Online campaigns can be divided into two main groups - branding and sale-oriented, in practice very often both of these types are combined.

In the internet where everything can be measured you need to keep in mind and understand several variants of advertisement pricing before starting negotiations, let’s describe them briefly.

  1. Cost per time
  This is the worst variant, because you pay for a certain period of time and don’t

  get anything guaranteed like clicks or views, or leads.

  2. Cost per view
  It’s also called CPM or cost per thousand views. This is better
  then paying for time, because you know at least how many people
  will theoretically notice you ad.

  3. Cost per click
  Getting even better, with this one you are sure that you pay for
  visits to your website or landing page, that the user not only
  ”could have noticed” but indeed noticed, got interested and
  clicked.

  4. Cost per sale
  This one is near impossible to negotiate, usually no one will
  agree to work on such basis, but it’s the ideal variant, you
  know how much your product costs, you know how much you will pay
  to a website for a sale, one minus the other and you get
  guaranteed ROI. This is usually the model of affiliate programs
  where the vendor pays commission to affiliates from each sale.

  Small tip, in any of these types of payments, knowing such things as traffic on the page you are advertising on, CTR of the ad and CTRs on your landing pages and shopping cart, you can make a simple mathematical model to estimate the cost per sale even if you are doing a cost per time campaign, you have to note though that going up from point 4. to point 1. the accuracy of the model drops, because you can never know for sure the figures in the model, but at least you can make a decision of whether it’s worth the try or not.

Every company selling corporate solutions is doing lead gen, so the ultimate question is, what’s the maximum cost per lead in a marketing campaign which can bring positive ROI?

Here’s a quick guide how we count the initial numbers needed to do successful lead gen:

Methodology

In the analyses outrageously large sales are omitted because they can sufficiently change the ratios.

We count as one lead sale – one product name, because most of the leads that generate sales – sell only one of the revised products.

We then count the number of products sold in every contract and the sales price for one product.

Then we multiply the number of products by their sales price and write that down for every contract.

Average sale price (ASP)

We count the total sales from all the contracts by each product and divide this figure by the number of contracts. Thus we receive the average sale price (ASP) for one contract.

Maximum cot per lead (CPL)

We take x% for each average transaction sum and thus receive the maximum CPL which we are ready to pay in a marketing campaign.

Average sale per lead (ASL)

We take the total sum received from specific leads for a period of time and divide this figure by the number of leads received in the same time range.

How to count the x%

To prove that the x% assumption is the right figure for counting the maximum CPL, we count the average sale per lead (ASL) confined to a specific product, i.e. the figure which would give a $0 ROI in a campaign in case it is taken as the CPL.

Because on average an even number of leads sell each of the revised products, we divide the total number of leads received by the number of products in the analysis and receive the average number of leads dedicated to each product.

Then we divide the total sum received from each product by this figure and receive the same maximum CPLs, so performing everything the other way around, you will get the x% which you can use for future analysis.