The Good, The Bad, and the Ugly of Cost Per Lead Affiliate Deals

CPL’s deals are very common in partnership marketing. They have the potential to drive a lot of volume, but they also come with a lot more risk. The following gives an overview of why and when to use them in your affiliate strategy, the requirements of your technology, how to manage effectively, and an overview of why things might not pan out as expected.

Why CPL instead of CPA

Some affiliates have a preference for being paid further up the funnel. It creates more optimizable events, it’s a lower commitment from the user, and it removes complications around attribution windows.

That said, an affiliates preference for CPL isn’t a reason to introduce these kind of deals into your program.

Where we think there is room for CPL deals, is when there is a long buying cycle. Usually, a long buying cycle means a much higher price point, but not necessarily.

The buying cycle is also correlated to where in the funnel the user is positioned.

Take a service like a Continuous Glucose Monitoring Program. These programs can cost up to $300 per month, so the user can sign up for more information, but take some time to convert. 

In the case of the funnel position, one example would be a mental health service provider. While the price point may not be as high, potential buyers sit in different funnel buckets. Someone searching for “best online psychologist” sits in a very different bucket than the person searching for “Why am I always anxious.”

Both services here should consider bringing CPL deals into their program. Being able to reward partners with commissions for leads allows partners to send traffic that may be be ready to make a purchase. 

For less considered purchases like cheaper consumer packaged goods costing less than $50, the necessity for CPL deals instead of CPA deals is questionable.

What Does the Technology Need to Do

The technology needs to allow the affiliate manager to set up payouts based on different funnel stages. Sometimes the “lead” is a quiz complete, sometimes it’s an on-site lead magnet pop-up, and sometimes it’s reaching the checkout page. Whatever the trigger, your affiliate platform should track this accurately.

The next crucial requirement is around deduplication. Programs should not pay for individuals who have already registered as a lead with the brand. 

Whether the deduplication is achieved by providing all leads to the affiliate platform as a lookup set with the email address passed in the post back, or the eligibility check on the advertisers side, it must be QA’d, as paying for duplicate leads will massively affect the efficiency of the deal.

Another requirement of the platform is to allow for SUB ID tracking. If the affiliate is using multiple sources, or even multiple pages from the same website, each sub ID should be tracked separately. SUB ID tracked should be simple to use for the affiliate.

Setting up for Success

Before you get one click to your website, it’s important to ensure you have the appropriate protective measures in place. 

Cap Every Deal:

While affiliates will want deals to work out for you, it’s possible that the traffic won’t convert. If you offer $10 per lead, you should choose an amount you are comfortable testing with each affiliate. Let’s say that amount is $500. You should put a cap of 50 leads on that deal, and put a “reserve the right to edit the payout” term into the contract.

The following terms should be communicated. “A commission of $10 will be paid for each UNIQUE NEW lead that signs up the brand. We reserve the right to change the commission after 50 leads have converted.”

Confirm The Detail: 

Different channels behave differently. Paid Search leads can behave very differently to paid social.

Likewise, confirm the content that’s driving the clicks. 

Finally, confirm there is no incentive involved for the user to sign up. Any form of incentive will completely kill the deal. Incentives can be cash-back, credits for a platform, or simply being promised an entry to a competition for signing up. 

Continuous Management

Once you have the program ready, it’s important to define what success looks like, and how to optimize. 

The ultimate goal is to acquire leads at scale, and have the program ensure the CAC targets aren’t exceeded. For example, if the blended CPL is $10, and the target CAC is $300, then you will need a lead to sub of 3.33% (10/300).

However, looking at the blended results can lead to a lot of wasted marketing dollars. Sometimes the blended performance can look fine, but like any performance marketing campaign, there can be lots of wastage.

A more detailed view can surface more data that the affiliate manager should be monitoring.

In the above, two of the lowest performing deals from a conversion rate perspective, have two of the highest conversion rates from a click to lead perspective. These data points, when plotted against benchmarks, should prompt the affiliate manager to discuss a rate adjustment with the affiliate and review the content that generated the conversions. Some deals aren’t salvageable, so it’s best to terminate the CPL deal with the underperforming partner.

Understanding performance at a partner level shouldn’t be where the analysis stops. As mentioned in the tech requirements, adding sub ID’s to partner tracking is important. For publishers, pages influencer CVR, for email partners, content and list influencer CVR, and for influencers, their content hugely influences downstream conversion rate

Why Deals Go Wrong

There are 4 main reasons that deals can go bad. Most revolve around the lead to conversion rate not turning out like expected. Below are reasons affiliate managers should be aware of:

Partners will optimize to mazimise their deal: They optimisation can vary per partner type. Media buyers who are on a CPL deal are going to set the optimisation event to lead on whatever platform they are using, be it google search ads, google display network, meta, or tiktok.

Most experienced media buyers will know that telling these platform to generate conversions further up the funnel will reduce the downstream CVR. That is to say, that if you tell Facebook to generate leads, it will do exactly that, but the likelihood is that the lead to purchase you’re used to seeing when optimising to purchase will plummet. Seeing lead to purchase drop from 10% to 1% when optimising to lead instead of purchase is not uncommon. 

With search ads, finding terms that will become leads is a lot easier than finding terms that become payers, particularly when it comes to quiz funnels. One example we found was in the online therapy space. Quiz traffic was easily available, but quiz leads has little to no intent. 

The below extracts show the CPC differences between quiz terms and therapy terms. CPC’s are 20x on the therapy terms! You need to make sure you aren’t getting leads on the cheaper, lower intent terms.

Finally, an affiliate more classify themselves as “Display”, and piggy-back on an incentive network like TapJoy. In these scenarios, there is little to no hope that the lead will convert. 

Once any form of incentive is brought in, you can kill all hopes and assumptions about conversion rate. This must be protected against in the terms of the program.

Closing Thoughts

Having been running CPL deals for over 10 years, the team at Your10k have had their fingers burned on more than one occasion. The advice might seem simple, but time and time again we see brands get hurt.

Step 1: Protect yourself with caps, and terms and conditions. 

Step 2: Understand the traffic source and benchmark conversion rate before offering a deal.

Step 3: Review the data regularly, and as granularly as possible.

Step 4: Act fast on suspicious data.