Timothy A. Koonce: Why inbound marketing costs inevitably increase over time

INBOUND MARKETING COSTS

By Mark Schaefer

One of the tenets of the inbound marketing movement is that using content to attract qualified leads is the most cost-efficient marketing system around.

But with the inbound marketing movement now approaching ten years, I am seeing certain trends among companies who have been in this awhile that show that inbound marketing costs may go up, not down, over time.

When you think about it, it makes perfect sense. Let’s unpack this economic truth today.

More friction, more cost

The fundamental idea behind “inbound marketing” is that creating helpful content on your website attracts customers auto-magically as they find you through channels like blogs, search engines, and social media. At least in theory, the cost of this type of marketing is supposed to be very low compared to traditional “outbound marketing” of advertising and sales calls.

This model is running into a number of problems and is not the route to easy street many hyped over the years. I’ll discuss one of those problems today.

Let me introduce a simple chart that depicts what can happen to inbound marketing costs over time:

inbound marketing costs

When you begin an inbound marketing program, simply creating content in an unsaturated niche will result in awareness that will bring in the “low-hanging fruit.” The sales “friction” is very low. These customers have been waiting for a company like you to come along with helpful content and now that they are aware of you, they’re eager to learn more.

As time goes on, those easy customers become harder and harder to find. In fact, as the leads dry up, inbound marketing requires ever-increasing investment in more content, better content, promotion expenses, and even sales calls.

Rising inbound marketing costs

The problem gets exponentially worse if additional friction is created by content competition in your niche (not addressed in the chart). Now, the cost of inbound marketing also goes up due to the need to stand out above the increasing noise level in your vertical, either through investment in better content, advertising, or traditional sales support.

This quote from a connection in my LinkedIn stream sums it up: “In reality content marketing isn’t working because of the ever escalating volume and velocity of content being inflicted on prospects just to maintain the volume of leads we need. Our posts and emails aren’t generating what we need, so we ramp up the volume (and cost of marketing) in an attempt to achieve our goals.”

You could also foresee a situation where your competitors are in the same boat, so customers are simply deluged with content from everybody, driving up the costs to stand out.

Always exceptions!

This is a model of theoretically what would happen to your marketing costs in a normal marketplace but I can imagine scenarios where inbound marketing costs would remain low or constant over time:

No content competition in a massive global marketplace.

There is a continuous entry of new customers who fuel the top of the pipeline (an example might be teens reaching drinking age (fresh customers arriving for a spirits company); or people getting cancer who need medical treatment. Your costs would remain low in these situations if there is little or no competition.

You are in a unique position of authority so demand remains constant. An example might be Seth Godin. He has maintained his blog at the same pace for many years and yet he could probably fill every date on his calendar with a speaking date if he wanted to.

There are probably other scenarios. But I think for most businesses, the reality is there are a finite number of “easy” customers in the world and costs would predictably go up over time as they become harder to find.

Your thoughts? Keynote speaker Mark Schaefer Mark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant. The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon.