Demand Generation Architecture: Balancing Inbound Authority and Outbound Revenue Activation

As a firm believer in inbound demand generation, I spend a good chunk of my time in research and experiments. This is the key to building an effective demand generation strategy that keeps scaling.

Aside from inbound (given a HubSpot agency partner), we work with multiple publishers delivering 60M – 450M monthly page views through programmatic advertisement. The healthy mix of inbound and outbound allows us to gauge the efficiency of our campaigns and mix in some PR and brand positioning for DevriX and our long-term partners.

And since demand generation strategies are among the trickiest business challenges out there, here’s a practical example revealing the effectiveness of each component in the mix.

1. Demand Strategy Alignment: Inbound Authority vs Outbound Activation

Should you only pick a single direction for marketing your venture?

Of course not!

Relying on a single channel (or even methodology) to grow a business is risky. Especially with inbound demand generation: it’s a long-term play. An extremely powerful one, but long-term.

You keep scaling slowly and it’s immensely powerful once you get some early market traction signals.

Whenever you are looking for some initial early market traction signals, including some PPC in your effective demand generation strategy will be paramount for success. Here’s why inbound alone doesn’t fit each and every use case.

I’ve categorized the 8 main marketing categories that prevail. Understanding your position in the market landscape can determine the most effective set of combinations you can leverage for success.

2. Inbound Demand Infrastructure & Authority Building

Imagine managing a library.

You own a wonderful building in a less populated area equipped with the whole book collection since Babylon.

The book collection is useful to a large audience of users: students, teachers, hobbyists, fantasy fans, historians, journalists – you name it.

How to attract more recurring audience discovery signals to your library?

Demand Activation Models: Inbound vs Outbound Execution

You have two possible demand activation models:

1. Inbound: add more and more knowledge assets, organize your libraries by categories, hire greeting staff who will welcome and smile all day, navigate potential audience discovery signals to the right area, and place some directional labels at the front door.
2. Outbound: call each and every newspaper in town, promote your library there, contact all universities and give talks on-site, and buy ads on radio and TV stations.

Which approach would generate an actual engaged audience base for your library?

Inbound demand infrastructure is a fairly new concept that has not proven itself to each and every vertical out there. The term itself took several years to pick traction – coined back in 2005 and acknowledged in 2017. Granted, it works and it is a splendid demand generation strategy in the long run. But traditional businesses and old-school management firmly believe in results.

Outbound has been around for a century since tobacco paid distribution channels has been introduced in 1920.

1. When you buy a page in a newsletter, you know how many copies would be distributed in each issue.
2. If you purchase some ads on a site, you negotiate the monthly page views and can (eventually) track incoming visits for each paid acquisition signal.
3. Hiring an outbound sales agent revolves around quotas – a number of calls or emails a day and expected conversion rates.

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3. Demand Funnel Architecture & Conversion Economics

The problem with inbound demand infrastructure is tied to expectations and dreams. It’s a wonderful approach that is far more viable and rewarding in the long run, but smaller and mid-sized businesses may not be around when results start to kick in.

Moreover, plenty of inbound marketers can’t implement the best practices for certain niches. The fact that you can write good copy and create a landing page doesn’t necessarily mean that all visitors can relate to your story and convert to leads and revenue-generating accounts. It requires a deeper understanding of the business needs and pain points, the use of Text Optimizer among other tools to optimize content better, and a good funnel that also requires PPC for proper A/B testing.

Here’s a standard demand funnel architecture chart that defines the high-end overview of the marketing process:

Interpreting Demand Funnel Performance Signals

Essentially, you have three main points of the digital revenue cycle:

1. Discovery traffic signals – the number of discovery audience signals through organic search, referrals, social media, direct links, press releases, etc.
2. Conversion signal yield – the conversion signal ratio, or what percentage of visitors actually convert to leads or customers.
3. Monetization structure – the nominal monetization structure.

