Pay Per Lead (PPL): The Advertiser’s Guide

In digital advertising, it’s not always enough to get clicks or impressions — most businesses want sales. Enter pay per lead (PPL). This performance-based advertising model enables companies to pay only for qualified leads. In this guide, I’ll cover everything you need to know about PPL — what it is, how it works, and how it differs from pay per click (PPC).

What Is Pay per Lead (PPL)?

Pay per lead (PPL) refers to an advertising model where advertisers pay only when a customer lead is generated. That’s because the goal of a PPL campaign isn’t just to drive traffic, but to acquire potential customers. Different actions can be considered leads, like filling out an online form, signing up for a free trial, or requesting a quote.

What Is Pay-per-Lead Marketing?

Pay-per-lead marketing is closely related to PPL. However, while the latter is simply a pricing model, PPL marketing refers to the strategy behind PPL that advertisers use to drive leads through performance-based marketing campaigns.

With pay-per-lead marketing, you need to set clearly defined criteria for what constitutes a lead. You can do this by using contact forms, downloads, or sign-up events, such as webinars or appointment bookings, which are easy to track. The key is to be efficient — you want every dollar you spend to be tied to a measurable outcome. This way, you can calculate your return on investment (ROI) and customer acquisition costs.

Why Is PPL Important?

PPL can reduce wasted ad spend because you’re only spending money on leads — users who have taken a concrete step towards becoming a customer. In other words, you only pay when someone has shown genuine interest in your product or service. This can also make it easier to scale your campaigns, because there is less guesswork about your users, so you can be more confident in the outcomes.

Pay-per-Lead Channels

PPL campaigns can be run on many different channels. The challenge is knowing which platform is the right one for your product or service, and your target audience. Here are some common PPL channels:

Search Engine Advertising

Most search engines, like Google or Bing, operate on a pay-per-click (PPC) model. However, you can run PPL campaigns on these platforms by tracking what happens after the user clicks. To do this, you need to determine what will qualify as a lead — an online form submission, or a request for a quote, for example — and then use Google Ads’ or Bing Ads’ conversion-tracking tools to optimize for leads.

Affiliate Marketing

PPL is very popular with affiliate marketers, who make money by promoting a business’ product or service and driving sign-ups. For example, an affiliate for a software company would earn a commission if a user clicked on an affiliate link and signed up for a free trial of a software product. Even though the client hasn’t bought anything yet, a lead has been generated, increasing the likelihood of purchase.

Social Media Advertising

Most social media platforms allow you to structure your campaigns to generate leads and optimize for cost per lead (CPL), even though they operate on a PPC or cost-per-impression (CPM) model. For example, in this case study, PPL Labs generated over 200 leads for Disc Centers of America using Facebook Ads:

Email Marketing

While email marketing is typically designed to build relationships with potential leads over time, email campaigns can also drive users directly to lead generation forms or sign-up pages, especially when a lead magnet is used, such as an e-book or webinar.

Pay-per-Lead Models

Here are some common ways in which PPL campaigns are structured:

• Pay per qualified lead: This model aims to identify leads that are most likely to become customers. Leads must meet clearly defined requirements to qualify and for payment to be generated.
• Pay per appointment model: This approach aims to generate appointment bookings, whether for a consultation or a product demonstration. You can agree to pay for a booked appointment or a completed appointment.
• Pay per download: If your goal is to drive conversions of a lead magnet, consider paying per download. It’s easy to measure the performance of downloads, but be warned, some users may just be looking for a freebie with no intention of making a purchase.
• Pay per attendee: If you’re holding a webinar, you can pay based on the number of attendees. That said, webinar guests may be lower-quality leads and not as ready to buy as someone prepared to book a 1:1 appointment or sign up for a free trial.

Advantages of Pay-per-Lead Marketing

PPL marketing can be an effective way to drive business growth when run correctly. Here are some benefits to PPL campaigns:

Cost Efficient

Since you only pay when you receive a lead, your budget can stretch further. This method is ideal for smaller businesses or businesses with a limited marketing budget.

Easier to Track ROI

Because PPL campaigns have clear attribution models (rules for measuring outcomes), it’s much easier to track ROI. This also makes it easier to test different creatives and channels to determine which ones are most effective.

Generates Warm Leads

PPL campaigns are usually focused on mid- or bottom-funnel actions. Remember, you’re not just looking to drive traffic: The leads you generate (and pay for) are more likely to convert into paying customers than brand-awareness campaigns.

Considerations with Pay per Lead Marketing

PPL marketing has its advantages, but it also has some drawbacks. Here are some potential challenges to consider:

Lead Quality Can Vary

Not all leads are created equal. If you don’t execute your campaign targeting effectively, or your leads come from low-quality sources unlikely to convert into paying customers, you could generate unqualified leads and waste time and money.

