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: 

What is Cost Per Lead: 

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