Searching and obtaining information to interact with potential customers who can place an order for the best price – this is one of the types of lead management called lead generation. The term itself comes from the English “lead generation”, which translates as “lead generation”. The second name is CPL (Cost per Lead).
The term “lead” is used when the buyer has shown interest in the product: left an application for participation in the event, a call back, uploaded a file, sent his contacts or filled out an online questionnaire.
Attention! A lead is not an actual, but only a potential customer.
In general, the process looks like this. An Internet user, interested in an ad, goes to the advertiser’s website and leaves contact information. A sales specialist contacts him, advises him on all issues and closes the deal.
Such a marketing tool as lead generation is useful for those businesses that carry out direct sales and are interested in increasing sales. Using this method increases the effectiveness of marketing activities, which allows you to generate a flow of potential customers and pay only for effective transitions to the site.
What is the difference between lead generation and contextual advertising?
Different cooperation options for an advertising agency client can have their positive aspects. They need to be evaluated based on a specific goal that a particular business sets for itself.
Contextual advertising
When concluding a contract for contextual advertising with an agency, remuneration for its work is most often formed either as a percentage of the advertising campaign budget or in the form of a fixed subscription fee. The amount of remuneration of an Internet agency does not depend on how many users are really interested in the ad and click on them. Moreover, the conversion of clicks into real requests is not evaluated in any way.
Note! An advertising agency that receives remuneration as a percentage of the budget is not interested in increasing the effectiveness of contextual advertising.
The agency’s profit with this approach does not depend on the results of the work, which are ultimately expressed in the provision of monthly reports with information on the number of clicks on each ad.
When ordering a lead generation service, only the target action of the buyer is paid: the actual call or application. If lead generation is used in contextual advertising, then the customer does not pay for each click, but only for the user who made a call or sent an application to the mail.
Important! With a small number of new orders coming from an ineffective advertising campaign, the cost of it will be minimal if the contract with an online agency involves payment per lead, not per click.
The profit of a CPL agency directly depends on how useful its work was for the customer’s business, therefore, it is in the interests of both parties to develop an Internet resource and constantly improve its quality.
The benefits of lead generation
Clearly setting and tracking advertising campaign goals. When using the lead generation service, the customer has the opportunity to define strict budget limits, monitor its execution and evaluate the effectiveness of the actions taken;
Efficient distribution of company resources. When forming a flow of potential customers, it becomes possible to filter the non-target audience, which frees up the time of sales managers for better service of really interested users;
Building stronger communications with customers. When promoting complex and expensive products, lead generation allows you to build interaction with customers for a long period of time, as well as fill the base of potential customers;
Target spending of the advertising budget. The customer of the AC pays only for the direct interested request of the buyer, and the number of clicks or ad impressions is not taken into account;
Guaranteed return on investment in advertising in the form of sales profits. Lead generation allows the customer to receive a guaranteed profitability from placing contextual advertising on the network;
Easy pre-assessment of effectiveness. When paying per lead, it is not difficult to assess the level of conversion of expenses into revenue.
What do you need to set up effective lead generation?
Hint! You should not order a pay-per-lead ad setup if at least one of the conditions for effective lead generation cannot be met.
To set up lead generation, you will need to fulfill certain conditions:
Products or services with high margins. If the margin in your niche is minimal, it is highly likely that it will not even cover investments in advertising, and even more so the commission of the agency.
Products for which demand has already been formed. New niches or directions are promoted using a completely different advertising strategy from the classic one. At first, you need to allocate budgets for a completely cold audience, which has a lower conversion rate. In such cases, lead generation will not work, as the number of leads will be minimal.
Average level of competition. If there is a high level of competition in a niche, the price of a lead will be huge, and if it is too low, there will be few leads. Therefore, contextual advertising with pay for leads in topics with average competitive activity is the most effective.
A high-quality Internet resource, thought out and designed for people. For effective lead generation, the page should contain a call to perform the desired action right next to the submit order button. All forms, in turn, should be simple and clear, and the phone and buttons on the page should be noticeable;
Conduct and evaluate the effectiveness of a mandatory test campaign. This allows you to get data on the conversion cost, predict the flow of new hits, analyze traffic, user behavior and compare them with similar data from other advertising channels;
Accounting for all requests for all points of their receipt. To accurately measure conversions and, as a result, effective advertising activity, it is important to have reliable data collected from all channels. They can be forms of feedback, callback and direct calls received by phone;
An accurate estimate of the cost of a lead. Without this indicator, it is impossible to predict the budget and analyze the return on investment in advertising.
