Social media has seen an outburst of activity from marketers over the past year, but brands looking to prove the value of their efforts on social media often come up short. But according to a new study released by Pontiflex today, advertisers are shifting to a cost per lead model rather than paying for the number of eyeballs that see their ads. And when it comes to retaining new leads, social media is an excellent way to keep consumers engaged and listening to brand marketing.

The Pontiflex CPL Report found that nearly 50% of advertisers who are collecting leads on an opt-in, CPL (cost per lead) basis are bringing those leads to social marketing and community sites. Also, 23% of marketing leads received e-newsletters from advertisers of interest. Furthermore, 15% of consumers enrolled in subscriber acquisition programs – these include loyalty programs, reward programs and other member acquisition efforts.

A marketing lead consists of basic personal information — first name, last name and email address. In a marketing lead campaign, advertisers only pay for individuals that sign up for their programs, rather than a CPM basis, where brands pay a certain amount according to how many thousands of people look at their ads. 

According to Pontiflex CEO Zephrin Lasker:

"A marketing lead is the contact information of a consumer who has raised her/his hand in response to a specific brand advertisement and said 'Tell me more!' – a Jane who wants to volunteer for a climate change campaign or a John who wants to receive special offers from Blackberry."

Pontiflex also found that the price of leads is going up. The CPL Report found a 31% increase in the overall price of basic marketing leads. Pontiflex attributes the increase to more premium publishers offering CPL options. Those publishers included Lifescript.com, PlanningFamily.com and Demand Media.

Pontiflex also thinks that performance advertising is becoming more useful than CPM ads. According to Lasker:

"Performance advertising is growing rapidly at the expense of CPM advertising. To meet this demand, an increasing number of premium publishers are monetizing untapped revenue streams on their websites (registration paths or mobile apps) to offer CPL advertising. Premium inventory costs more. As a result the cost of the marketing leads increased from Q3 to Q4 2009."

To increase sales, many marketers are finding that a strong relationship with consumers beats bombarding them with brand advertising. After getting leads from CPL advertising, Pontiflex found that brands continued to engage consumers through social media. Because leads are opt in, it's up to brands to continue to engage consumers after they earn initial contact with them.

One example of this is the Huggies brand, where Kimberly-Clark collected leads from CPL ads targeted toward expecting mothers. They then sent emails to those leads to build brand loyalty with them and then directed them to a pregnancy countdown widget that was embedable in any social networking site.

According to the findings, CPL advertising is gaining ground online.

In the third quarter of last year, 43% of advertisers used CPL advertising to communicate with their audience through social media. But in quarter four number grew to 48%. Similarly, between those two quarters, the cost of a lead containing the basic contact information of a consumer increased by 31%.

In the fourth quarter of 2009, there was an increase in the percentage of consumers engaged by brands through community/social sites and e-newsletters. There was also an increase in marketing leads acquired for direct response efforts in the last quarter of 2009.

Says Lasker:

"Social marketing has always been thought of an 'experimental' medium where it is difficult to measure results. The Pontiflex CPL Report debunks this myth. It demonstrates that by combing CPL with social media, you can have it all – accountability and engagement.  It shows that even as we speak, marketers are using CPL advertising in conjunction with social marketing to deliver on all of the tenets of a major advertising channel: reach, measurability, optimization and control."

Meghan Keane

Published 20 January, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (2)

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James Blute

really interesting article.

over 8 years ago

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Michelle Carvill

I read this and thought that some of the content andfindings all seemed a bit dated.  From my experience of the online advertising arena the CPM model has been out moded for probably the last couple of years, paying for eyeballs (do people really still do that?) - with a CPL or a CPA scheme being the preferred model.  Decent lead rates were achievable for CPL a couple of years ago.  However, at around the time when the big R word started to surface repeatedly (so September 2008), what we saw was a big decrease in the level of activity generally, (fear causing short sightedness) and a dramatic reduction in the level of CPL rates - and far more of a push towards CPA (so not paying for leads, but paying only where the leads convert).  

It's encouraging to see that the CPL rates are on the rise - and this makes sense.  However, advertisers are still largely cautious - with a hybrid model being utilised - low CPL and a higher CPA mix.  However, we're finding that there's still a big preference towards CPA.

All in all - the rise of CPL rates and the reach social media enables, means good news for those sites and campaigns that are geared for lead generation.    

over 8 years ago

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