Content Discovery Smackdown: Hootsuite vs. Buffer vs. KloutContent Marketing Minds: Ingredients of the Tastiest Content [Nutrition Label]From the Corn Field to the Digital Era: Content Marketing Starts with TrustContent Marketing: Is 2014 Really Shaping Up to Be the Year of Video?
Your Customers Aren’t Listening! How to Create Consumer Dialogue that Converts4 Tools for Nonprofit Social Listening and Reputation ManagementThe Promising Role of Social Listening in Treating Health IssuesThe Importance of Social Listening for Brands
- Public Relations
Facebook Testing a Way for Users to Buy Products on the Platform7 Website Tips to Attract More Shoppers to Your PagesHow eCommerce, Augmented and Virtual Reality Will Redefine the Retail ExperienceSearch Query Analysis to Increase eCommerce Website Conversions
- Content Marketing
Technology & Data
Social Startups: Bizible Connects All the Dots from Marketing Contributions to RevenueCreating the Perfect Profile for Your Social Media Marketing EffortUsing GPS and Localization for Social AnalyticsAnalytics and Prospect Intel: Discovering Your Ideal Prospect
- Big Data
- Tech & Innovation
3 Security Risks You’re Taking Every Day While Using Social MediaShould the President Have the Power to "Pull the Plug" on the Internet?How Safe is Your WordPress Website From Hackers and Other Malicious Attacks?
- Software & Tools
- Small Business
- Social Organization
Celebrating the Grand Re-Launch of Social Media Today! SBH Podcast Episode 8Why Should You Care If Your Employees Are Thought Leaders?Beyond Engagement: The Art of Managing Social-Media Risk in Employee Advocacy
Why All-in-One Social Media Management Systems Don't Cut It for Social Customer ServiceWhat You Should Know About Customer, Digital, and Contextual ExperienceSurging into Q3: How to Make It Better Than Q2Is How You Serve Your Customers Costing You Business?
Join us September 15th in Atlanta for The Employee Advocacy Summit and learn how to unleash the power of your employees.
Post your event here and we'll share it with our community. If one of our members is featured, we'll promote as well on their profile.
- Marketplace & Webinars
The SMT Marketplace
Your resource for exclusive content and insights from Social Media Today, and opportunities to reach our community of professionals.
The Social Business Book Club brings you books, discussions, and insights from today's to business thought leaders.
Join interactive talks and and panel discussions with leading thinkers and practitioners on social media and networked business, or browse the catalogue of recorded sessions - all completely free.
Reach Social Media Today's community of marketing and communications professionals in an editor-approved context with a native advertising package.
The Economics of Inbound Marketing: Lower Costs, Higher Conversion
Posted on July 15th 2012
Let’s face it, in days past, a good many marketers conveniently sidestepped economics, accounting and all that mathematical stuff that violated the romantic idea that advertising was a creative art form.
We rather study subjects like psychology, philosophy, design, history, drama and creative writing. Or at least we used to. As such, in the offices in back where they tend to house the "creatives," nary a spreadsheet is present. The creative team would sooner stick hot knitting needles in their eyes than answer to a slew of statistics.
The Internet became an unstoppable force. The economy became an undeniable disaster. And business leaders became sticklers for a pesky little thing called ROI.
A simple question like “What kind of return are we getting on our marketing spend?” could silence a conference room faster than a tray of glazed donuts. Creative types floundered. Number crunchers rose to power.
For companies big and small, across an uncountable number of business categories, outbound marketing (direct mail and broadcast for example) began to lose its luster. Marketers needed to learn what it takes to spit, polish and shine the top line, the bottom line, and shrink the size of the line items in between where companies calculate their costs.
Inbound marketing emerged.
With inbound marketing, the age-old practice of pursuing new business by buying media time and space began withering away. The objective changed from finding customers to employing Internet-based tactics to allow customers to find you.
We can theorize endlessly about what’s going on here, but if you prefer to cut to the kill, you simply examine the numbers. In marketing today, you embrace economics or you embrace unemployment.
It’s not nearly as scary as it may sound.
The numbers prove which marketing tactics are more effective.
As you might expect, after that lengthy preamble, I’m not going bore you with theory. I’m going to lay numbers on you. Powerful numbers. Real numbers, from the most recent annual “State of Inbound Marketing Report” delivered by HubSpot.
Help yourself to the generous heap of background info, takeaways and charts they present. I’m going highlight the stats that have even bean counters going gaga for the blogging, content marketing, SEO, and social media tactics that constitute inbound marketing.
Lower cost per lead—Organizations allowing inbound marketing to dominate their marketing spend experience a 61% lower cost per lead than those sticking mostly with outbound marketing. In dollars: average cost/lead for inbound = $135; outbound = $346. Surveys from 2010 and 2011 returned virtually the same result. This metric has become a constant.
Higher conversion rates—Are lower cost leads lower value leads? On the contrary, the data collected revealed leads coming by way of online search are EIGHT TIMES more likely to close than outbound leads. Leads from inbound links (online referrals) are FIVE TIMES more likely to convert. Think about it. The prospects came to you because of research they’ve done, things they’ve read, information exchanges they've had. They’ve been searching for you. There’s no need to introduce a glossary of online marketing terms here. We’re talking simply about trust.
Where will you invest your marketing dollars?
HubSpot asked this question, of course. 47% of the sizable sample reported a year-over-year increase in inbound marketing budgets. 42% were unchanged. They picked the brains of the 47% pool by asking why the budget increase or shift? The number one answer: it’s proven successful.
Want to know the respondents’ favorite media channels? The correlation between content generation volume and customer acquisition? B2C vs. B2B metrics? Favorite social media? Effectiveness by industry? Greatest sources for leads? The report covers all this and more.
Does size matter? It does and it doesn’t. It seems small business plan to spend 43% of their lead generation budgets on inbound marketing—compared to 21% for large businesses.
Herein lies one of inbound marketing’s greatest charms. It’s the great playing field leveler. While smaller companies clearly can’t shell out the kind of money large companies do to buy media, they can compete for eyeballs to any degree they choose.
Earn an A in economics.
Lower marketing costs. Higher conversion. True or false? Inbound marketing delivers the more attractive approach for the management of your marketing dollars.
Class dismissed. We’ll see you online.
If you have questions or comments, please share them here. And if you’d like to learn more about preparing your website for making good grades in economics, read "21 Pointers to Sharpen Your Website."