Which Marketing Channel Has the Lowest Cost Per Lead?

Are you spending more to acquire customers than you wind up earning from them?

If the answer is yes, it means your cost-per-acquisition (CPA) is higher than your customer’s lifetime value (CLTV).

It also means that your current marketing efforts are unsustainable and will lead to lost revenue. 

However, most business owners overlook CPA and CPL (cost-per-lead). 

Why?

It’s because they’re too busy tracking their clicks, views, and impressions, falsely believing they’re more important for measuring ROI. 

That’s not the case. 

Tracking the cost-per-lead for each marketing channel is the #1 way to measure lead generation ROI, so it should take precedence over other metrics. 

By understanding which marketing channels have the lowest CPA and CPL (but still yield great results), you’ll know beyond a reasonable doubt where your money is best spent. 

This kind of data-driven budgeting is how you avoid overpaying for channels that seem promising, but in reality are actually underperforming. 

In this post, we’ll teach you how to spend less per qualified lead, which will vastly improve your marketing ROI. 

Along the way, you’ll learn which marketing channels have the lowest CPA, like SEO, so keep reading! 

Why Cost-Per-Lead is the Metric That Matters Most for Measuring ROI

Whether you want to do SEO, pay-per-click (PPC), digital PR, or any other type of marketing, you need a way to measure the success of your efforts. 

Particularly, you have to determine whether you’re seeing a positive return on investment or if you’re spending more money than you’re bringing in. 

If you never take a look at your metrics, you’ll have no way of knowing if you’re striking gold or digging your own grave. 

Thus, it’s critical to pay attention to your performance data during any type of marketing campaign. 

The trick is knowing which metrics matter most for meeting your goals. 

A mistake many beginners make is focusing too much on engagement metrics that they think represent ROI, but don’t. 

The hidden cost of cheap clicks 

Cost-per-click (CPC) is the perfect example of an engagement metric that masquerades as an ROI metric. 

It measures how much you have to pay whenever someone clicks on one of your paid ads for a particular keyword (in a PPC campaign). 

The false assumption is that if you target trending keywords with low CPCs, you’ll see a positive ROI. 

After all, if the keyword has high search volume and you’re not paying much for each click, that has to yield positive results, right?

The problem is that clicks don’t guarantee conversions. 

As a metric, CPC has no way of letting you know how many clicks actually lead to customer conversions. 

For instance, consider a website with poor loading speed that uses PPC ads. 

Even when targeting golden keywords with high volume and a super low CPC, they’re not likely to see many conversions (if any) because most internet users won’t stick around to wait for their website to load. 

Yet, if they used CPC as their primary metric for measuring lead generation ROI, they’d think everything was hunky-dory. 

Organic clicks and impressions have the exact same problem. A click or an impression does not guarantee a sale or lead conversion. 

This is why cost-per-lead and cost-per-acquisition are the end-all, be-all metrics for measuring marketing ROI. 

You’re literally measuring how much money it costs your business to generate a single lead or acquire a single customer, which is exactly the type of information you need to gauge the success of any marketing campaign. 

How to calculate your CPL and CPA

Even if you aren’t a fan of math, the formula for calculating your CPL is really simple:

CPL = Your total marketing spend / total number of leads generated

The formula for CPA is nearly identical, just that you divide by the total number of customers acquired instead of leads generated.

CPA = Your total marketing spend / total number of customers acquired

As a sample calculation, imagine you spend $1,350 on a managed SEO campaign, and you generate 45 customers as a result. 

Let’s plug the numbers into the formula:

Total marketing spend ($1,350) / total number of leads (45) = $30 CPA

So, you’re spending $30 per conversion, which is actually fantastic (more on the average CPAs of marketing channels in a bit).

Once you know your CPA and CPL for each marketing channel, you can determine:

1. Which channels are the most effective (i.e., low CPA but high ROI).
2. How your CPA compares to your customer lifetime value (CLTV). This will let you know if your marketing strategy is sustainable. 
3. If you’re spending too much on a particular channel. 

As you can see, understanding your CPA and CPL paves the way for even more valuable marketing insights. 

What causes a low marketing CPA and CPL?

There are a few reasons, including:

• The intent of the traffic (whether they want to buy or just learn basic information) 
• The audience the channel caters to (whether they’re interested in your products and services) 
• The cost of gaining the traffic (buying ads, creating content to rank, etc.) 

Putting it all together, high-intent traffic from your target audience using organic channels is what lowers both metrics. 

That’s why SEO provides such a low CPL since it’s a long-term strategy that has compounding effects. 

While you will incur some upfront costs (creating content, hiring an agency, etc.), these are reduced or go away completely over time. 

What are the Most Affordable Marketing Channels? Cost Per Lead Estimates

With the basics out of the way, let’s compare the average CPL of the most common marketing channels. 

#1: Search engine optimization (SEO): $30 – $70 average CPL

First, it’s important to understand that SEO typically has the lowest CPL out of any marketing channel, averaging $30 – $70 per lead. 

The main reason is that a strong SEO strategy becomes virtually self-sustaining after a period of time. 

The key is to establish the following:

• A vast library of evergreen content (i.e., content that doesn’t become outdated) 
• An authoritative and natural-looking backlink profile 
• High rankings for crucial industry keywords 

Once that’s done, it’ll become way easier to:

1. Maintain existing rankings 
2. Start ranking for new keywords (since you’ve already built trust) 
3. Appear in AI Overviews and SERP Features 

We like to think of SEO as the gift that keeps on giving. 

Also, there’s a real progression to SEO that’s akin to an RPG (role-playing game). 

