For more than a decade of my career, I held various demand generation titles at multiple companies, and the function has evolved greatly in that time.
However, if you’ve been listening to the chatter on LinkedIn over the past two years, that evolution has gained speed and influence. What was once a lead generation and nurturing function has now been rebranded into a full go-to-market (GTM) approach, often owning most of the budget, especially in smaller tech companies.
The new demand gen philosophy
If you haven’t been close to the conversation, some great points are being made about the flawed strategies that have come to represent the majority of demand generation:
- The prevalence of lead gen as the main success metric of marketing efforts, feeding near-term dashboards instead of actual revenue outcomes.
- Placing forms in front of all content, prioritizing lead gen over content consumption.
- Content being warped and watered down to make it mass appeal in lead gen campaigns.
- The watering down of the MQL, and adding low-intent lead-scoring prospects to hit targets, results in lower and lower SQL conversion rates.
- Increasing volumes of leads to hit SQL outcomes as the tactic becomes increasingly saturated.
In short, demand generation had become a volume-based game, chasing pipeline in the piles of leads through a persistent battering of SDR outreach cadences.
Not only is it a negative brand experience, but it is also a failing strategy, with customer acquisition costs skyrocketing. The need to start pushing back on this antiquated approach was long overdue.
The solutions being proposed were many, but could be boiled down to a simple idea:
Demand generation should be about creating high-intent MQLs that convert into pipeline.
It would be proposed that this happens by increasing the number of people raising their hands to talk to sales directly rather than trying to find hand-raisers among the growing volume of low-intent leads. Alongside these inbound hand-raisers, it would instead use its lead gen efforts to “capture” the high-intent MQLs.
All of it would be in the pursuit of high-conversion rates to SQLs and sustainable acquisition costs.
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A good concept meeting a brand marketing vacuum
Everything laid out about the better demand generation direction is a welcome change that opens the door to marketing focused on message consumption over conversion, of long-term value creation compared to short-term results only.
The trouble comes with the next steps and the glaring lack of necessary brand marketing support critical to this direction change.
There was no brand marketing in place for the prior style of demand generation either, but the impact was often hidden by a marketing function hitting its lead and MQL targets. Once demand generation steps back to focus on quality over quantity, it should become clear that no existing brand efforts are happening to create them.
The trouble is, as an industry, we haven’t prioritized brand building in decades and so that realization hasn’t hit.
Instead, what is happening is that demand generation is filling that vacuum itself, assuming the missing brand marketing role. Which, while coming from a place of good intent, is ultimately a bad idea.
Demand generation: An activation function
As part of this new demand generation ideology, there is an admirable and passionate desire to win MQLs by a persuasion effort long denied by lead gen mandates. Some people are calling this demand creation. The idea is to provide so much value through thought leadership and clear messaging that you will create demand for your product, resulting in new high-intent MQLs.
When you compare the ideology to marketing and economic fundamentals, there are some glaring issues, not the least of which is the economic challenge of creating demand.
But if it means channeling demand toward your brand (sadly, this is not always true), then it still suffers from the same linear thinking that the older demand generation was built on: the idea that audiences are in a passive state until you move them into an active one through persuasion.
The only difference is that it’s happening in an ungated content fashion, instead of within lead nurturing programs in marketing automations systems, but the problem is the same.
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Non-linear buying and situational decision-making
Buyers come in-market on a timeline we do not control. The more complex the organization, the more immovable that timeline is.
What results in handraiser MQLs is not an effort of persuasion but of memory. There is no shortage of evidence that buyers form consideration sets long before the active purchase process begins, but what is gaining new traction is the importance of buyers also thinking of your brand when it’s time to buy.
That situational awareness of your brand during the moments when they need to solve a problem is as important as a positive perception of it.
This is solved by the creation and refreshing of memories, which take place across time and in a very non-linear way, with memories formed months and years ago and being called up during situational moments that are entirely outside of our control.
This is the essence of brand marketing but is in stark contrast to the demand generation motion, which prioritizes near-term results and linear journeys as an activation function.
Different mindsets, different motions
The intentions of the new demand generation mindset are positive and worth embracing. But as good as they are in concept, they can’t replace a brand marketing effort alongside them, thinking and measuring differently.
And this isn’t simply a theory, either. HockeyStack reports that while this new demand generation motion is producing much higher MQL to SQL conversion rates than the old lead-gen model, it’s still ultimately producing a negative customer acquisition cost because the lack of brand support is causing it to plateau.
It’s still much more effective than the older model, but at the end of the day demand generation is an activation function and needs something to activate against.
This has always been the role of brand marketing; perhaps this is a moment for real change.
A better demand generation motion, supported by an investment in brand marketing, will produce outsized returns. But they must be invested in together as one cohesive plan.
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Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.
