What is pay-per-lead in affiliate marketing anyways?
You’ve heard of the pay-per-lead or cost-per-lead advertising model and you’re looking to learn more about it?
We’ve got good news for you!
This article is all about pay-per-leads advertising.
We will cover the pay-per-leads topic in detail by understanding what it is, how it compares to the pay-per-click and pay-per-sale models and more.
We have divided this article into the following sections for your ease of navigation:
- Definition of pay-per-lead advertising
- Types of affiliate marketing payment models
- Pay-per-lead vs pay-per-click
- Pay-per-lead vs pay-per-sale
- Where is the pay-per-lead model used
- Pay-per-lead for B2B marketing
- Impact of pay-per-lead advertising on SEO
- When should you think about pay-per-lead
- Takeaways
Let’s dive right in.
Definition of pay-per-lead advertising
Pay-per-lead is a type of online advertising where the advertiser will pay for a qualified lead on their website.
Pay-per-lead is a payment model found in affiliate marketing setups.
With a pay-per-lead type of advertising, the website visitor must perform a profitable action on the business owner’s website, or perform a non-cash conversion activity, for the business to have to pay for the lead.
The pay-per-lead advertising model is a form of affiliate marketing where there is a form of partnership between the advertiser and the business owner.
In this type of affiliate marketing relationship, the business owner will pay the advertiser on a pay-per-lead basis or PPL.
Types of affiliate marketing payment models
Within the affiliate marketing segment, there are different payment models.
You have:
- Pay-per-click or cost-per-click
- Pay-per-lead or cost-per-lead
- Pay-per-sale or cost-per-sale
With a pay-per-click payment model, the business owner will be required to pay when a user clicks on the advertiser’s ads leading him or her to the business owner’s website.
A pay-per-lead is a payment model where the business owner will not pay for a visitor clicking through its website but only when a recognized conversion action performed like filling up an online form or signing up.
The website visitor will be required to perform a non-cash conversion event to trigger a payment obligation for the benefit of the advertiser.
A pay-per-sale payment model is the most beneficial for the business owners.
Businesses will only pay the advertiser when an actual sale is recorded with a lead referred through the affiliate partner’s affiliate link.
Pay-per-lead vs pay-per-click
For a business owner, pay-per-lead is a much better payment model than a pay-per-click from a risk perspective.
Under a pay-per-lead model, a business will be required to pay when a website visitor, coming through the advertiser’s online advertising efforts, converts.
This means that the website visitor is no longer a mere visitor but a potential lead that can be nurtured and eventually converted into a paying customer.
A user that has just clicked on the business advertisement and is converted is a warm lead.
This can be interesting for the business as they will get a stream of warm leads they can quickly convert into customers quickly.
The pay-per-lead is better than a pay-per-click for a business as they’ll pay for a website visitor that has performed a concrete action or has demonstrated some interest in the business’ products and services.
This is much more attractive than a pay-per-click where you pay in bulk for any website visitor.
As for the advertisers, a pay-per-click or a pay-per-lead model will matter depending on their estimate of how much effort will be required to advertise to get users to click on the business advertisement and how many will convert.
It comes down to a numbers game.
Depending on what gives you the highest return on your investment, you’ll favour one model over the other.
Pay-per-lead vs pay-per-sale
Let’s compare the pay-per-lead to a pay-per-sale payment model.
A pay-per-sale model is when a business owner will pay you for a sale booked with a site visitor that came through the advertiser’s efforts and affiliate link.
For the business, the pay-per-sale is an interesting mode and it’s the most common form of affiliate marketing payment model.
Under the pay-per-sale model, the business owner has no obligation to pay for a user clicking on the advertiser’s advertisement or even converting based on a defined conversion definition.
Rather, the payment obligation will materialize when the business sold its products and services to a lead.
The business can then pay out the commissions from the proceeds of its sale.
For the advertiser, which is model is better pay-per-lead or pay-per-sale?
Well, it depends.
It will depend on how much a business will pay per lead or pay per sale.
For the advertiser, it’s all about the numbers.
Depending on how much time and effort it takes to generate a conversion or a sale, a payment model may be more advantageous over another.
If the return on investment is positive, then advertisers will have the incentive to adopt any payment model.
Where is the pay-per-lead model used
The pay-per-lead model can be used in a variety of ways.
Online advertising can be divided into the following categories:
- Display ads
- Search engine marketing
- Social media advertising
- Native advertising
- Pay-per-click
- Remarketing or retargeting
- Affiliate marketing
- Video ads
The pay-per-click or pay-per-lead models can be used effectively by companies highly transactional in nature.
