Inbound Marketing Channels Maintain Low Cost Advantage

by Jack Loechner, Mar 13, 2012, 6:56 AM

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According to the 2012 State of Inbound Marketing report by HubSpot, businesses that use primarily inbound marketing strategies for lead acquisition consistently report lower cost-per-lead (CPL) rates than those using outbound-centric strategies. Respondents who spend more than 50% of their lead generation budget on inbound marketing channels report a significantly lower cost per sales lead than those who spend 50% or more of their budgets on outbound marketing channels.

The average cost/lead for outbound-dominated businesses was $346,while inbound businesses  reported their leads cost $135 on average.

Inbound marketing-dominated organizations experience a 61% lower cost per lead than outbound marketing dominated organizations. Previous studies showed strikingly similar results: the 2010 survey and 2011 survey showed that inbound marketing-centric organizations experienced a 60% and 62% lower cost per lead respectively.

Average Cost Per Lead Inbound vs. Outbound
	Cost Per Lead
Marketing Dominant	2010	2011	2012
Outbound marketing	$332	$373	$346
Inbound marketing	134	143	135
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

Businesses consistently ranked inbound marketing channels as having costs lower than outbound channels. Blogs, social media and organic search maintained the top slots as least expensive.

“Below Average Cost” Per Lead (% of Respondents by Lead Channel
Channel	% of Respondents Saying “Below”
Blogs	52%
Social Media	45
SEO (organic search)	38
Direct mail	34
Telemarketing	33
PPC (paid search)	28
Trade shows	19
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

Blogs had the highest instance of being reported as “below average cost.” 52% of companies who blog indicated leads from this channel were “below average cost.” Trade shows, direct mail, and telemarketing were most frequently ranked as more expensive. 52% of companies who blog indicated leads from this channel cost below average.

Above Average Cost Per Lead (% Respondents by Lead Channel)
Channel	% Saying “Above Average”
Trade Shows	46%
Direct Mail	26%
Telemarketing	26%
PPC (Paid Search)	25%
SEO (Organic Search)	14%
Social Media	14%
Blogs	10%
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

The report says that a large percentage of businesses are consistently increasing inbound marketing budgets.89% are either maintaining or increasing their inbound marketing budgets. Among the 47% of respondents with increased inbound marketing budgets, the most commonly cited reason was “past success with inbound marketing.”

Marketing budget for the current year comparison to budget for the previous year:

• Higher 47%
• No change 42
• Lower            11

Among the 47% of respondents with increased inbound marketing budgets, the most commonly cited reason was “past success with inbound marketing.”

Reason For Budget Increase
Reason	% of Respondents
Past success with inbound	54%
Other	18
Change in management	17
Economy	11
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

The average budget spent on company blogs and social media increased from 9% in 2009 to 21% in 2012. Much of this growth can be attributed to social media. In 2010, blogs were 7% and social media was 8% of total marketing budget; in 2012, they were 8% and 13%, accordingly.

The outbound lead generation budget, on the other hand, has been steadily

decreasing over the last four years. The largest drop has been in relation to telemarketing. In 2009, telemarketing was 10% of the total marketing budget on average. In 2012, it half of what it used to be.

In a continuation of a trend identified in previous reports, small businesses are attempting to level the playing field by focusing on lower-cost inbound lead generation techniques. In 2012, small businesses (1 to 5 employees) plan to spend 43% of their lead generation budgets on inbound marketing. In comparison, large businesses (500 or more employees) only plan to spend 21% of their lead generation budgets on inbound marketing.

Small business are only giving 14% of their budget to outbound, while large business are allocating 33% of their budget to outbound channels.

Small businesses plan to spend dramatically more of their budgets on social media and blogs while large businesses plan to spend more of their budgets on outbound methods, including trade shows, direct mail and telemarketing.

The frequency of blog posts appears to correlate positively with new customers acquired, with 92% of companies that publish a blog multiple times per day acquiring a customer from their blog.

Blog Post Frequency vs. Customer Acquisition (% Acquiring Customer Thru Blog)
Frequency	% Acquiring Customer
Less than monthly	43
Monthly	56
Weekly	65
2-3 times a week	70
Daily	78
Multiple times a day	92
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

Not only are customer acquisition trends shifting toward inbound methods, but marketers are also becoming more aware of the advantages of inbound marketing. In the last six months social media, SEO, and blogs all were rated as more important by over 30% of respondents.

Sources Of Leads That Have Become MORE Important Over The Last Six Months
Source	% Saying “More” Important
Social media	62%
Organic search	52
Blogs	36
Paid search	20
Trade shows	14
Direct mail	10
Telemarketing	9
Source: HubSpot,The 2012 State of Inbound Marketing, February 2012

Respondents were also asked to rank the services that they use as “critical,” “important,” or“ useful.” An impressive 25% of users rated their company blog as “critical” to their business. 81% of users rated company blogs as “useful” or better. LinkedIn, YouTube, Facebook and Twitter were considered “useful” or better by over 60%.

The report concludes by noting that “Traditional outbound marketing techniques, including direct mail, print advertising and telemarketing, are becoming less effective. Buyers are not only finding ways to tune these messages out, but more importantly, they now have the capability to evaluate the products and services they need on their own.

As a result, businesses are transforming their marketing efforts to focus more on inbound programs that allow customers to find them. The State of Inbound Marketing report shows that businesses that more aggressively practice this are capturing leads more effectively. Given the digital nature of inbound marketing, the marginal cost per customer acquisition is typically close to zero, meaning that as buyers continue to shift how they make purchases, the cost per lead for a given business will continue to decrease... :

For additional information from HubSpot, and access to the full PDF file of the study, please go here.

 

 

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