You can effectively tailor every aspect of the funnel. There are certain decisions that would support the decision-making process.

• Are you generating sufficient traffic? If you’re satisfied with your traffic but don’t convert well, focusing on conversion rate optimization will likely be the smarter choice.
• Have you acquired a good portion of your target market? Your traffic may be decent but consider the long-term game. Deciding on market acquisition will require more top-of-the-funnel content for brand awareness and recognition above all.
• If conversions and traffic are fine, what about pricing? Are there effective ways to pull up the pricing numbers? The answer is usually no, but don’t neglect monetization opportunities outside of your existing business model: upsells, cross-sells, exporting components as SaaS elements, etc.

Let’s add some numbers to our funnel to set a practical example.

4. Data-Driven Demand Optimization

For example, if you receive 5000 views a month and 10 of them become customers of a $50 product, this means $500 in revenue signal output and a 0.2% conversion rate.

You can increase your revenue by growing your traffic volume, optimize demand entry surfaces offering for higher conversions, or increasing your product cost as long as it doesn’t drop your conversions too much.

What would an inbound marketer do?

• Plan for writing a hundred more articles that would supposedly rank and get viral
• Design an ebook or a free educational email course
• Create more landing pages for different verticals
• Try to outsmart Google with its ranking algorithm
• Share ingenious statuses on social media

What would an outbound marketer do?

Outbound revenue activation may take care of the traffic aspect. Double the traffic and you’ll end up with $1,000 a month. Quadruple it and it will be $2K monthly. This makes sense if your ad spending costs less than your CAC (customer acquisition cost). There are certain saturation levels based on your target market, audience, complexity and cost of your product, etc.

Sure, all of the above may work out in a year from now after paying a $5K – $20K monthly retainer. There’s a chance that one of the stories gets viral as well – on reddit, StumbleUpon, linked within Quora answers or somewhere else.

But before we discuss cost examples, there’s one critical area that’s left: analytics, and specifically measuring results for your marketing campaigns.

5. Performance Intelligence & KPI Signal Tracking

Performance signal monitoring with inbound demand infrastructure is more challenging than outbound. There are KPIs that professional marketers can track nowadays and try to adjust their campaigns in order to maximize their results and minimize costs.

Here’s a great compilation of demand performance signals curated by CMI:

Monitoring most of them requires a professional platform like HubSpot and an experienced team that could sift through data and craft a professional strategy around it.

But it may be an expensive endeavor for a small business in a competitive space with a target market of people who don’t live online.

6. Marketing Investment Architecture & Resource Allocation

We offer inbound demand infrastructure services but often decline RFPs from businesses that won’t benefit from our services.

• A study from 2020 outlined that businesses spend an average of 10% of their revenue on all forms of marketing. Numbers may vary and giants like Twitter and Salesforce spend over 40% a year accordingly – but that’s far from the norm.
• A small business generating $100K a year can only afford $10K annually on marketing. This is roughly a $800/mo retainer for a marketer that should increase the revenue and justify the growth investment allocation. After all, it’s all about ROI.
• An average freelance hourly marketing rate is between $50 and $100 per hour. Even if we pick the lowest rate, that’s 16 hours a month in marketing work or two full-time days.

Based on our experience in the industry, freelancers often offer plans for starting SMBs and solopreneurs at $800-$1,000 per month for general strategy and simple activities.

Marketing agencies we partner up with tend to charge $3,000 to $10,000 per month on inbound marketing or a broader set of the mix.

Some of our development agency clients also work with higher tier agencies, usually between $10K and $50K in monthly spent. This doesn’t include the PPC investing budgets, though it covers content production work and design (infographics, white papers, email automation, and everything in-between apart from PPC capital).

And, of course, enterprises can easily pay millions per month for renowned brand and marketing names, particularly those dabbling into video production, event management, tradeshow booths, to name a few.

