners replies to responses from leads generated by her cold email outreach campaigns

SEO

Search Engine Optimization (SEO) is another channel that can work well with a PPL model. You don’t pay for tools upfront, but you need a great agency that can write pages that rank well. If those pages bring in traffic that performs an action, like filling out a form, you pay the marketing agency for each form fill.

SEO-based lead generation services leverage content marketing and search engine optimization to attract decision-makers and potential customers.

But it’s important to realize that SEO isn’t a strategy that brings in high number of leads very fast.

Usually, you’ll need to give your published articles and landing pages time to rank before they begin bringing in leads. If you need more customers fast, SEO pay-per-lead services may not be the best way to get them.

Pay Per Lead Benefits: Why PPL Can Generate Leads Efficiently

Working with a pay-per-lead agency can offer several benefits, like the fact that you often don’t need to pay a retainer. Your marketing agency might simply have you cover the tools instead.

If you do pay a retainer, it’s likely only to cover tools and to pay the team members assigned to your project.

Fixed Cost Per Lead (CPL)

Under a pay-per-lead agreement, you generally pay a fixed price for each acquired lead. This means you don’t need to worry about adjusting ad spend or dealing with fluctuations in the cost of acquisition for each lead.

This fixed cost structure allows for better budgeting and planning. It frees up money you can invest into other parts of your business.

No Surprise Costs

PPC models can fluctuate wildly depending on ad success. With PPL models, you save money by avoiding these fluctuations.

In many cases, you also don’t need to worry about Google’s updates affecting your ad performance and increasing your lead acquisition costs.

No Results, No Worries

Advertising models with fluctuating costs may not lead to results. This means you could spend thousands on ads without generating leads.

Under PPL, you only pay when you get leads.

This means you don’t end up paying your marketing agency for poor performance. You get exactly what you pay for.

Pay Per Lead Drawbacks: What to Watch Out For

While PPL can be highly effective, it isn’t the best choice for every business. Here are some drawbacks to consider.

Lead Quality Concerns

If your marketing agency isn’t using the right qualifiers, you could end up paying for poor-quality leads.

Agencies are incentivized to bring in as many leads as possible, which might compromise lead quality.

You must set strict targeting criteria to keep lead quality high.

If you’ve found a lead gen agency with a PPL model you’d like to try, look at the agency’s reviews from past clients. Negative reviews about their PPL program should be a red flag. Work with agencies known for providing high-quality leads.

Not a Guaranteed Solution for Every Business

PPL models work best for businesses selling products or services that people need regularly. If timing plays a major role in purchasing decisions, PPL might not be the best fit.

Agencies tend to work with businesses they are confident they can generate leads for. That said, this model might not suit every industry. It’s not unheard of for marketing companies to avoid working with businesses in accounting, finance, and IT. The exception is when they have a very competitive and specific offer.

Learning Curve

Your marketing agency will need time to understand your product or service. This learning curve can take up to two months as your agency works to refine your messaging.

Agencies with huge experience in your niche might be able to shorten this by a few weeks. But it isn’t a guarantee.

Always inquire about an agency’s experience selling similar products and services to your own. This makes it easier to gauge how quickly they can generate results.

Choosing the right PPL model and agency can drive business growth and customer acquisition effectively. Before selecting a PPL model, collaborate with lead generation agencies that have experience in generating leads through pay-per-lead methods. These agencies can provide valuable guidance on choosing the right PPL model for your business.

How To Choose a Pay-Per-Lead Program

Choosing the right pay-per-lead (PPL) program is one of the most important steps for generating qualified leads. Here’s a general guide to help you make an informed decision.

Research Marketing Agencies

Look for marketing agencies with well-established PPL programs and plenty of customer reviews.

Read them thoroughly to learn what success other organizations have had working with the same agency.

Positive reviews are solid indicators that the agency is capable of identifying and attracting a qualified lead.

Evaluate Fit for Your Business

Know whether or not PPL is the right choice for your business.

