B2B Demand Generation Benchmark – 2014

By: on October 22, 2014

Note: We’ve updated this report! The latest version can be found here.

As the B2B marketing landscape continues to shift, it can be difficult for marketers to know how to best allocate their resources. Which older tactics no longer work, and which have staying power? Which newer tactics are fads, and which already produce tangible results?

To shed light on these questions, we conducted our annual B2B Demand Generation Benchmark report.

We surveyed 200 business-to-business (B2B) marketing professionals in order to understand which channels, offers, content types and technologies they were using to fuel their demand generation (or “demand gen”) programs—and which they found most effective.

Key Findings

  1. Marketers found trade shows, referral marketing and in-house email marketing to be the best channels for generating large numbers of high-quality leads.
  2. Videos were not only the most-used type of content (used by 92 percent); they were most commonly cited as producing a very high volume of leads.
  3. Most B2B marketers (79 percent) use at least 11 different marketing software applications, with 97 percent using email marketing software.

Trade Shows Generate Highest Quantity and Quality of Leads

First, we asked B2B marketers to rate the relative quantity and quality of leads generated through a range of channels. Trade shows were most commonly cited as generating both the most and the best: 77 percent of marketers said they generated a “somewhat” or “very high” quantity of leads, and 82 percent said they generated leads of “good” or “excellent” quality.

According to Michele Linn, content development director at the Content Marketing Institute (CMI), this makes sense.

“[Trade shows] are always the tactic that marketers rate as the most effective.In the digital age, where so much stuff is online, there’s something exceptionally powerful about doing in-person events—if done well.”

Michele Lin, Content Marketing Institute

Quantity of Leads, by Channel
Quality of Leads, by Channel

Other channels selected as producing a “very high” volume of leads included search engine advertising (22 percent), in-house email marketing (21 percent) and B2B print, radio or TV advertisements (20 percent), making these particularly attractive options for marketers looking to run quantity-focused programs.

The latter finding is surprising, particularly since last year’s demand generation report emphasized how digital channels have largely surpassed traditional media. However, print magazines are still one of the most important sources used by decision-makers to research B2B purchasing decisions, according to an exhaustive, 423-page study by ABM (see page 23). As such, this more traditional channel is still an effective one for demand generation campaigns.

When evaluating the quality of leads by channel, 78 percent of marketers singled out referral marketing (also known as “advocate marketing”) as producing “good” or “excellent” leads. This is in line with Gartner Research Director Hank Barnes’ claim that B2B buyers are increasingly turning to peers, professional communities and B2B review sites (such as Software Advice) to inform buying decisions.

Notably, display advertising such as banner ads came in last on both the lead quantity and lead quality charts, although retargeting ads performed better in terms of quality. This finding corroborates the claims of inbound marketers that traditional display ads should be used situationally—if at all—for B2B demand generation, due to extremely low engagement rates.

Social Media, Email Marketing Yield Lowest Cost-per-Lead

When asked to evaluate the cost-per-lead of these channels, many (34 percent) singled out social media marketing—that is, social media campaigns and programs outside of ads—as having a “very low cost.” A combined 66 percent also cited in-house email marketing as having a “somewhat low” or “very low” cost-per-lead.

In addition, while many marketers said trade shows produced a high volume of excellent leads, this was also the channel most frequently described as having a “somewhat high” or “very high” cost-per-lead (83 percent)—no surprise, given the cost of travel, registration fees and mountains of swag typically used to lure prospects into presentations.

Cost-per-Lead, by Channel
Demand Generation Channels Used

The vast majority of marketers reported that they used all 15 of the demand generation channels we listed, with each being used by at least 85 percent of respondents. In-house email marketing was the most popular choice, with a 97 percent adoption rate. This is likely due to its high level of effectiveness—it was rated third-highest both in terms of quantity and quality of leads generated—combined with its low cost-per-lead.

Video Is Most-Used Content Type

We also asked respondents to rank the demand- and lead-generation effectiveness of various types of content, offers and calls-to-action (CTAs). Of the content types we asked about, video was the one most commonly leveraged for demand generation programs—used by 92 percent of B2B marketers. That’s above surveys (88 percent), white papers (88 percent) and case studies (87 percent).

This is in contrast to the findings of CMI’s recent B2B Content Marketing report, which found case studies to be more commonly used than videos. The discrepancy is likely due to the differing demographics of our samples.