Risk of Fraud

If you use a third-party vendor for your PPL campaign, you could be subject to fake or incentivized leads that don’t result in sales. For example, let’s say you’re running a PPL campaign for a roofing company, and you decide to hire a third-party lead-generation vendor. Your goal is to find homeowners who are looking for roofing services, and you offer the vendor $75 for every qualified lead. The vendor, in an effort to drive a high volume of leads, involves several affiliate partners. One of the affiliate partners runs an aggressive sweepstakes offer, where users can enter to win a $500 Home Depot gift card. The sign-up may gather all of the contact information required to fulfill the lead, but the user has no intention of hiring a roofer — they just want the gift card.

Campaigns Can be Difficult to Manage

A high-performing PPL campaign requires ongoing optimization, including testing various creatives and platforms, as well as close collaboration between the marketing and sales teams. This adds complexity, and if things are not aligned properly, you could lose valuable leads.

Choosing the Right Pay-per-Lead Program

Before committing to a specific PPL program, make sure it includes the following:

Well-Defined Lead Criteria

Everyone involved needs to understand what qualifies as a lead and how those leads will be delivered and tracked. This will reduce the number of low-quality leads and irrelevant submissions. It also sets the foundation for effective tracking and optimization, and protects ROI.

Proven Track Record

Only work with vendors or affiliates who have a track record of success in similar industries and customer segments. You can ask for references, read online reviews, check with industry experts, and read case studies. For example, Taboola publishes case studies of successful advertising campaigns on its website.

Scalability

Look for programs that allow you to scale your campaign as your results improve, without sacrificing the quality of your leads. Not all vendors can handle large volumes of leads, so you want to find large networks with multiple traffic sources that offer automation and lead-filtering tools, to ensure high-quality leads.

How to Optimize PPL Costs

Improve Your Targeting

Don’t just send your ads to everybody: Use audience segmentation and behavioral data to target the right audience for your ads. While this can take time, laser-sharp targeting will result in more relevant leads and lower ad spend.

Test Continuously

Always be A/B testing your ad creatives, offers, and landing pages. Even small changes to images, text, or call-to-action (CTA) buttons can result in higher conversion rates. Take advantage of performance advertising platforms that offer AI-powered A/B testing, which allows you to continuously test and optimize in real time.

Automate

The more you can automate the various steps in your PPL campaign, the more quickly leads can move through the funnel. For example, identify tools that can automate lead scoring (assigning a rating to each lead based on the likelihood of the user becoming a customer), customer relationship management (CRM) integration, and follow-ups.

PPL vs. PPC

Pay-per-lead (PPL) and pay-per-click (PPC) models may sound similar, but each method is used to accomplish different marketing goals. For starters, PPL is outcome-focused: You only pay when you receive leads, which are more likely to result in paying customers. The purpose of PPC campaigns is to drive traffic. You pay for every click, even if the user doesn’t convert. PPC campaigns typically sit at the top or in the middle of the sales funnel. PPL campaigns operate in the middle to the bottom of the funnel.

Key Takeaways

Pay-per-lead (PPL) marketing allows advertisers to generate high-quality leads while keeping ad costs low. Because you’re only paying for qualified leads, it’s easier to track return on assets (ROA) and scale campaigns based on actual results. But, successful PPL campaigns rely on clearly defined lead criteria, choosing the right partners, and actively managing campaigns to avoid low-quality or fraudulent leads. If done correctly, PPL can be an excellent way to grow your business.

Frequently asked questions (FAQs)

What is the pay-per-lead generation model?

A pay-per-lead generation model is a type of advertising in which businesses only pay when a qualified lead is generated, instead of paying for traffic, clicks, or impressions. The goal of PPL advertising goes beyond brand awareness to finding potential customers.

Is pay per lead legit?

Yes, PPL is a widely used digital marketing model. However, like any model, it can only be effective when used properly, which is why it’s crucial to choose a partner and establish clearly defined lead criteria. Otherwise, you could be subject to fraud or poor results.

PPL vs. PPC vs. CPA: What’s the difference?

With pay per lead (PPL), you pay when, e.g., a user submits a form or expresses interest in your product or service. With pay per click (PPC), you pay as soon as someone clicks your ad (you don’t pay for impressions only). With cost per acquisition (CPA), you pay when someone completes a specific action, such as making a purchase or subscribing to a service. In the sales funnel, PPL sits between PPC and CPA.

What is an example of a pay-per-lead campaign?

A window company runs a PPL campaign where they only pay when someone fills out a form to request a free quote for new windows. They partner with a lead-generation platform that drives traffic through Google Ads and Facebook Ads. Users must click on the ad and complete the form, which includes their name, home address, and contact information. Every time it happens, the platform qualifies it as a lead and charges the window company $50.

How do you calculate pay per lead?

A straightforward way to calculate PPL is to divide the total marketing campaign spend by the number of leads generated. For example, if you spend $1,000 on a campaign and generate 100 leads, your PPL is $10.