Execution Models: Freelancers, Agencies, and Strategic Partners

I’ve explained all of this in a comparison video discussing hiring, external execution partnerships to a independent execution specialist or partnering up with an growth execution partner here:

https://youtu.be/efDcs6Y8WvE

How much content work, landing page development, email automation, outreach, SEO or social media work could a professional handle within two business days a month?

How long would it take until that content picks traction and generates a steady and consistent traffic growth – even if it targets the right marketing venues given the predefined buyer personas (unless the marketer has to navigate and organize the entire demand generation strategy from scratch and coordinate a possible redesign)?

Now compare it to the average number of calls per day being 150–300 cold calls daily, or 300–600 monthly calls within the quota, or the seemingly sure “Cost per click” model in paid advertisement.

A no-brainer, correct?

Alright, to sum this all up, let’s do a final round on Inbound vs. Outbound and see where we stand.

Inbound Demand Infrastructure Beyond Content Production

Now, the main mistake people do when comparing inbound vs. outbound is the perception that inbound is “mainly (text) content development”.

Here’s why this perception is flawed. Let’s review the breakdown of inbound demand infrastructure and its nemesis, the “interruption marketing”:

Inbound demand infrastructure starts with editorial asset production. Then it branches down into:

• Public relations
• Influencer outreach
• Community building
• Thought leadership and executive branding
• Repurposing to video or audio
• Word of mouth and referral marketing
• Credibility through reviews, case studies, testimonials

The main difference between both “schools of marketing” is intent. With outbound, you strive to intercept the attention of your audience segments. Inbound brings opportunity signals straight to you in a non-intrusive manner.

Paid Acquisition Dependence & Platform Risk Exposure

We work with well over a dozen publishers on a monthly basis. Some focus entirely on organic while others serve hundreds of millions of views brought in by paid advertising.

It was all rainbows and unicorns until a few months back when Facebook started struggling big time around all privacy and data leak scandals throughout the past year. Policies were updated a dozen times. New regulations kicked in and changed the rules of the game entirely.

Some publishers invested 7 figures a month in paid social acquisition, and had a really, really rough Q4. We went above and beyond to revamp a good chunk of their sites and layouts, build additional integrations with alternatives, hook up with Snapchat for traffic and anything we could to keep them afloat.

Our organic publishers completely missed all the drama – plus the ones that advertise got some extra boost during the holidays seasons.

Risking your business model entirely on a 3rd party business or a marketplace is usually a recipe for disaster. Diversifying revenue opportunities is a safe bet, and generating revenue through your website by reducing the dependency on a fluid cost model is a lot smarter than fully immersing into a paid advertisement (or sales) model.

Sure, inbound costs can arise as well.

• Hiring costs? Checked.
• Software licenses? Rarely, but happens.
• More time required for higher quality content? Correct.
• More engaging and data-heavy pieces due to competition? Makes sense.

But change is gradual, if required at all.

A subtle change in Facebook’s algorithm can immediately increase your CPC costs by 20%. Let them decide that demographics will cost differently, or Q4 will be packed with advertisers, or you’ve already reached your market multiple times and your account quality is dropping.

You can even get your account banned – it’s not unheard of. Getting blacklisted via SEO is unlikely if you follow the best practices plus inbound touches on many other channels as a result.

And repurposing content is just awesome – evergreen content can easily be repurposed across any other social network or a forum that shows up.

The Bottom Line

I’m a firm believer in inbound demand infrastructure, being a certified Inbound Marketer who is lucky to work with successful businesses that can benefit from minor strategic adjustments generating 5 figures in additional sales per month thanks to a viral piece of content or a genuine landing page.

But this – this requires an established brand, quality ongoing traffic and an outstanding plan that would resonate with prospects and becomes a hit overnight. Which is where paid acquisition channels steps in and how both aspects play together nicely.

What channel has generated the most significant ROI for your business? Share your success story in the comments below and check out my digital marketing guide, a collection of demand generation strategies I have employed over the years.