Online Marketing by an Undergraduate

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Hubspot Inbound Marketing Report – Analysis

Today I read my first white paper, the “State of Inbound Marketing”, produced by Hubspot. Below I list the paper’s three key findings and then present my reaction to the paper. Comments and criticism welcome.

3 Key Findings:

  1. Inbound Marketing channels deliver a dramatically lower cost-per-sales lead than outbound channels.
  2. Blogs lead other social media in terms of importance to business.
  3. Small businesses are most aggressively allocating lead generation budgets to blogging, social media, and search engine optimization.  (Hubspot, 3)

My Reaction:

Point 1 Take away: Dramatic Difference in lead cost between outbound marketing driven business and inbound marketing driven business overstated because of skew in large business outbound driven marketing spending.

When the white paper aggregates the survey data, an inbound marketing driven business lead averaged $84 in cost whereas the outbound marketing driven lead averaged $220—difference, $136. When the white paper breaks the data down, however, the difference grows to about $400 for large (>50 employees) businesses and shrinks to between $10-$15 for both small (<10 employees) and medium (11-49 employees) sized businesses—a much different picture.

A key cost driver for large outbound marketing driven businesses are the expensive trade shows—expensive because 55% of respondents said that trade shows cost above the average of other lead channels—to which they allocate at least 13% of their budget (at least 13% because this is the average for all large businesses, an outbound marketing driven business might allocate a higher portion of its budget to trade shows). On the other hand, small business only allocate about 5% of their budget to trade shows and only generate 5% of their leads from this channel.

The large business spending on such an expensive outbound marketing tool contributes to an overstatement of the difference in lead cost between an outbound marketing driven business and an inbound marketing driven business.

 

Point 2 Take away: Blogging leads other social media in importance but unclear why.

The white paper shows that 31% of respondents felt that blogging was critical to their business with fully 75% saying blogging was useful (the categories were critical, important, useful, somewhat useful, not useful). The social media tool Stumble Upon came in second with 5% of respondents saying the service was critical  and 55% saying the service was at least useful. For perceived business importance, blogging is the clear winner. The white paper, however, does not disaggregate blogging from social media in the lead generation statistics, so I cannot know the difference in effectiveness between blogging lead generation, and all other social media lead generation.

 

Point 3 Take away: Small businesses are aggressively shifting resources to inexpensive lead generating channels with success.

Small business respondents allocate three times the budget (15% vs. 4%) of medium-to-large businesses to blogging and social media resources. Additionally, they spend more (15% vs. 10%) on search engine optimization than medium-to-large businesses do. This finding suggests small businesses are more cost conscious than their larger counterparts, as 55% of respondents estimated blogging and social media costs are below the average cost of other lead generating channels and 48% responding SEO costs are below the average as well. Additionally, SEO was THE ONLY distribution channel that generated leads in a percentage significantly greater than its budget allocation (16% vs. 12%).

 

My Take away:

The white paper demonstrates the advantages of using an inbound driven marketing strategy as well as presents inbound marketing techniques within the context of a broader marketing strategy.  

Because each lead generation channel produces leads in line with spending (except for SEO), the more a business can shift resources to less expensive lead channels, the better. Here, inbound marketing techniques win over outbound techniques (trade shows, direct mail, telemarketing) because inbound techniques are generally less expensive.

Additionally, with the increasing importance of the internet as a social environment, outbound marketing strategies are becoming less effective, putting even more pressure on businesses to shift resources to inbound marketing strategies.

Although based on the previous two paragraphs, businesses should shift more of their resources to inbound marketing, that does not mean a business should eliminate their outbound marketing strategies, it just means they should play a lesser role.

Not without flaws, the paper could have benefitted from a lead generation budget allocation breakdown comparison between inbound marketing driven businesses and outbound marketing driven businesses in both large and small business categories, a disaggregation of lead generation data between blogging and social media, and an historical breakdown of lead budget allocation percentage vs. lead generation percentage to see how quickly outbound marketing is becoming less effective and inbound marketing becoming more effective.

While the paper has its limitations, it was informative and thought provoking, two great qualities for knowledge I got for free. 

 

**Note: One observation that I did not include in my analysis above but is nevertheless important is that the white paper’s data show that the average length of company blogging is 10.8 months, with the median being six months, an indication of a LARGE SKEW toward businesses blogging much more than 10.8 months. While the paper does not go deeply into the consequences of this observation, some things I would like to know are: how effective are these established blogging businesses compared to their more nascent counterparts, and how often do established bloggers compare to their same competitors? This knowledge would be helpful in communicating with future clients how long they should expect to blog before generating a return and also how frequently they would have to blog at different stages of their blog’s life cycle.

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