Inbound Marketers Enjoy Lower Cost Per Lead

hubspot-avg-cost-per-lead-feb-2012.jpgInbound marketing-dominated organizations enjoy a dramatically lower cost per lead than their outbound marketing-dominated counterparts, according to [pdf] a February 2012 e-book from HubSpot. The average cost per lead for an inbound marketing-dominated organization this year is $135, 61% lower than the $346 average for outbound marketing-dominated organizations. Both averages decreased from 2011, when they were $373 and $143, respectively, although the gap between the two remained similar.

Blogs Seen as Least Expensive

When asked to classify a variety of lead generation categories as below, near, or above average cost, 52% of respondents who blog said that leads from the channel were below their average cost per lead, compared to 10% who said that they were above their average cost per lead. According to a study released in January 2012 by the Center for Marketing Research at the University of Massachusetts Dartmouth, 92% of Inc. 500 businesses using a blogging platform in 2011 said it had been successful for their business, up from 86% in 2010.

Meanwhile, looking at lead generation costs, social media (45% saying below average, and 14% above) and SEO (organic search – 38% below, 14% above) followed blogging, ahead of direct mail (34% above, 26% below) and telemarketing (33% below, 26% above). Roughly the same proportion said PPC (paid search) was below (28%) their average cost per lead as said it was above (25%) their average. Trade shows were seen as most expensive, with 19% saying leads generated from this channel cost beneath their average, compared to 46% who said they were above their average.

Almost Half to Increase Inbound Budgets

Marketers are clearly following the channels they see as the most effective uses of their budgets: 47% plan to increase their inbound marketing budget this year compared to the prior year, compared to 11% who plan to decrease it. Among those planning to increase their budgets, the most common reason was due to past success with inbound marketing (54%), with a change in management (17%) and the economy (11%) also factors. Of those decreasing their budgets, the clear majority are doing so due to economic conditions (62%) or a change in management (21%).

Gap in Budget Allocation Widens

Data from “The 2012 State of Inbound Marketing” indicates that marketers are apportioning 35% of their lead generation budgets to inbound marketing this year, compared to 23% for outbound marketing, a 12% point gap. In 2011, that gap stood at 8% points (32% vs. 24%). Within their inbound marketing budgets, the influence of blogs & social media is on the rise: this year, marketers will spend 14% of their inbound budgets on these channels, up from 19% in 2011 and 9% in 2009. The share marketers are allotting to SEO this year is 14%, relatively steady from 13% in 2009 through 2011.

Other Findings:

  • The share of outbound marketing budgets devoted to telemarketing has decreased over the years, from 10% in 2009 to 5% this year. Similarly, the share allocated to direct mail has dropped from 9% to 6% in that timespan.
  • This year, small businesses (1 to 5 employees) plan to spend 43% of their lead generation budgets on inbound marketing, double the 21% share spend planned by large businesses (500 or more employees). At the same time, small businesses are allocating 14% of their budgets to outbound marketing, compared to 33% for large businesses.
  • Small companies are planning to spend a far larger share of their lead generation budgets than large businesses on social media (18% vs. 7%), SEO (14% vs. 11%), and blogs (11% vs. 3%), while large companies are devoting a larger share to trade shows (17% vs. 4%), PPC (11% vs. 7%), direct mail (9% vs. 5%), and telemarketing (7% vs. 4%).

About the Data: The HubSpot report is based on responses from 972 professionals who were familiar with their business’ marketing strategy. These professionals included marketers, business owners, entrepreneurs, and executives at companies of various sizes. 72% of the respondents worked in B2B companies across a range of industries. range of industries, including retail, technology, professional services, and communications and media.

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