At flawless Inbound, we feel strongly that our role in the Canadian business community is to help B2B organization get better at innovating their marketing and sales execution to produce better results for their companies. That is why I share insights like the ones here. I think knowing why we do what we do is just as important as seeing how we do it. I hope you agree.
Demand Generation vs. Inbound Marketing
Lately, I feel like demand generation (pre-awareness stage marketing) has been getting a lot of renewed attention, while inbound marketing (awareness stage marketing) has been taking more of a backseat. I am curious as to the shift, and I want to help readers understand the differences, advantages, risks and rewards so that you can make a safe, educated and results-oriented decision on marketing strategy for your company. Demand generation, inbound or both? You make the call!
Advantages, Risks And Expected Results From Demand Generation Marketing Tactics
Demand generation is defined as any activity that creates interest or awareness in your company’s products or services. By definition, it assumes awareness does not exist before your demand generation efforts. That is why we consider demand generation to be pre-awareness marketing.
Advantages: It is definitely an offensive strategy, meaning it is proactive and attempts to find people who are not looking but are a profile prospect match nonetheless. If done well and with key tactics, like account-based marketing, it can also help align the sales and marketing teams, a goal that should be on most CEO’s wish lists. Another advantage is the acquisition of data. You can capitalize on the various data services and buy the names of potential prospects based on any number of qualification criteria. Instead of waiting for them to come to you, you go to them.
Risks: I could have called these disadvantages, but I like risks better because risks can always be mitigated with good plans and strategy. Just because there are risks does not mean we do not move forward. Typically, demand generation programs require bigger budgets and longer time frames for the investments to produce the return.
In most cases, you are renting names, so you do not own the contact information. You are interrupting potential prospects, so there’s a risk of spoiling some brand equity with some of the target markets. Less data on the performance of the program is usually available, making it more challenging to optimize application performance and cut out non-performing aspects of the marketing effort.
Expected Results: If time is not on your side and you need leads immediately, demand generation tactics typically produce results in a shorter period than some deployments of inbound, but driving those results might require a bigger budget. For example, you can pump money into pay-per-click and produce results sooner than waiting for your organic search engine optimization to kick in.
When you’re talking about targeting people who are not even in the awareness stage of their buyer journey, you should expect longer sales cycles for these leads, but perhaps you end up with more leads because you’re bringing into your pipeline people who would not have found you on their own had you not targeted them and connected with them.
Advantages, Risks And Expected Results From Inbound Marketing Tactics
Inbound marketing is about being visible when prospects are looking for information related to your company’s products or services. They are already aware, and you need to be found when they start looking. This means inbound is an awareness stage marketing methodology.
Advantages: One of the biggest advantages is that you are building a system that should redefine how you market your company, one that runs over time to produce a steady stream of people who want to talk to you without you having to continue to pump money into advertising. Instead of renting attention, you are earning attention. It does not require the same level of investment as demand generation or advertising, so it is a more economical option, and every aspect is highly quantifiable. Over time it becomes more and more efficient.
Risks: It is very complex. Planning it, building it and optimizing it takes expertise. If you do not have the expertise, it is going to be hard to get inbound to produce results in the short term. It takes time because you have to strategically plan it, build out the assets and then optimize each tactic. Don’t expect a lot from it for the first six months (at a minimum). In most cases, clients see a high level of performance in the second year.
If this is your first time planning, building and growing an inbound program, you will probably make a few mistakes. You can mitigate this risk by getting someone with much experience to help you skip those potholes and produce results more quickly.
Inbound is limited to only those people who are actively looking for what you do. You have to be OK with that fact. This means the universe of potential prospects is going to be smaller when you practice inbound than if you are targeting and going after anyone who fits the bill regardless of interest like demand generation does.
Expected Results: Your expectations should be more oriented around a marathon. With inbound, it is going to take time, but the results will build. Month over month, you will see more visitors, higher conversion rates, and more leads. The more you invest in the creation of assets and the optimization of the program, the better the results. Inbound leads cost 61% less than demand generated leads because the money is invested into people who are already looking for you, as opposed to people who are not. It might take longer, but it is going to cost less.
I am not trying to make a persuasive argument for one type of marketing over the other. I think that in some cases demand generation is the perfect play and in other cases, inbound makes more sense. Lately, we have been seeing a lot of successful client programs using both in very strategic and thoughtful ways. Account-based marketing is a program that uses some very personal, direct demand gen outreach at the top of the prospect pyramid and more inbound techniques as you target lower-level prospects.
I think it is safe to say that most companies want to be found organically on Google, and by running a pay-per-click campaign, they get the visibility needed while waiting for the organic lists to percolate up to the top of the rankings. You can earn email addresses by publishing wonderful content, and you can buy email addresses, too. By creating content for both, you nurture the people who already know you, and you can bring new people into your ecosystem at the same time.
For me, it comes down to budget. If you can afford to invest in everything, there is a lot to choose from. If you have to be more selective, then you need to match up your revenue goals, expected results and budget to make sure all three of those expectations are aligned. Don’t expect to drive millions of dollars in incremental revenue for $2,000 a month in marketing spend. If you want to drive a Mercedes, you have to pay for the Mercedes.
Demand generation or inbound marketing? The choice comes down to your business goals, marketing budget and level of expertise. Understand the pluses and minuses of both and make a decision that’s right for your company, your prospects, and your marketing team.