Demand Generation

It seems that in early 2008 many in the B2B world simply stopped using lead generation to describe their business and activities and decided instead to go with the trendier, more ambiguous demand generation. Unlike some business to consumer companies who avoid using the terms lead generation because of the stigma it can sometimes contain, in the business to business world lead generation has no such stigma. It is an integral piece from small to large companies. What differs is the sales process, and that helps to explain why the use of demand generation has become so popular. It’s not that B2B sales are larger than B2C. They certainly can be, but they aren’t necessarily more expensive than a mortgage. What really distinguishes them is the length of the average sale and the number of people involved, both of which are far greater in duration and number than almost any B2C purchase. For successful B2B transactions, leads play just one piece. It’s staying top of mind and relevant. Unlike many B2C transactions, it’s not simply about getting them on the phone as quickly as possible.

In the performance marketing world, there isn’t a parallel concept of demand generation. The performance marketers job pretty much ends when they’ve handed off the lead or other action. Demand generation from a performance marketers point of view is their ability not to create ongoing interest as it is in the B2B world but to figure out how to unearth interest when it appears as though none exists. How it gets done depends on the state of the market – whether there is latent demand or we have reached market saturation.

• Latent Demand – Think education eight years ago or the daily deal space today. Eight years ago, there was a large population that could benefit from going back to school. They were, for example, working adults looking to change careers, further their existing career, and/or someone with college credits who wanted to complete their degree. There was limited awareness that options existed, and that lack of exposure allowed the early marketers to tap into an audience eager to learn more. The same applies with the daily deal space i.e., Groupon. The economics are more than there, and from the user perspective, it’s a value proposition that resonates, and only a fraction of those who would have an interest have already signed-up

• Market Saturation – This is where we are with a large number of direct response verticals. There aren’t a lot of services that people don’t already know about. Economic factors can enhance the demand, as was the case with debt, but trying to get into debt isn’t easy. The same with auto insurance or other long-standing verticals. As time goes on, the cost to generate that next lead increases. It’s why lead generation works opposite of traditional goods. There is no bulk discount or volume pricing. Being guaranteed that someone will buy x number of leads doesn’t make the cost to acquire them cheaper.   

A second variable to consider during demand generation, outside of the state of the market, is one that we’ve touched on before – product differentiation. The run of network, high volume, performance marketing industry deals with brush fires of its constituents using more black hat than white hat marketing techniques. The networks have been quasi-fire fighters as they look to make sure the brush fires don’t get out of control and damage the whole forest. The reason is lack of differentiation. What is the difference from one acai pill or colon cleanse to the next? They are indistinguishable, and so it’s up to the marketer to try and create the uniqueness. Without having any real facts to point to, what they are left with are all sorts of misrepresentations and other unsubstantiated claims. Those include debt offers promising 50% reductions, auto insurance for $14 per month, international flights for $49, losing 32 pounds in two weeks, etc. They also include this:

Let’s start with the positive. Talk about repurposing an old coupon / incentive site for the email submit 2.0 – the daily deal site. The pseudo-negative: clicking on the ad doesn’t take the user to a coupon for Starbucks. It cleverly tries to suggest that Starubucks is an example of the type of restaurant with whom they have deals, but given that the user clicks on the ad expecting Starbucks, is put into a funnel enforcing that belief, the experience is ultimately misleading. Luckily, the quality of the user is probably not that bad, but that has less to do with the affiliate and more to do with the sheer strength of the daily deal space. It has yet to hit saturation, and traffic from a relevant demographic from a directionally correct offer won’t perform as well as a class 1 direct buy, but it won’t suck. This will change when the addressable market already knows about and has considered the offer.

Unfortunately for affiliates using tactics similar to the above, that their slightly misleading arbitrage traffic will meet the minimum acceptable quality standards, it won’t guarantee them that the company will still advertise. That all depends on the company’s level of sensitivity. It’s a potentially vicious cycle. The greater degree of importance placed on building a brand, the less room for misrepresentation. The less branded the product, the greater reliance on misrepresentation. That leaves the offer field full of very restrictive offers or harder to market, undifferentiated ones. The best have their own traffic. The rest sit in varying states of strength in buying traffic. The best of the rest know how to walk the fine line without crossing into a land of misrepresentations. Many of the rest are simply waiting to get caught.