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Home Blog Inbound Marketing Inbound Marketing ROI: Are you budgeting wisely?

Inbound Marketing ROI: Are you budgeting wisely?

Inbound Marketing

Updated: Dec. 15, 2015

Marketing Upheaval In Progress

Marketing is in a state of rapid change across virtually every industry. Companies large and small are allocating an increasing share of their marketing resources to online media opportunities, collectively known by several names, including:

  • Inbound Marketing (vs. traditional “Outbound” Marketing)
  • Pull Marketing (vs. traditional “Push” Marketing)
  • Search Engine Marketing, also known as Search Marketing

Inbound (Pull) Marketing Yields Higher ROI

The reason inbound marketing is commanding an increasingly larger share of marketing budgets is simple: Lead generation costs are lower and closing ratios are higher. As a result, businesses are realizing a higher ROI (return on investment) by shifting resources to these new marketing opportunities.

Push Verses Pull Media: What is Push Media?

Marketing professionals refer to traditional media channels as “push” media. These include print, TV, radio, direct mail, etc. Collectively, these channels push your advertising message to consumers without consideration of the consumers’ current level of interest, immediate time constraints, and other factors critical to acquiring new customers and clients (see buying cycle).

The Buying Cycle:
Consumers Purchase On Their Schedule

Professional marketers recognize there is a consistent pattern of behavior that accompanies a major purchase. That pattern is called the “Buying Cycle.” This model can be expanded to include additional levels of awareness and activity, but the four steps below illustrate basic buying behavior.

Four Stages of the Buying Cycle

  1. Awareness (recognize a need)
  2. Research (options & considerations)
  3. Compare (product/service/company)
  4. Purchase

Note: The remainder of this article references data from a 2012 survey by Hubspot and also mentions annual surveys conducted by SEMPO, the Search Engine Marketing Professionals Organization.

Why Is Traditional Push Media Ineffective?

Consider print advertising, the hardest hit traditional media according to recent SEMPO surveys. Whether your printed message is delivered through direct mail, a magazine/newspaper display ad, or some other means, consumers are bombarded with such messages. Even people who need your product or service will be less receptive if your advertising message is pushed upon them without permission when their focus is elsewhere.

What Is Pull or Inbound Media?

Inbound (Pull) Media is the group of marketing channels that present your advertising message to consumers when they are researching or ready to purchase your product or service. Pull Marketing utilizes the array of online media channels that make your message available to buyers on their schedule. Online media channels include search engine optimization (SEO), “Paid Search” or “Pay per Click” (PPC) advertising, blogging and social media.

Note: The term “Search Engine Marketing” or “Search Marketing” often refers collectively to Search Engine Optimization (SEO) and “Paid Search” (PPC advertising), two of the Pull Media channels mentioned directly above. Learn the difference between SEO and “Paid Search.”

Pull Media’s Effectiveness:
Timing and Engagement

In contrast to traditional “push” or “outbound” marketing, Inbound Marketing enables people seeking your products or services to find and interact with your message. And it empowers them to do so at a time when they are actively engaged in the Buying Cycle. Timing and engagement are powerful influences on purchasing behavior.

Pull or Inbound Leads Are Easier To Close

As a group, the inbound media channels generate leads that are easier to close (have higher closing ratios) than traditional outbound media. Again, this is attributable to timing and engagement. Pull Media makes your offer available to prospective buyers who have already identified a need (Buying Cycle Stage One) and now are seeking information about your product or service on their schedule.

SEO:
Highest Closing Ratio Of Any Media Channel

Leads generated through search engine optimization (SEO) have the highest closing ratio of all (see Hubspot Survey summary below). Why? People searching for your services on Google or another search engine are usually in Stage Three or Stage Four of the Buying Cycle. They are ready, or nearly ready, to make a purchase.

Social Media And The Buying Cycle

Social media enables companies to engage and interact with potential customers who are more likely to be at Stage Two of the Buying Cycle. Companies of all sizes, especially in the business to consumer (B2C) space, are finding social media to be an effective tool for building brand awareness and developing relationships with prospective customers.

Effective Social Media:
B2B Verses B2C Companies

The 2012 survey by Hubspot showed LinkedIn as the most effective source, among social media channels, for B2B (business to business) lead generation. It indicates Facebook currently is the most effective social media source for B2C (business to consumer) lead generation. One exception appears to be the Health Care industry where LinkedIn generated more leads than Facebook. (survey page 26)

The following data is from the Hubspot survey:
2012_the-state_of_inbound_marketing.pdf

Closing Ratios per Media Channel:

  • SEO — 14.6%
  • Referrals — 9%
  • Paid Search — 7%
  • Social Media — 4%
  • Outbound (“push”) — 2%

Average Cost Per Lead:
Outbound Verses Inbound Marketing:

  • Outbound Channels — $346
  • Inbound Channels — $135

The Cost per Lead data above equates to a 61% lower cost per lead for Inbound Marketing verses Outbound.

Conclusion: Improved ROI Opportunities Dictate Resource Reallocation

In summary, Incoming or Pull media channels provide marketers lower costs per lead and higher closing ratios. These factors yield dramatically improved returns on investment (ROI) when compared with traditional media channels. Higher ROI opportunities are driving companies to reconsider their marketing strategies and reallocate marketing resources accordingly.

Further Reading on Incoming Media ROI and Opportunities

Hubspot Survey: 2012 State of Inbound Marketing (PDF document)

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Posted in Inbound Marketing, SEO

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