Marketing agencies that run PPL campaigns often use lead databases to pull contacts they’ll reach out to on your behalf.

If your business relies on customers seeing your offer at exactly the right time, then PPL may not be your best option.

The same is true if you need your customers to use specific technology that isn’t the industry standard. This is because prospecting platforms might limit your agency’s ability to filter contacts based on the software they use.

Compare Past Results From Internal Marketing Efforts

Compare results from your past marketing efforts to results from the agency you have in mind.

Look for case studies for companies similar to your own, but take them with a grain of salt.

Your marketing agency is likely featuring its most successful clients. There isn’t any guarantee that you’ll see the same results. This is true even if your company works with the same industry or audience.

An internal team researches pay per lead marketing agencies to determine the best fit

Look For Sign-Up Incentives

Look for incentives. Some agencies will provide the first few leads for free. If they do, it’s likely a way to establish trust. It may also be a way to compensate for the time it takes to fine-tune the messaging for your offer.

If they don’t offer incentives, it isn’t necessarily a dealbreaker. But it may indicate the agency you have in mind isn’t confident they can attract potential leads.

Understand Setup Costs and Retainers

Make sure the agency you work with is clear about setup costs and retainers.

If the agency you work with isn’t transparent about costs and the price of each lead, you might see hidden fees down the line.

This defeats the purpose of a PPL model, which is supposed to help you keep your marketing spend predictable.

Compare Price Per Lead To Client Lifetime Value

Compare the price per lead to the lifetime value of your clients.

If an agency charges $500 per lead but you only earn $400 during the time you work with a client, it’s not worth it.

Ideally, you want an agency that prices each lead 2-5 times lower than your average client’s lifetime value.

What Businesses Should Consider Pay Per Lead Marketing?

In our experience, Pay Per Lead (PPL) works best for companies in the industries below.

Marketing

Marketing firms are always looking for new clients, and businesses are often looking for new marketing firms.

If you own a marketing agency, the PPL model helps you attract potential customers who actively need marketing.

These leads are often sales-ready, which makes it easier for the sales team to close deals.

Religious Institutions

Religious institutions can use PPL to reach out to potential members or donors. Churches are community-focused, and they tend to respond to sales messages very often.

Companies that offer services specifically to churches can also use pay-per-lead programs to quickly get in touch with leads who need their services.

Legal Services

Businesses need legal help all the time. If you’re a lawyer who offers any service that businesses need on a regular basis, PPL is a fantastic option for finding new business.

This is partially because businesses that need legal assistance are often ready to take action right away.

This helps your firm grow its client base without spending money on broad advertising campaigns that may not bring in results.

What Businesses Should Avoid Pay Per Lead Marketing?

PPL doesn’t work as well with industries where timing and technology are key to selling your products or services. Many lead generation agencies may refuse to work with clients in the industries below.

IT

The IT industry often deals with complex solutions and very long sales cycles.

PPL may not be as effective because potential leads need nurturing and education before making a decision.

And the complexity of IT services means that leads might not be sales-ready immediately. Your sales prospects may not understand your offer. If that’s the case, they simply won’t buy from you.

Software

Software companies, especially those offering specialized products, might find PPL challenging for the same reasons as IT companies. Sales-ready leads may need a significant amount of education to understand the benefits of your software. They might meet with you, but won’t be willing to buy until they clearly understand how you can help.

Accounting and Tax Services

Accounting and tax services often rely on long-term relationships and trust. Potential customers may take a while to decide to buy or meet with you unless they hear about you through a recommendation.

The PPL model might bring in leads, but these leads likely won’t be ready to commit immediately. Depending on what your agency charges for each lead and how quickly you need to bring in revenue, the pay-per-lead model may not make sense.

How To Set Lead Qualifications For Your PPL Programs

No Pay Per Lead (PPL) program will deliver the quality leads you’re after unless you ask the right qualifying questions. Here’s how you can decide what you need to ask to attract the right potential customers.