Our sample included a significantly higher percentage of marketers representing large businesses (see the “Demographics” section below for more on this), which we found were eight times more likely than small businesses to use video content. This is unsurprising, given the relatively high cost of video production.

Types of Content Used for Demand Generation
Offers and CTAs Used for Demand Generation

In addition to generating a surprisingly high quantity of leads, Linn suggests that the widespread adoption of video marketing also reflects the rising importance of YouTube as an organic search channel, noting that it has the second-highest search volume, behind only Google.

Videos and Surveys Generate the Most Leads

When asked to evaluate content types, marketers most commonly cited B2B videos as generating a “very high” quantity of leads (23 percent). Linn says this is fairly surprising, noting that videos have long been thought of primarily as indirect content used to build interest and trust, rather than to actually drive leads.

However, the fact that videos are directly generating leads suggests that marketers are creating more actionable videos. Some have had success requiring buyers to fill out lead capture forms (a practice known as “gating”)  to access in-depth video, or using CTAs to drive further interactions—typically within the video itself or in YouTube comments and annotations, as in this ad for Adobe Marketing Cloud.

Quantity of Leads, by Content Type
Quantity of Leads, by Offer/CTA Type

Many marketers also reported that surveys and research content produced a “very high” (23 percent) or “somewhat high” (45 percent) number of leads.

Linn says that surveys are a type of content that “people don’t mind [registering] for,” thanks to the high value of quality, original research. In addition, she emphasizes the value of surveys as content that “you can repurpose in a lot of different ways,” such as by creating an infographic from the data collected.

Linn adds that it also makes sense to see case studies come in at the bottom of the list.

“People gate a lot of the stuff early in the sales cycle to get leads into the funnel, and obviously, they want to nurture leads throughout,” she says. “But to me, it doesn’t make a lot of sense to gate case studies at all, [because they’re mostly just used to establish trust]. So it doesn’t surprise me that those wouldn’t generate a high quantity of leads.”

Among offers and CTAs, live demos with sales reps and free product trials topped the list, with 27 percent and 22 percent of marketers, respectively, describing them as producing a “very high” quantity of leads.

Live-Demo Offer Produces Highest-Quality Leads

In addition to generating the highest number of leads, live demos with sales reps were also the offer or CTA most cited as generating “excellent” (45 percent) or “good” (42 percent) quality leads.

As with the in-person experiences offered by trade shows, live demos offer a more personalized context in which to interact with customers. And because they are scheduled events with a real person on the other end, B2B buyers enter with the expectation that they will need to provide detailed contact information. And when buyers provide more in-depth information, it results in higher quality leads.

Quality of Leads, by Offer/CTA Type
Quality of Leads, by Content Type

What’s more, live demos are typically positioned toward the end of the sales funnel, for prospects with clear purchasing intent—as are all the of the offers and CTAs in the first chart above. The content types listed in the second chart, by contrast, tend to attract buyers much earlier in the sales funnel, resulting in fewer overall leads of “excellent” quality. However, it’s important to note that many buyers engaging with this sort of content, if properly nurtured, will eventually engage with end-of-funnel offers and content, as well.

Most Marketers Used 11 or More Software Applications

Next, we asked marketers to identify which software systems—from a list of 11 we provided—they used to facilitate demand generation efforts. Nearly all (97 percent) used email marketing software. This makes sense, given the high quantity, high quality and low cost of leads generated through in-house email marketing.

Customer relationship management (CRM) and marketing automation suites were the next most commonly used technologies, at 97 and 96 percent, respectively. This reflects their status as foundational systems for B2B marketing, as described by Scott Brinker, co-founder and chief technology officer (CTO) of ion interactive.

More surprising is how quickly nearly all marketers have adopted advanced data collection and analytics software, such as Web analytics (used by 95 percent), various business and marketing intelligence solutions (94 percent) and tools for social media monitoring and listening (90 percent). The same was true for more specialized programs—such as referral or community marketing software, used by 88 percent, and pay-per-click (PPC) software, used by 86 percent.

Altogether, most marketers (79 percent) used all 11 of the software solutions we listed.

Software Solutions Used
Number of Software Solutions Used per Company

These results reflect the increasing importance and sophistication level of technology to B2B marketing departments—corroborating Gartner’s claim that by 2017, chief marketing officers (CMOs) will spend more on information technology than on chief information officers.

