Marketing of all types tends to involve a lot of industry speak, including acronyms. CPL generally refers to the cost per lead — it's the average amount you spend to get people to take a desired action, such as clicking on your website, joining your newsletter, or scheduling a visit to your community.

CPM can refer to several marketing metrics, but in the case of Senior Living Community marketing, we at FIVENineteen tend to talk about cost per move-in. CPM, then, is the average amount you spend for each person who becomes a resident of your community. In other industries, this might be referred to as cost per acquisition. 

CPL and CPM are critical marketing and business metrics, as they help you understand the efficacy of your marketing campaigns. 

Understanding CPL (Cost per Lead) and CPM (Cost per Move-in)

To better understand CPL and CPM, consider these hypothetical examples:

• You run an ad campaign that costs $500. You can tie phone calls from five prospective residents to that campaign. In this case, your cost per lead is $100.
• You launch a social media content and ad campaign that costs $1,000 to try to drive more traffic to your website. You can attribute 2,000 unique visits to that campaign. In this case, the CPL is 50 cents.
• You spend $20,000 in the first quarter on marketing. During that period, 10 new residents move in. Your marketing cost per move-in is $2,000.

Note that these are basic hypothetical examples, and the calculations can be a bit more complex in a real-world business setting. But already, you can see how CPL and CPM have an impact on your finances — and that not all leads are the same. 

How CPL and CPM Impact Your Marketing Budget

Consistently higher CPL and CPM metrics typically mean you're spending more on marketing. It's important to balance acquisition costs with the revenue those leads and move-ins generate.

You should also consider what higher (or lower) CPL and CPM say about how you're spending your marketing budget. For example, a high CPL in paid search campaigns could suggest that your keywords are too broad or competitive. You may be spending more money on those keywords without generating the leads or acquisitions you want. This insight could lead you to refocus on more specific, localized terms, reducing your CPL.

Insights about CPL per channel can also help you better balance your use of marketing channels. For instance, if Google Ads has a high CPL, you could reallocate some of your Google Ads budget to lower-cost channels like social media ads or organic SEO.

The Surprising Effects on Lead Quality

Lead costs and lead quality are deeply connected. Consider the examples toward the beginning of this article: $100 per lead to generate a phone call from an ad versus 50 cents per lead to get a click from social media. You can likely guess which of those are the higher quality leads.

Generally, a higher CPL means more expensive but potentially higher-quality leads. For example, a targeted Google Ads campaign focused on high-net-worth families might result in a higher CPL. However, it may yield leads more likely to convert into long-term residents.

By the same logic, a Facebook campaign aimed at a broad audience might generate numerous low-quality leads, resulting in a higher number of inquiries but fewer actual acquisitions.

Consider this: You could spend $1,000 for 500 clicks that result in a single move-in. Or you could spend $1,000 for 5 phone calls that result in two move-ins. In the first case, your CPL is $2, but your CPM is $1,000. In the second case, the CPL is $200, but the CPM is $500.

Relying solely on CPL to understand the quality of your marketing efforts and make decisions about campaigns can lead you astray. You could end up spending money just to drive low-quality leads without any positive impact on revenues. Instead, ensure you're also using CPM as a quality indicator to understand whether your campaigns are driving relevant leads.

As you learn more about your CPM and CPL, you can make strategic shifts in your marketing efforts, refining your strategies for lead generation and optimizing the return you get from marketing investment. For example, you might:

• Refine audience targeting. Go back to the drawing board with data analytics to better understand demographics and behaviors related to your target audience. These insights help you dial in marketing campaigns for better CPM and CPL.
• Improve content and messaging. Consider whether your content needs an upgrade. Test new copy for landing pages, ads, social media posts, and emails.
• Adjust channel and platform strategies.  Consider whether your marketing mix is optimal. You may need to shift budget to platforms that perform better. 

Tools to Track and Optimize CPL and CPM

Google Analytics can provide information that helps you calculate CPL and CPM for website content marketing and search engine ad campaigns. You can also use your CRM solution and other existing tools to gather information to support CPM and CPL analysis. 

The Power of CPL and CPM in Refining Strategy and Optimizing Marketing Spend

CPL and CPM are more than cost indicators for marketing budgets. They provide actionable insights into marketing performance, including how effective your audience targeting, content efforts, and channel choices are. By analyzing these metrics consistently, you can better allocate your budget to high-converting channels, improve your lead quality and drive down your cost per move-in.

Connect with the team at FIVENineteen to get assistance with your broader marketing plan and strategy, including optimizing marketing spend based on CPL and CPM metrics.