What is the Cost Per Lead for Digital Agencies from different channels?

According to a recent Digital Agencies survey by Hubspot, out of the top 5 challenges, three which caught my attention are

1. 60% of Agencies have the problem of Finding New Clients
2. 34% of Agencies have the problem of maintaining profitability
3. 29% of Agencies find it tough to maintain Cashflow

Survey from HubSpot

All the three problems mentioned are interrelated with respect to the Sales and Marketing aspects of an agency. The Mathematical formula for a Profit/Loss calculation is

Profit/Loss = Client Retainer – (Marketing Costs to acquire lead + Sales cost to convert lead into a client + Operational Costs)

In the above-mentioned parameters, Client retainer is a straightforward number and same is the case with Operational Costs & Sales cost to convert lead into a client.

The most complex number to derive is Marketing Costs to acquire leads as it is spread across multiple channels. This cost is also called Cost Per Lead.

Let’s understand the Cost Per Lead in detail:

Cost per lead is the total costs incurred for preparing, publishing and sharing the offers across different channels to that of the number of leads generated.

It is very important to segregate the costs across different offers so that you know what type of content/offer is more profitable i.e. generating clients at a cheaper cost.

Calculating Cost Per Lead across the different channels and then measuring it with the client’s retainer and other operational costs will lead to knowing the exact profitability.

Let’s take an example. The marketing team has spent \$1000 and generated 10 leads, the cost per lead will be \$100. Now, if the agency plans to increase its sales by doubling the number of leads to \$20, and wishes to keep the marketing spend the same (i.e. \$1000), the cost of lead will come down to \$50. That’s awesome right J

Key Channels of Lead Generation for Agencies:

There are primarily two ways to generate leads –

1. Content marketing for organic growth
2. Paid search strategy.

Let us look at the table below to understand the cost per lead of these strategies over a period of two-three years for a large number of businesses worldwide.

The above table implies that content marketing could be a better way of generating leads at a lesser cost. It could be a relatively slower method of building the base with the customers, but through consistent messaging, it becomes more effective than paid search.

There are several channels within content marketing used to generate leads, and the cost per lead differs for each of them.

According to the same research as mentioned above, the cost per lead for search engine advertising could cost \$60, while the cost per lead for social media marketing costs around \$27 per lead.

Where is the Problem?

If the costs of leads are the ones as mentioned in above table then every agency will be profitable.

Problem 1:

The whole calculation is distributed into a period of three years. If you roll it back into Year 1, the cost per lead for content marketing is more than \$250. Now that’s a lot of money because not every lead converts into a client.

Problem 2:

On an average, it takes around \$3000-\$4000 to create a lead generating gated content (we are considering all the related costs like the tools required to host, content writers, graphic designers, SEO for content etc.)

Problem 3:

The time it takes to write this form of long content is a minimum of 3-4 months.

Problem 4:

There is hell lot of interesting marketing content out there written by industry leaders like Hubspot, Neil Patel, Moz etc. It becomes very tough to find the right idea to write a long-form content.

Don’t get us wrong; we are not undermining the value of content marketing or paid search in generating leads. These are some of the best options for generating leads.

Interactive Forms – Effective channel to reduce the cost of Leads by 10 times and more

The Marketing Industry leaders like Hubspot, Neil Patel are effectively using this strategy to generate thousands of leads.

Website Grader has generated more than 4 Million leads till date for Hubspot

SEO Analyzer tool is generating more than 72000 leads every month for Neil Patel.

RoboAuditor – A white label SEO audit tool not only lets you embed the audit tool on to your website to generate leads but also lets you download white label audit reports to share your prospects and move them down the sales funnel.

Advantages of White Label SEO Audit Tools

is very easy. Just add a couple of lines of code on to your web page where you want to display and start generating leads from day 1. Don’t wait for months like you have to do for your gated content

As the cost of tools is very minimal (around \$19 – \$99 per year), the total cost of lead generation is very minimal i.e < \$

3.Personalized and Actionable Content:

Your prospects will love to read the content as it is utmost personalized and actionable SEO Audit for his own website. Your prospects would love it.

Conclusion:

It is imperative for every agency to reduce the cost per lead as much as possible to remain profitable in the business as well as generate more leads.

As a CEO of your agency, you have to get the right balance of using content marketing, Paid Marketing and White Label SEO Audit tool like RoboAuditor to keep costs low and remain profitable.

RoboAuditor is an Embeddable SEO Audit tool which generates 4X more leads with the traffic you already have.

Author

Rahul M

A geek who loves Digital Marketing and CRM. Enjoying building tools for helping businesses and marketers generate growth