Cost Per Acquisition vs. Cost Per Lead

Whether you realize it or not, digital advertising is a part of our everyday lives. 

Digital marketing has become a big business. In fact, digital ad spending surpassed TV ad spending last year. For context, that means spending on digital ads was over $77 billion! 

With so much money being spent on online advertising, it makes sense to understand the best-paid advertising methods to maximize profits for your business.

Acronyms For Every Cost Imaginable

If there’s a cost to something, marketers probably already made an acronym to describe it. 

You may already know acronyms like CPM (cost per mille), CPC (cost per click), and CPL (cost per lead) and CPA (cost per acquisition) that describe the different advertising strategies businesses can implement. 

It’s important to know what these acronyms stand for and what they mean for your business.

For this article, however, we will focus on Cost Per Lead (CPL) and Cost Per Acquisition (CPA). Each metric measures the spending required of businesses during different legs of the customer journey.

Let’s lay the groundwork for starting your digital marketing ad campaign.

Defining Leads

What exactly qualifies as a lead? We’ll classify leads as someone who leaves any kind of contact information on your website or campaign. Contact information means an email address, phone number or just a person’s name collected via a contact form.

This information helps you evaluate and assign a cost to new strategies for your marketing campaign. 

When you are evaluating new marketing strategies ask yourself this question: 

“Does this new medium strategy create leads at a lower cost than your previous channels?” 

If that’s the case, you may find it’s worth investing more resources.

Cost Per Lead

CPL is one of the most commonly used metrics to analyze the efficiency of a marketing campaign. Cost per lead (CPL) is the amount you spend to generate a new lead. 

CPL is essentially the amount of money your business needs to spend in order to generate a single lead. 

Understanding CPL can help you determine which lead generation channels are the most affordable and efficient. That way, you can make informed marketing decisions over time. 

Calculating Cost Per Lead

So how do you calculate the cost per lead for your marketing campaign? It’s actually not as hard as you think.

Cost per lead is calculated by dividing what you spend ($) on a campaign or channel by the number of leads (#) generated.

How to calculate cost per lead

As an example, consider your company spent $5,000 on a pay-per-click (PPC) campaign and 100 users converted to leads: Cost per lead = $5,000/100 = $50 per lead.

Lead Quality

Your cost per lead will be different depending on your industry, channel or the quality of a lead. 

A study by SurveyAnyplace shows that your target industry and channel are major deciding factors for pricing in campaigns.

Industry CPL benchmarks
Source: Nigel Lindemann, SurveyAnyplace

If you want quantity you might want to lower your cost per lead, even if the leads aren’t as qualified. Alternatively, you might want to increase the cost per lead to target quality leads with lower overall customer acquisition costs (more on that below). These will be more suited for your business.

SEO Optimization for Your Campaign

Optimizing your digital advertising campaign used to be heavily reliant on the types of keywords you used to rank in search results.

However, there’s more that goes into SEO these days than just keyword research. Nowadays, SEO is heavily weighed by these factors:

These SEO metrics are often overlooked by first-time advertisers, so be sure to build up your brand online via your website.

We also recommend you updated contact information for your business on all of the major search engines.

For keyword research tools, we recommend you use tools like SEMRush, Uber Suggest, Moz and Wordstream.

These tools provide you with valuable industry keyword you can rank for, as well as the keywords your competitors are using.

Pay Per Lead Live Chat

Live chat is a popular lead generation strategy that many businesses use to lower the cost of their generated leads. 

How does live chat do this? 

With live chat, you have a human representative field chats with prospective clients via a chat widget on your website.

Through this interaction, the representative uses a customized script made by you to sort through all the leads your website gets daily. 

Think of investing in live chat services as getting higher quality leads for your business. The more money you invest in developing your live chat strategy, the better the quality of leads you’ll receive.

One way to look at this is with candy – because who doesn’t love candy!

Let’s say you spend $100 on 50 candies while your friend spends $125 on 75 candies. Your friend spent more overall.

But the cost per candy works to her advantage! Your friend spent $1.66 per candy while you spent $2 per candy!”

Candy illustrates how pay-per-lead chat can lower CPL
Candy illustrates how pay-per-lead chat can lower CPL.

Want to learn about how to use live chat to increase conversion? Download our whitepaper here.

Cost Per Acquisition

Cost per acquisition (CPA) is similar to cost per lead, but the metric applies to leads that are further down the funnel.

This metric is defined as the total cost of acquiring a new customer via a specific channel or campaign.

This metric is usually associated with your total media spend on a particular campaign.

For example, if you spend $250 to design a new display ad and invest $500 in the campaign for that ad, that particular campaign cost is $750. If you acquire five new customers from that campaign, the CPA is $150.

How to calculate Cost Per Acquisition:

Similar to how we calculated CPL we calculate CPA by performing the following equation:

How to calculate cost per lead

To calculate the total media spend of a particular campaign, simply replace “money” and channel/campaign with “media”:

How to calculate cost per lead

To summarize: You calculate the cost per acquisition by dividing the total cost (whether media spend in total or specific channel/campaign to acquire customers) by the number of new customers acquired from the same channel/campaign.

Advantages and Disadvantages of CPL & CPA in paid campaigns

Every marketing plan should include some form of paid digital advertising. Many of these platforms base cost on CPL or CPA. Before you start, you should be aware of the pros and cons of paying based on CPL & CPA.

Advantages of Cost Per Acquisition (CPA)

Disadvantages of Cost Per Acquisition (CPA)

Advantages of Cost Per Lead (CPL)

Disadvantages of Cost Per Lead (CPL)


Cost per acquisition and cost per lead are used by many businesses in a variety of different industries.

The value these metrics can provide depends on your product or service you want to sell.

Remember, the quality of the leads you generate from these campaigns varies based on your budget. The more time and resources you dedicate to refining your digital marketing strategy, the higher the quality of leads you will generate from your campaign.