If a company offers a simple product or a service or requires, then the pay-per-lead model can result in a lot of great qualified leads and lots of sales to the business.
The pay-per-lead model can be used in highly transactional business models.
For example, in cases where a company is offering a free trial period on their software or you need to sign up for looking at their course catalog.
On the flip side, if a company is selling complex products with long sale cycles and sophisticated buyers and if a mere click or a sign-up form will not result in a sale shortly thereafter, then the pay-per-lead model may not be used or as effective.
Pay-per-lead for B2B marketing
The pay-per-lead for B2B marketing can be a little more tricky.
To see if a pay-per-lead for B2B marketing is going to be effective, a business will need to understand its audience and who it is going after.
The more your business product is complex, the longer your sale cycle and the more you need to work and nurture your leads.
That means you’ll need to qualify more leads to ultimately generate a sale.
As a result, a pay-per-lead payment model in B2B transactions may not be profitable for a business.
A business transaction may involve several business stakeholders, will take a longer time and in most cases will require the business to develop a relationship with its prospects before they make a purchase.
A B2B business transaction is quite different than a B2C transaction.
In a B2C transaction, there is only one person making a purchasing decision and that decision can be made in minutes, if not seconds.
A pay-per-lead for B2C marketing can be more profitable for a company than in a B2B model.
In most cases, businesses in the B2B space will tend to offer a pay-per-sale or cost-per-acquisition type of payment model.
They’ll pay a commission once they’ve secured the sale resulting in less risk for the business.
Impact of pay-per-lead advertising on SEO
The pay-per-lead advertising model can have a positive impact on your SEO.
SEO today is not like what SEO used to be a decade ago.
There are hundreds of factors used by search engines to evaluate the relevance and value of your page for their users.
There are however some key SEO basics and fundamental parameters that are known to help improve SEO.
Some of the parameters helping SEO are:
- Click-through rate or CTR
- Dwell time on page
- Bounce rate
- Backlinks
Implementing a pay-per-lead advertising model, you will generate clicks to your website signaling to search engines that your page is relevant.
Your referral partners will most likely build advertisements surrounding your products and services by doing content marketing, blogging or other forms of advertisements giving you backlinks.
These backlinks are correlated with improved SEO ranking for your website.
Also, if you have a solid landing page and a good conversion funnel, you will engage with your website visitors who will spend more time on your web page thereby increasing their dwell time.
This is another positive SEO signal for your website.
Using an attractive landing page and engaging with your audience, you will also reduce the bounce rate representing those users who leave your website shortly after visiting it.
At the end of the day, your pay-per-lead advertising efforts can have a positive impact for your SEO at the same time as it can be profitable for your business.
When should you think about pay-per-lead
The pay-per-leads affiliate payment model can be interesting for you to try if you are unable to generate a good amount of revenue through your paid digital advertising campaigns.
You can also use the pay-per-lead to complement your online paid advertising campaigns.
Some industries and verticals can do quite well adopting a pay-per-lead affiliate program such as:
- Software companies or SaaS businesses
- Professional service organizations
- Industrial businesses
- Manufacturing businesses
- Marketing agencies
- Financial industries
- Insurance
To be profitable as a business, you must have a solid lead generation campaign.
You can do that through your own inbound marketing efforts or you can partner up with a referral partner who can send leads your way.
Whey they do, you will pay them on a pay-per-lead basis.
You get to define what a lead means to you so once a lead is qualified based on your definition, you will pay your referral partner.
Takeaways
There you have it folks, all you need to know about pay-per-leads advertising model.
The pay-per-lead advertising model is a payment model within the affiliate marketing advertising space.
As the name suggests, the pay-per-lead or cost-per-lead payment model will require a company to pay for leads satisfying its definition of a lead.
Typically, a conversion event or a non-monetary action has to be taken by a website visitor demonstrating their interest in the business products or services.
This can be done by signing up for a newsletter, downloading a whitepaper, downloading a free trial of a software or requesting a call back from a sales representative.
These are all conversion events that could justify a payment to the referral partner from whom that user came from.
The pay-per-leads model is an interesting model for both businesses and advertisers depending on the nature of the business, volume and types of products and services being sold.
Businesses could evaluate a cost-per-lead model if they are not generating enough sales from their own paid advertisement campaigns.
Advertisers can generate good returns by promoting products and services and receiving a commission for every lead.
In the end, the pay-per-lead advertising model in affiliate marketing can be quite interesting to consider.
We hope you enjoyed this article.
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