High-quality content and authoritative backlinks are the XP your website needs to level up on Google and other search engines. 

#2: Paid search (Google Ads): $70 – $150 CPL 

Next, let’s look at PPC (pay-per-click) ads, which have a higher average CPL that ranges from $70 to $150. 

The main benefit of PPC campaigns is that they can immediately drive traffic to your website, which is definitely an advantage. 

This is particularly useful for brand-new domains that haven’t proven themselves on Google yet. In these scenarios, their SEO will take a bit longer to yield meaningful results, and paid ads can help fill in the gaps. 

However, we always recommend pairing PPC with SEO. 

Otherwise, you could wind up with a costly habit that’s hard to break. 

By that, we mean SEO will help you wean off PPC ads, like a baby weaning off the bottle. 

As soon as your content begins to rank at the top of Google organically (i.e., thanks to your SEO efforts), you can save a ton of money by ending your PPC campaigns. 

Sticking with video game analogies, PPC is like PTW (pay-to-win). 

Actually, it would be more accurate to say that PPC is PTP (pay-to-play), as each click does NOT guarantee a conversion. 

That means you have to pay to play, pay to win, and pay to lose! 

Lastly, PPC campaigns can be incredibly wasteful if your targeting, user experience, and landing pages are weak, so bear that in mind. 

#3: Paid social advertising (Instagram, Meta, LinkedIn): $100 – $250 CPL 

Advertising through social media typically yields a pretty high CPL, but the lead quality can be high. 

To us, social media ads serve two primary purposes:

1. Raising brand awareness 
2. Retargeting prospects that have already shown interest 

As far as cold traffic conversions go, you’re better off using SEO. Yet, if you want to boost brand recognition and retarget leads who have already visited your website, social media ads can deliver great results. 

#4: Email marketing: $10 – $50 CPL (when optimized) 

If you have a strong email list, you can enjoy an extremely low CPL. 

The only issue?

Email lists don’t build themselves, so you’ll have to engage in other marketing channels like SEO, digital PR, and paid ads to fill your list with email addresses from your target audience. 

Cold conversions through emails are possible, but they’re few and far between. 

Our recommendation?

Use email marketing to nurture the leads you acquire through SEO and digital PR! 

#5: Digital PR and influencer partnerships: $50 – $500+ CPL (varies wildly) 

Digital PR involves networking with online journalists and media outlets to secure brand coverage and editorial backlinks (which are powerful for influencing search rankings). 

Another aspect of digital PR is partnering with online influencers to promote your brand. 

The CPL for these tactics varies wildly, but it tends to run high. 

Digital PR backlinks are some of the toughest to build, so they don’t come cheap. The same is true for partnering with influencers who have large followings. 

However, there are smaller-scale influencers (nano and micro influencers) who command a great deal of respect from their audience, so it’s worth partnering with them, too (and it’s more cost-effective). 

Ultimately, digital PR is great for:

1. Giving your brand visibility and credibility a serious boost 
2. Improving your existing search rankings through improved authority 
3. Securing editorial backlinks that improve SEO and generate referral traffic

Because of this, digital PR makes an excellent add-on to SEO campaigns. 

Cost Isn’t Everything: Consider Lead Quality, Too  

Let’s make one thing clear before we wrap up: finding the lowest possible CPL shouldn’t be your only goal when analyzing marketing channels. 

While cheap leads are great, they won’t do you any good if they don’t convert. 

So, you should consider the quality of your leads, too. 

Obviously, if your CPL is higher than your CLTV, you’re overpaying for your leads. However, that doesn’t mean that expensive leads are always bad. 

In fact, targeting leads that are slightly more expensive but higher in quality can actually raise your CLTV, so you shouldn’t consistently target the cheapest leads possible. 

Yet, this also reinforces why SEO is such a powerful marketing channel. 

Not only are its leads some of the most affordable, but they’re also high-quality. 

SEO is a form of inbound marketing, meaning it attracts members of your target audience by creating content for the search terms they use. 

In other words, you’re generating traffic from the types of people who want to consume your products and services.

Real World Example: How SEO Reduced CPA for Local Furniture Store

Don’t just take our word for it, let’s look at some real-world proof that SEO provides a low CPL yet high-quality leads. 

Sofas 2 Furnishings is a family-owned furniture store in Simi Valley, California. 

They operate in a highly competitive space, as there are many competing furniture stores in the area. 

When they first came to us, they weren’t generating much traffic and mainly relied on paid ads, so their CPL was up there. 

After 9 months of managed SEO, we got them ranking for thousands of new keywords, many of which were in the top 3. 

Most impressive, we got them appearing at the top of the local pack and in the #1 organic result for the keyword ‘simi valley sofas’ (a huge money keyword for their industry):

This heightened visibility caused their CPL to start plummeting (which is a good thing). 

Why?

They’re appearing at the very top of Google without having to pay anything, so it goes without saying that they’re generating top-tier leads for next to nothing. 

Ranking #1 for a keyword organically means you don’t have to pay a keyword’s CPC, like this one, for example:

Wrapping Up: What’s the Best Marketing Channel for Your Business?

In summary, CPL is the most important metric for measuring the ROI of your marketing efforts. 

While low CPLs are ideal, you must ensure the leads you generate are high-quality and likely to convert. 

SEO is the best of both worlds because it has a low cost-per-lead and provides high-quality leads. 

Other channels, like email marketing and digital PR, make great supplements to SEO. 

If you’re ready to get the most out of your digital marketing efforts, schedule a call with our team for a CPL-focused session!