When asked to rate the relative importance of these 11 technologies in relationship to the success of their demand generation programs, 72 percent or more said that all 11 were at least “moderately important.”

Value of Software Solutions to Demand Gen Success

Value of Software Solutions to Demand Gen Success

CRM was most commonly cited as “extremely important” (36 percent) or “very important” (35 percent) to the success of demand generation programs—which, again, is unsurprising, given the necessity of storing and tracking customer information. Business intelligence software was second on the list, with 59 percent of respondents describing it as “very” or “extremely important,” reflecting marketers’ need to store and interpret increasingly vast quantities of data.

Fewer marketers described marketing automation software as “extremely important” (17 percent) or “very important” (24 percent)—surprising, given its typical status as a backbone platform for lead capturing and nurturing efforts.

This could partially be a result of our separating “email marketing software” into a distinct category, since it often falls under the umbrella of marketing automation processes. However, Heinz argues that the result reflects how marketing automation technology “in broader adoption markets” is still at an early, immature stage.

“Way too many companies are still just doing batch-and-send emails with little intelligence, segmentation, scoring etc.,” he says. The effective implementation of marketing automation software, he adds, could present a huge opportunity for businesses to achieve the same results, yet at a lower cost and with better leverage and scalability.

Small Businesses Struggle to Meet Demand Gen Expectations

Next, we asked marketers to assess the overall performance of their demand generation programs, compared to expectations. We found that small businesses (with fewer than 100 employees) were most likely to say their efforts performed below expectations (44 percent).

Comparatively, only 27 percent of midsize companies (100-999 employees) and 29 percent of large companies (1,000 employees or more) said the same.

Digging further into the data, we also found that those marketers who used all 11 of the technology solutions we listed were more likely to say their demand generation programs performed “far above” (9 percent) or “slightly above” (28 percent) expectations. That’s compared to 5 percent and 16 percent, respectively, of the marketers who used fewer software applications.

Demand Gen Performance vs. Expectations, by Business Size
Demand Gen Performance vs. Expectations, by Number of Solutions Used

Linn says that these two findings may be closely related, but that simply purchasing more technology without a plan is not the answer.

“[Small businesses] need to understand their business needs and have the tools meet their requirements, instead of vice versa,” she says. Many small businesses decide they need software for demand generation and simply make a purchase without a documented strategy or implementation plan, she adds.

Also, Heinz notes that these findings may have as much to do with marketers setting unreasonable expectations as with poor demand generation performance.

“Across the board, we too often expect marketing programs to work immediately. We want qualified leads, now! But our prospects don’t work that way,” he says.

Most Marketers Plan to Increase Demand Gen Spending

When asked how they planned to adjust spending on demand generation programs next year, 41 percent of marketers said they would increase their spend, 43 percent said they’d spend the same amount and 17 percent said they would decrease spend.

“People realize now that having a demand generation strategy is so critical. They need to plan content along the entire customer lifecycle. And it can be very time-intensive and resource-intensive. So, from that perspective, it’s not surprising that people are increasing spend at all,” Linn says. “It’s an engine that constantly needs to be fed.”

Plans for 2015 Demand Generation Spending

Plans for 2015 Demand Generation Spending

Linn was, however, surprised that even 17 percent of marketers might plan to decrease investment in demand generation programs. She suggested that this number, along with the large number of marketers keeping spend the same, could reflect how businesses’ inbound marketing processes are beginning to reach a more advanced stage of maturity—particularly those of the larger businesses constituting much of our sample.

“As companies mature within their process, they’re going to have that content bank, [so] they don’t need to create from scratch all the time … [rather,] they can just update and refine,” she says. “Secondarily, as they refine what their process is and become more efficient, they’ll need to expend [fewer resources].”

We also asked marketers to break down their plans for future demand gen investment by channel. Search engine advertising was the most common area for increased spending, with 12 percent planning to spend “much more” and 30 percent planning to spend “somewhat more.” This finding aligns with CMI’s recent research, which shows that content marketers consider search engine ads to be their most effective paid advertising method.

Plans for 2015 Demand Generation Spending, by Channel

Plans for 2015 Demand Generation Spending

Many marketers (30 percent) were also planning to increase spending on social media marketing programs outside of ads.

