Recently I had a conversation with a fellow marketer who challenged the notion that inbound leads costs less. They pointed to the high cost per lead of some paid search (PPC) campaigns as evidence. I tried to identify the challenges of using paid search as a proof point that pull marketing is not a cheaper, more effective approach.

One of the great benefits of blogging is that it allows me to think a little longer on how best to respond to really important questions like these. So in this post, I will make my best attempt to show that inbound leads do indeed cost less. I will point to some research from Hubspot that quantifies the fact that inbound leads cost significantly less than traditional demand generation. I will also talk about how this is only part of the story because inbound marketing is about understanding the current market landscape. It’s about lining up marketing efforts more closely to the buying process. And it is about earning a prospect’s business vs. buying it.

What is Inbound Marketing?

Inbound marketing also known as “pull marketing” uses content to attract a desired audience. The buyer is in control and decides whether to act on the content or not. It is typically more persistent or “always-on” as the content is placed where buyers tend to go seeking information. Common inbound marketing tactics include both paid and organic content placements on the company’s or other’s website, blogs, click-to-call and click-to-chat, search engine marketing techniques and social sharing. More simply, “pull marketing” uses content on the web, search and social to attract a desired audience and then uses personalization and response management resources to convert that traffic to leads, pipeline and deals.

Market Forces Driving The Need For Change

There are some significant forces at work that are driving many marketers to change the approach they take to marketing from an outbound push to more of an inbound pull approach:

  1. Buyers are tuning out of traditional push-based messages lowering response rates and increasing marketing costs per lead.
  2. Buyers are in control of their own buying process. The mobile internet and social web allow them to find the information they need, when they want it.
  3. Buyers are shifting their time spent on Digital channels. Internet access, mobile browsing and social networking are all conspiring to deliver information, education and entertainment to all of us on demand – where and when we want and need it.
  4. Content is nearly ubiquitous and the expectation is often that it should be “free.” Content has become shorter, less “serious” and more informal, social and “scan-able” on a mobile device.
  5. Marketing departments are being asked to deliver higher yields – to be more efficient in delivering higher business results on a relatively flat budget in the face of buyers who are increasingly rejecting marketing messages.
  6. Marketers are acting as publishers. To respond to this, leading marketers are seeking to deliver information to buyers earlier in the buying process, with more un-gated, social, informal and educational information that is not about their products and services but that meets buyers needs in this fragmented, multi-format, always-on world.

Inbound Marketing Leads Cost Significantly Less

One of the main reasons marketers are shifting their focus and their budgets away from traditional tactics is because of the theory that inbound leads costs less.  At the recent SiriusDecisions B2B Marketing Summit, Jay Gaines (@izjay) announced that “inbound leads cost less and convert at significantly higher rates than outbound.” He continued, “and the difference is significant and quantifiable!”

But don’t just take his word for it. Marketing platform provider Hubspot has been delivering research to support this notion for over 3 years. In 2012, their State of Inbound Marketing report declared that inbound leads cost 61% less than traditional outbound. The trend has remained relatively constant, shifting only 1% from 2011’s 62% cheaper:

Which Marketing Tactics Perform The Best?

The report also shows that Blogs, Social Media and Search drive the lowest cost per lead and that paid search (PPC) truly is more expensive than some outbound tactics except trade shows / events:

Cost Per Lead Is Not The Only Reason To Shift to Inbound Marketing

The main reason to shift more marketing resources to inbound marketing tactics is simple: customers!

Inbound marketing seeks to help our buyers in their journey by providing valuable information. Inbound marketing is the marketing of attraction and earns a business the right to gain a customer. The real reason to shift to inbound marketing is that it is simply a more sustainable business model because it lines marketing up to customers. It is the reason I became a marketer. It is the reason marketing exists: to bridge the gap between our buyers and business.

Additional Resources

Mashable: Inbound Vs. Outbound Marketing (INFOGRAPHIC)

Hubspot: Killing It: How Inbound Marketing Can Help Your Company Crush the Competition

Hubspot: Inbound Marketing vs. Outbound Marketing

Hubspot: It’s Time to Transform Your Marketing

Forrester: CMO Mandate: Adapt or Perish

About Michael Brenner

Michael Brenner is the Head of Strategy for the leading content marketing platform, NewsCred. He is also the author of B2B Marketing Insider, a contributor to Forbes and a frequent speaker at industry events covering topics such as marketing strategy, social business, content marketing, digital marketing, social media and personal branding.  Follow Michael on Twitter (@BrennerMichael)LinkedInFacebook and Google+ and Subscribe to B2B Marketing Insider by Email

13 Comments

  1. Jason Miller said…

    Hi Michael,

    Solid post on the benefits of Inbound. I absolutely agree with you that B2B buyers’ needs are changing. It’s essential to have a solid inbound strategy in place in order to have the right content in the right place from the first touch point all the way through the funnel to the sale.

    Jay Gaines nailed it at Sirius Decisions; “inbound leads move faster, convert better and close at higher rates”.

