Online Lead Generation: Pricing Models

Online lead generation has created an impact in the advertising industry since its discovery as a tool for better product promotion and ability to reach a larger number of potential customers. Many companies have taken advantage of the large number of Internet users in their campaign for easier sales making. The strategy has defined a clearer target and higher monthly revenue as their connection to people has extended rapidly.

Lead is a type of online form which potential customers can sign up to if they are interested in buying a product or in receiving regular promotion information from certain advertisers. A lead generating company is a third-party advertiser serving different advertisers by selling leads that can build direct or indirect touch-points with the customers or with other advertisers. They generate sales leads and marketing leads for distinct purposes.

Sales lead is used by advertisers to promote their products but not necessarily sell them to the customers. As an end-user sign up to a sales lead, he or she becomes a member and the information inputted is used by the advertiser to contact them to promote more of their products and soon persuade them to buy. Marketing leads, on the other hand, are generated for instant sales. A customer only signs up to a marketing lead at the moment he or she wants to buy a certain product.

Online lead generation has three pricing models – cost-per-thousand, cost-per-click and cost-per-lead. This is how the business of selling the lead to advertisers works. Cost-per-thousand or CPM pricing model is the earliest model adopted for the purchase of leads. For this type of contractor marketing, the advertisers pay for the number of views on the advertisement carried by the lead. The model is criticized for the risk that customers may view the advertisement but not have the interest to click on it to view them all.

This problem is resolved when cost-per-click or CPC model was adopted. The advertisers are only obliged to pay every advertisement that has been successfully clicked by the customers. The model was later modified to this type of contractor marketing after the price of search keywords that lead to the advertisement increased tremendously.

Today both risks have been resolved by the most recent lead pricing model, cost-per-lead, which saves advertisers from paying more than what they take advantage of from online lead generation. In this contractor marketing lead pricing model, they only pay for every lead generated to advertise their products.