B2B Demand Gen Channels Ranked by Cost-per-Lead

SoftwareAdvice-B2B-Cost-per-Lead-by-Channel-Oct2014Which channels provide the lowest costs-per-lead for B2B marketers? Given that a recent Ascend2 report found that the majority of marketers are seeing steady or increasing costs-per-lead, a new report from Software Advice provides timely and intriguing data on the performance of various channels.

The study assessed costs-per-lead by asking respondents to identify channels as having a “very low cost,” “somewhat low cost,” “somewhat high cost,” or “very high cost.”

The channels with the lowest costs (somewhat or very, combined), per the data, are:

  • Email marketing (house list), with 66% rating this channel as having a very (30.4%) or somewhat (35.6%) low cost;
  • Social media, not paid ads (62% citing low cost);
  • Referral/advocate marketing (53.6%);
  • Email marketing, rented or bought list (51.7%); and
  • Social media advertising (50.8%).

Aside from topping the cost-per-lead rankings, these channels were the only of the 15 measured in which a majority of marketers estimated them to have a low cost-per-lead. The prominence of email and social isn’t too surprising, given that these tend to be lower-cost channels. Of course, lower-cost doesn’t mean effective, but the survey results indicate that on a cost-per-lead basis, they are indeed working for marketers. (Alternatively, when sorting the data by “very low cost,” social and house email lists continue to score highly, while organic search sneaks into the top 5.)

What about the other side of the equation – which channels have the most expensive costs-per-lead? According to the survey results, more than 6 in 10 marketers perceive the following as having a somewhat or very high cost:

  • Trade shows and events (82.8%);
  • Print, radio and TV advertising (79.9%);
  • Third-party lead originators/publishers (67.2%);
  • Third-party webinars (65.5%); and
  • Telemarketing/cold calling (62.6%).

Again, these aren’t entirely surprising. Third parties must be paid. Offline advertising isn’t cheap. And trade shows and events require a physical presence – which doesn’t come cheap.

On the face of it, then, online channels tend to beat offline in terms of costs-per-lead. But here’s where it gets more interesting: what about the quality of those leads?

In this ranking, trade shows and events (considered the most expensive source of leads) wins out, earning the largest share of respondents’ “excellent” and “good” votes. (This aligns with other data showing that these are extremely effective for B2B marketers.) Looking only at channels that provide “excellent” leads, the survey results reveal that trade shows and events are followed by referral/advocate marketing, in-house email marketing, retargeting advertising, and telemarketing/cold calling. Right off the bat, then, two of the most expensive channels for leads also prove to yield the best quality.

When sorting the responses by “excellent” or “good” quality of leads generated, print, radio and TV advertising sneaks into the top 5 (#4 behind in-house email marketing), while third-party webinars also gain ground.

In other words, it appears that the channels that are most expensive do produce high-quality leads. The data also is another reminder of email’s effectiveness: not only does the house list produce a cheap cost-per-lead, it also generates a high-quality lead.

Meanwhile, social media (ads and non-ads) and third-party lead originators were most likely to be said to produce “poor” quality leads.

(While quantity per lead is presumably captured in the cost-per-lead rankings, the Software Advice study also ranks channels on this measure, finding that trade shows and events produce the most. Paid search, email marketing, offline ads, and retargeted ads also rank highly.)

Coming up with a “B2B Channel Effectiveness Quadrant,” the study indicates that trade shows and events clearly beat all others in quantity and quality of leads generated, with referral marketing and in-house email marketing also in the “very high quantity and quality” quadrant. Print, radio and TV ads are the only to fall into the “lower quantity, very high quality” bucket, while search engine ads and 3rd party email marketing are the only in the “very high quantity, lower quality” bucket. All others, including social media, display, organic search and retargeting were in the “lower quantity, lower quality” bucket.

But wait, there’s more! The study also looked at the most-used and most-effective content types. The following are some highlights from that section of the study:

  • Videos (92%) and surveys (88%) are the most-used content types for demand generation among respondents and are also said to generate the highest quantity of leads;
  • When it comes to the quality of leads generated (“excellent” or “good”), toolkits, surveys, case studies and white papers are among the top-ranked;
  • Among offers and calls-to-action, “contact us” buttons and price-quote buttons are used by more respondents than live demos with reps, video demos, webinars and free trials;
  • However, live demos with reps and free trials reportedly generate the highest quantity of leads; and
  • Live demos with reps clearly offer the best quality leads, ahead of price-quote buttons.

About the Data: To obtain the results of the report, Software Advice surveyed 200 B2B marketing professionals in the U.S. who were first profiled by its third-party research partner, Research Now, and screened for their experience with demand generation channels, tactics and metrics.