Identify Unqualified Leads

Start by considering the types of businesses you wouldn’t work with.

What makes them unqualified?

It might be their revenue, the technologies they use, employee count, or other factors you can measure.

Clearly defined disqualifiers help you filter out low-quality leads and focus on those who benefit most from your services.

Ask The Right Questions

Take the factors that would make a lead unqualified and transform them into questions. Keep these questions concrete and specific.

This approach helps generate qualified leads without overwhelming potential customers. The more detailed your questions, the easier it becomes to identify leads that align with your business goals.

But be cautious about asking for too much information at once.

Longer forms might attract higher-quality leads, but they also reduce the likelihood of people filling them out. Aim for short, direct, and to-the-point questions.

Learn Always

Regularly review and refine your qualifying questions to stop bad leads from scheduling a sales call.

Work with your team to identify any misalignments, then make informed decisions based on the data you collect. Ongoing optimization will help you gain greater control over your lead campaigns and drive business growth.

Pay Per Lead FAQs

Pay-per-lead is still a fairly new model within the marketing world. Here are answers to a few common questions we’ve seen during sales calls for our own pay-per-lead services.

What are some alternatives to PPL with fixed pricing?

One alternative to PPL with fixed pricing is to use databases that specialize in selling leads. These databases often sell access to prospects at a fixed price, but quality can still be an issue.

Since the leads are not pursued and gathered specifically for your business, you may end up with contacts who aren’t really interested in your offer.

How much do leads cost?

The cost of leads varies depending on the company and usually range anywhere from $300 per lead to over $1,000 per lead. Different companies have different pricing models based on the type of leads they generate and the industries they serve.

Factors that influence the price of a lead include the size of the lead’s company, the value of your product or service, and how hard it is to find and engage members of your target audience.

How do PPL companies define leads?

Lead definitions vary from company to company. Some companies will sell you “meeting-ready” leads. These leads may be interested in your services but aren’t ready to schedule a meeting until they learn more about your offer.

Other companies sell meetings with leads, meaning someone has filled out a form indicating interest in your offerings.

Leads generated directly through your website are more likely to be ready for a sales conversation.

I Own A Marketing Agency. How Can I Offer A PPL Program?

If you’re a marketing agency, you can use PPL programs to boost results and motivate your team to do better work. This is especially true when you give them commissions for the leads they bring in. Here’s some general advice as you get your own pay-per-lead program up and running.

Leverage Your Strengths

Consider your team’s strengths.

Are they great at keeping the cost per conversion low on platforms like Google and Meta ads? Or are they better at gaining leads through methods like SEO and cold outreach?

You want to provide PPL services for the platforms you’re most confident will bring in results.

Test On Yourself

You know what your business does better than anyone else. Which means you can sell your services better than anyone else.

If you can demonstrate that your PPL strategy works for your own business, it will be easier to sell the same strategy to others.

Refine Your Practices Regularly

Since you’re only paid when you get results, you need to do everything possible to optimize your processes.

More time spent bringing in results means more money lost and fewer profits for the leads you do generate.

Keep Your Pricing Competitive

This one’s obvious, but nobody wants to pay you $1000 per lead when they can pay another agency $500 for the same service.

Constantly optimizing your processes is the most direct way to make room for more profits without raising your prices.

Market Your Offer

Once you’ve decided on a program, tested it, and you’re ready to sell, advertise it through the channels that bring in the most leads for your own business.

Use digital marketing strategies and search engine marketing to attract potential customers and grow your business.

Grow Your Business With Pay Per Lead Marketing

Pay-per-lead is a powerful model where clients pay marketing agencies to deliver qualified leads who show genuine interest in a product or service.

However, the success of a PPL campaign hinges on your marketing agency’s ability to generate leads that align with your target audience criteria.

Schedule a call with a ClearBrand marketing expert today to discover which marketing strategy and channels are best for your business.

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