How does paid-per-lead advertising work?
With lead generation, only those visitors who actually provided contact information or showed other necessary activity are paid. A prerequisite for working in this format is the exact fixation of the target action at all points: setting the counter code for the order form and callback, accounting for phone calls and messages in chats.
At the initial stage, a test campaign is conducted to determine the cost of running contextual advertising with pay for leads, after which traffic and conversion rate are analyzed. Only after that the price of attraction is calculated, the total budget of the event is determined.
Important! Conducting a test advertising campaign is a prerequisite when choosing lead generation as a marketing tool.
The goals of testing are:
Data collection for calculating coefficients and cost indicators;
Traffic structure analysis;
Analysis of non-numeric parameters of the advertising campaign that affect the conversion rate;
Assessment of behavioral factors.
The test campaign should continue until the necessary array of statistical information is obtained. It usually takes at least 100 applications to make a correct forecast. This figure may vary depending on the industry and topics.
In order for performance data to be objective, it is important to ensure that claims are accurately recorded from all possible sources.
Among them are:
request a call form;
a completed application on the site;
call center phone number;
online chat, etc;
The choice of channels for fixing requests directly depends on the area in which the activity is carried out.
Attention! Lead generation requires monitoring of all channels existing in the company: both forms and chats, as well as telephone calls.
To count the number of hits sent from the site, a counter code is set on landing pages. The target is most often the “thank you” page, shown to the user after filling in the fields and submitting the form.
Call accounting is more difficult. Tracking tools such as IP telephony are used to fix them. Special services allow you to keep a record of all incoming calls in Google Analytics.
How is the cost of lead generation service calculated?
There are three payment schemes for the services of online agencies working in the field of lead generation:
CPA model or Pay Per Action. Most often, it implies a purchase or another action agreed in advance. That is, only those who actually bought, called or left an application are paid;
CPC model or Pay Per Click. With this scheme of work, the attraction of each visitor who clicks on an advertisement is paid;
CPL model or Pay Per Lead. Only those who provided contact information or showed other necessary activity are taken into account when invoicing.
To determine the cost of lead generation after a test advertising campaign, the following data is analyzed:
Total number of clicks;
How many hits there were in total;
Test AD budget
For an example of calculating the cost, let’s take the numbers of an imaginary test campaign: the number of clicks and leads is 1516 and 43, respectively, the budget is $89.64.
We get CPL=$89.64/43=$2.08 and conversion rate 43/1516=2.84%
For which online stores does lead generation work?
It’s not enough to just bring traffic to your site. To get leads, increase conversion and reduce the cost, the site must have certain selling qualities (well thought out and optimized, user-friendly).
Attention! Lead generation is not an effective tool for every online resource.
The effectiveness of lead generation for an online store depends on many criteria, including its theme and quality.
You can evaluate the quality of an online resource for attracting leads by the following parameters:
All forms on the site are simple and clear, contain a minimum number of required fields;
The web page must contain a call to perform a targeted action. For example, “please provide your contact details and we will call you back within an hour”;
Immediately next to the message containing the call, you should place a button: “order”, “leave a request”, etc.;
The button must be made contrasting with the general background of the page, and when hovering over it is better if it changes color or transparency;
After performing the desired action, the user should be redirected to a special confirmation page, which should contain a counter code for tracking goals;
When accounting for calls, the phone number should be made as visible as possible and placed in the upper right corner of the page. It is also desirable that it be fixed when scrolling, especially on smartphones;
If all of the above rules are followed, CPL advertising will be most effective.
Should I order ads with pay per lead?
Important! When asked whether it is worth choosing CPL advertising, you can give an unequivocal answer – yes.
The best results are shown by lead generation in Kyiv for companies operating in simple, popular and widespread areas of activity. If the task is to find clients for a complex business, for example, for the B2B segment, then there are two solutions:
Interact with a company that implements a ready-made lead source;
Order lead generation in an agency that at the first stage will be able to test a niche to determine the cost of a lead and understand whether the potential number of attracted customers justifies the remuneration for the work of PPC specialists.
