Google Ads can be an effective tool for your business, helping you reach new customers and drive sales. But let’s be honest—those clicks aren’t free, and without managing your cost-per-lead (CPL) effectively, you could be burning through your ad budget fast. Lowering your CPL means more efficient spending and a higher return on investment, which is what we’ll cover in this article.
What is Cost-per-Lead?
Your cost-per-lead is how much you spend to generate a new lead through your advertising campaigns. Put simply, it’s the total amount you spend on ads divided by the number of leads you gain from those ads. Leads could be anything from someone filling out a form on your website to a customer calling your business—whatever your goal might be.
The cost-per-lead formula looks like this:
Cost-per-Lead (CPL) = Total Ad Spend / Number of Leads
Understanding how to calculate cost-per-lead is crucial for measuring your advertising effectiveness. If your CPL is too high, you’re not getting the best bang for your buck. On the flip side, if it’s low, you’re driving good results without overspending. Finding the sweet spot will help you get more leads for less money—something every business aims for.
What is a Good Cost-per-Lead?
There’s no one-size-fits-all answer when it comes to a good CPL. It depends on several factors, including your industry, your target audience, and how much a customer is worth to your business. For instance, a software company might be willing to spend more to acquire a lead because of the high lifetime value of each customer, while a local lawn care business would have a much lower threshold.
In general, a good CPL is one that is lower than your expected revenue per lead—simple as that. If you’re making more money from each lead than you spend to get them, you’re in a good spot. Tracking and comparing your CPL over time also helps to see if your campaigns are improving.
How to Lower Your Cost-per-Lead in Google Ads
If you want to know how to calculate cost-per-lead and, more importantly, how to reduce it, keep reading. Google Ads is a powerful platform, but it can also be costly if not handled correctly. Here are proven strategies to reduce your CPL without sacrificing quality.
Improve Your Ad Quality Score
Google assigns a quality score to your ads based on several factors, including your ad relevance, expected click-through rate, and the landing page experience. A higher quality score can lead to lower costs-per-click, which directly impacts your cost-per-lead.
Here’s how to boost your quality score:
- Relevant Keywords: Ensure your keywords align perfectly with your ads and landing page content.
- Better Ad Copy: Write ads that connect directly with what the searcher is looking for. Be specific and direct.
- Landing Page Experience: Make sure your landing page is user-friendly, loads fast, and delivers what the ad promises.
Refine Your Targeting
Wasting clicks on users who aren’t interested in your service will drive up your CPL. Refine your targeting settings to make sure your ads are only being shown to the right people.
- Geo-Targeting: Show your ads only to people in the locations that make sense for your business.
- Device Targeting: If your conversions happen more on mobile, shift your budget to target those devices.
- Audience Targeting: Use audience targeting to reach users who are more likely to be interested in your product or service. Think about retargeting website visitors or those who have engaged with your brand before.
Use Negative Keywords
Negative keywords help prevent your ads from showing up for irrelevant searches. If you’re running ads for “plumbing services,” but your ad keeps getting clicked by people searching for “free plumbing guides,” you’re wasting money. Adding “free” as a negative keyword can significantly reduce waste and improve your CPL.
Optimize Your Bidding Strategy
Your bidding strategy impacts your cost-per-lead more than you might realize. There are several approaches you can take to manage bids:
- Manual CPC Bidding: Allows you to control costs by setting a cap on what you’re willing to pay per click.
- Target CPA: If you already have a good sense of how much a lead is worth, use target CPA (cost per acquisition) bidding to help Google optimize your bids for conversions.
- Maximize Conversions: This can be an effective strategy if you want Google to do the heavy lifting and you have enough conversion data to make it work well.
Create Dedicated Landing Pages
Each ad group should lead to a dedicated landing page that speaks directly to the searcher’s intent. If your ad promises a free estimate, make sure the landing page immediately highlights how to get that free estimate. Having more targeted landing pages can improve conversion rates, which in turn will lower your CPL.
A/B Test Your Ads
The only way to find out what resonates best with your audience is to test different variations of your ads. Change one element at a time, such as headlines, descriptions, or call-to-action phrases, to see what drives more conversions at a lower cost. Constantly refining your ads is key to reducing your CPL over time.
Use Remarketing
Remarketing allows you to reach users who have interacted with your website but didn’t convert. Since these users are already familiar with your brand, they’re more likely to convert, and the cost to re-engage them is generally lower than attracting brand-new leads.
Track and Adjust Regularly
Google Ads isn’t something you can set and forget. Monitor your campaigns, review your metrics, and adjust as needed. Pause keywords or ads that are not performing, increase bids on ads that convert well, and test new strategies regularly. Consistent monitoring and adjustment can lead to significant savings.
Key Takeaways
- Calculate Your Cost-Per-Lead: Use the simple cost-per-lead formula: Total Ad Spend / Number of Leads. Understanding how to calculate cost-per-lead helps you measure and control costs effectively.
- Set a Goal for a Good CPL: Knowing what a good CPL is for your business helps guide your campaigns. Make sure your CPL is below your expected revenue per lead.
- Target and Optimize: Improve your quality score, refine audience targeting, use negative keywords, and optimize your bidding strategies to lower CPL.
- A/B Test and Adapt: Regular testing and refinement are crucial to figuring out what works best and driving down your CPL.
See Real Results from Your Google Ads
Driving down your cost-per-lead isn’t just about saving money—it’s about putting your budget to work effectively to drive real growth. At Abstrakt Marketing Group, we know how to optimize your campaigns, fine-tune your strategy, and help you get more leads without blowing through your budget. Want to learn more? Let’s get started today.