According to Linn, this may reflect an increasing sentiment among business leaders: “You don’t want a college intern to be the social media face behind your company,” she says.

It may also reflect the expense of increased investment in social media platforms, monitoring and analytics technologies.

Notably, referral marketing did not place particularly high on the chart, despite how many marketers say it produces a high volume of good leads at a low cost-per-lead.

This supports Barnes’s claim that referral marketing has not traditionally been “at the top of the heap in terms of marketing investments,” but that “it should be moving towards that point.”

The B2B Channel Effectiveness Quadrant

Software Advice’s B2B Channel Effectiveness Quadrant presents a wide-angle view of the relative efficacy of B2B demand and lead generation channels. It illustrates the relationships between the quantity, quality and cost of leads generated by channel, making it easy to see at-a-glance which ones marketers used successfully in 2014. (For a full explanation, see the “Methodology” section below.)

The B2B Channel Effectiveness Quadrant may be used as a first step for marketers looking to understand how to best prioritize their efforts. However, the actual effectiveness of these channels will depend on how they align with the particular business goals of any given organization.

Channel Effectiveness Quadrant

According to Matt Heinz, president of Heinz Marketing, it’s especially critical that businesses continually re-evaluate what works for them and what doesn’t based on their own evaluation of key metrics—which, in addition to cost-per-lead, include lifetime customer value and conversion rates. He also cautions marketers to remember that the relationship between the lead quality and quantity of any given channel can vary significantly, depending on the context.

“[General trade events] might generate a high volume of leads, but very low overall quality, [whereas] executive events might generate low volume, but very high quality,” Heinz says.

Most Respondents Held Director-Level Titles or Higher

Most of the marketers in our sample held senior positions, with 63 percent having a director-level title or above—including 23 percent who identified as C-level executives (i.e., CEOs or CMOs). This leaves 29 percent of respondents holding manager-level titles and 8 percent identifying as coordinators, specialists, associates and so on.

In addition, respondents represented B2B companies of many different sizes, with 29 percent representing small businesses (under 100 employees), 32 percent representing midsize businesses (100-999 employees) and 40 percent representing businesses with 1,000 employees or more. Notably, 13 percent of respondents represented very large businesses with over 10,000 employees.

The annual marketing budgets of these companies also varied widely. Forty-one percent had a budget of under $1 million, and 40 percent had a budget of $1-50 million, leaving 19 percent with a budget over $50 million.

Demographics: Respondents by Job Title
Demographics: Business Size by Number of Employees
Demographics: Business Size by Annual Marketing Budget

Final Takeaways

Marketers looking to understand which channels to prioritize should use our B2B Demand Gen Channel Effectiveness Quadrant as a first step to contextualizing their own efforts, compared with the success other marketers are experiencing.

For instance, referral marketing was cited as a channel that offered a high volume of excellent, low-cost leads—yet it fell in the middle of the pack in terms of planned future spending. As such, businesses that currently have a simplistic or limited process for nurturing brand advocates should consider investing in more sophisticated tactics, such as B2B loyalty campaigns.

When it comes to prioritizing content, Linn says it’s important for businesses to balance “how long the piece [of content] takes to create, how they’re going to be using the piece and what the goal of the piece is,” and to “have a system in place where they decide what it is that they gate versus what it is that they don’t.” As an example, she argues that ungated case studies can be highly effective for building buyer trust, whereas gated case studies typically generate leads (albeit low quantities of them).

Finally, our research shows that the overwhelming majority of B2B marketers are highly sophisticated in the range of technologies they use to execute demand generation programs—suggesting that it’s more important than ever for businesses to build rapid, agile technology evaluation and adoption into their marketing processes. This is particularly true when it comes to business intelligence and Web analytics applications, which were most commonly cited as being crucial to demand generation success.

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

For the B2B Demand Gen Channel Effectiveness Quadrant, the x-axis position of each channel was determined by combining the percentages of marketers describing them as producing a “very high” or “somewhat high” quantity of leads, whereas the y-axis position was determined by adding the percentage who described the quality of leads as “excellent” or “good.” For the quadrant’s lead-cost designations (i.e., the color of each marker), we added the number of respondents describing each channel as “very low cost” and “somewhat low cost,” and placed the sum within evenly distributed percentile ranges.

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