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A breakdown of inbound marketing vs. demand generation

Inbound marketing and demand generation are easy to confuse, but they are different. While inbound marketing is marketing-centric, demand generation tends to be more sales-centric.

There are many marketing practices out there that seem the same but are different -- demand generation and inbound marketing is just one example.

Inbound marketing makes a business visible to its target audience by using engaging content and sharing how the company can address a prospect's pain points. Inbound marketing is a component of demand generation, which refers to how businesses generate interest in their company and attract leads.

Here are the key differences between demand generation and inbound marketing.

Demand generation

Demand generation describes the many customer acquisition initiatives a business uses to drive awareness of its products or services. The marketing and sales teams must work together through the customer journey to bring prospective customers through the sales process. Demand generation focuses on building and nurturing long-term relationships with prospective customers. Companies that use demand generation are typically sales-driven.

Demand generation tools include:

  • contextual advertising,
  • direct email marketing,
  • Infographics,
  • native advertising,
  • social media marketing,
  • webinars and
  • inbound marketing.

Another demand-generation method is outbound marketing. In this scenario, a sales representative initiates conversations with qualified leads. This approach is less targeted than inbound marketing and aims to reach a larger audience, rather than focus on one type of customer.

Account-based marketing (ABM), another demand-generation method, is key to identifying the right audience to have successful demand generation. An ABM strategy focuses on using a company's resources, budgets and campaigns to target a specific group of accounts to make sales.

Benefits of demand generation

Demand generation requires the sales, marketing and customer success teams to work together and integrate their technologies. As a result of these teams working together and having clear communication, companies can close more deals and increase customer retention rates.

Inbound marketing

Inbound marketing aims to attract customers, or leads, through company-created content on blogs and social media that will ideally appear within searches on search engines. Inbound marketing is a method or approach that businesses can use when executing a demand-generation strategy. Companies that use this approach focus less on the sale and more on where the marketplace is moving.

Inbound marketing is a method or approach that businesses can use when executing a demand-generation strategy.

Inbound marketing tactics mainly use free platforms -- such as Facebook, Twitter, YouTube and blogging websites -- to share content and attract website visitors. This is a less-expensive approach than outbound marketing, which relies on cold-calling, direct mail or TV and radio advertisements.

The aim of inbound marketing is to drive organic traffic to content rather than rely on advertising-driven traffic. This method increases brand awareness and provides prospective customers with relevant content that can guide them through their buyer's journey.

Benefits of inbound marketing

When done right, inbound marketing can provide many benefits to an organization. Here are some examples.

  • Offers a noninvasive approach to prospective customers. Many customers tend to research a company before doing business with them. Inbound marketing provides informational content for prospective customers without immediately pushing them to make a purchase. Customers can enter the sales funnel on their own terms without any pressure to buy.
  • Generates relevant leads from a targeted audience. Inbound marketing appeals to an audience that is interested in what a business offers. If a prospective customer is already searching for a company's content, he or she is more likely to act.
  • Provides a higher ROI. Compared to outbound marketing techniques, inbound marketing has a much lower cost. Inbound marketing requires social media, which is free, as well as a website or blog. Companies would also benefit from a marketing automation platform to follow up with leads and aid in the lead nurturing process. The overall cost of marketing decreases, as well as the cost per lead.
  • Increases visibility to potential customers. When businesses promote their content on the right channels, they are more likely to attract prospective leads and increase visibility.
  • Builds brand awareness. Using an inbound strategy, a company is more likely to focus on an interested customer rather than uninterested leads. This builds trust and relationships with the company's ideal customers and encourages them to share a company's content with others, whether it is through social media or word of mouth.

The relationship between inbound marketing and demand generation

Inbound marketing falls under the demand generation umbrella. As a result, the quality of a company's content -- as well as how the business uses and promotes it -- directly affects how many prospects show interest in the products or services and how many of those potential customers convert to loyal customers.

An inbound marketing strategy, when done right, captures the audience's attention in a nondisruptive way, and achieves the goal of demand generation -- which is to attract customers to the business and generate leads. If an organization provides its leads with helpful and informative content, it is more likely to make a sale compared to a company that does not provide that same high-quality information.

Editor's note: TechTarget offers ABM and project intelligence data, tools and services.

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