    We created a whitepaper that takes a look at incorporating inbound into a larger group of marketing tactics that amplify the impact of inbound marketing activities. I would love to hear your feedback on it.

    http://www.marketo.com/b2b-marketing-resources/best-practices/inbound-marketing-best-practices/amplify-your-impact-how-to-multiply-the-effects-of-your-inbound-marketing-program.php

    Thanks!
    Jason Miller – Marketo

  2. David Dodd said…

    Michael,

    Great post! I’m not sure, however, that we have a truly accurate picture of the cost of inbound vs. outbound leads. As far as I can tell, Hubspot does not provide its survey participants with detailed instructions regarding what constitutes a “cost” of an inbound lead and an outbound lead. Many inbound marketing costs are “internal” and they may not be specifically identified in a company’s accounting system. This makes it very easy to underestimate the cost of an inbound lead.

    I believe that inbound marketing is critical for most companies for all of the reasons you mention in the post. But to understand the true value of inbound marketing, we need to have an accurate picture of its true cost.

    • Michael Brenner said…

      Hi David, great point and yes it was not a cost accounting of the true cost per lead. One point that I like to bring up about why inbound is cheaper is that the fixed cost of enabling the content, the platform and the promotion of content platforms can be identified but that each additional lead that comes from those activities has NO INCREMENTAL COST. For example, once you build your website and establish the team and content supply to keep it updated, there is no additional cost for each additional inquiry the website generates. These types of activities have fixed but not variable costs associated.

      Contrast that with a tele-marketing campaign which has a cost per activity and the activities must be increased in order to generate more leads. I can also say that I have done the cost accounting of inbound vs outbound in a previous company and found results that lined up almost exactly with this 61-62%. Inbound leads were on average 2/3 cheaper than outbound.

      But I agree each company should look at their own marketing activities, identify true costs and make their own assessment.

  3. Jill Rowley said…

    Eloqua’s VP of Content, Joe Chernov, recently wrote on the topic. Why Marketing Automation Vendors are Talking “Inbound Marketing” and “Content Marketing” [Chartapalooza].

    Inbound had become a very popular term. The question is, Why?

    http://blog.eloqua.com/marketing-automation-content-marketing/

    Is Inbound the new Outbound? Is it really all about being found or can you still go out and find?

    Jill Rowley
    Eloqua

    • Michael Brenner said…

      Thanks Jill, I love that post from Joe. It gives my analytical side chills! Now, to answer your question, there are certain sales people I know who are excellent finders: they identify what they want and then they establish relationships, they use “content” in the form of emails, stories, jokes, and their personality – all to “attract” business. These kind of people are not pushing, they are pulling in demand. So the most effective outbound is still using the same techniques as effective inbound. So whether it is push or pull, if you can be what people want then you will draw them in…

  4. Joe Chernov said…

    Michael! Man, I had wanted to comment on this yesterday, then the day got beyond me. You hit on all of the key points (everyone in this industry should pool our money and appoint you the evangelist for the category … you make a very compelling case). One item that’s missing from a lot of the analyses of why inbound marketing works is the notion of self-selection. Marketers might be really, really good at identifying personas (personae?), but we will never be able to create a persona for every possible type of buyer. Inbound marketing works in part because it covers the ENTIRE longtail. People can discover and act on your content/offer, even if they don’t meet the criteria you’ve established as a “perfect target buyer.” We recently published an eBook (yesterday in fact) about the ROI of Content Marketing (it’s essentially a sister topic to this one), but since it’s behind a form (our first piece of content that’s exclusively gated — it’s an experiment), I thought it might be uncouth to include a link here. I don’t want to fish off your pier.

    PS: Thanks for the props on that inbound / content marketing & Google Insights post. This blew my mind but Doug Kessler (a fantastic inbound marketer himself) wrote virtually the identical post to mine — the day BEFORE mine, and I think Doug actually does a better job than I do on it: http://www.velocitypartners.co.uk/2012/05/23/b2b-marketing-research-content-marketing-goes-mainstream/

    Joe Chernov / Eloqua

    • Michael Brenner said…

      Thanks Joe, you are a true gentleman and a professional for pointing to others great thoughts. But you are too modest. You are the shining example of effective content marketing, especially for us B2B tech folks. I think you and Dough do an amazing job discussing the why of content marketing.

      And your point on persona(e) is a great one. I have been trying to explain this for years as the value of “the halo” effect. I wrote a post about it a year or so back but it didn’t do very well. We marketers have all been trained for years on the “TPM model:” Target, Position, Message. So a campaign where the target picks itself? Hogwash.

      We face this battle every day so thanks for the support!

  5. Nick Stamoulis said…

    Inbound marketing is about joining the conversation, rather than starting it. Consumers tend to tune out many “interruption” ads these days. To get noticed, you need to create quality content that customers can find on their own. The content can’t be promotional in nature. It needs to help customers solve a problem so that you can be seen as a trusted source of information. When it comes time to buy, you will be in their consideration set.

  6. Eric Heal said…

    Michael, this is a great post. Thank you for explaining inbound/pull marketing and expressing how important it is to be where our customer are.

    • Michael Brenner said…

      Thanks Eric. It’s the least I could do. It’s always important to define WHY before getting too far into WHAT and HOW. Inbound leads cost less simply because they are more closely aligned to delivering what people are looking for. I am really glad you found it helpful.

Leave a Comment