In marketing, there has been a debate as to which form of marketing is better; inbound marketing vs outbound marketing. The short answer to this question is that it depends. It depends on the industry your business is in. Inbound marketing is more suitable for eCommerce while outbound marketing might work better for niche industries like life insurance.
This article is going to address the definitions of inbound marketing and outbound marketing and the advantages and disadvantages of both.
What is inbound marketing?
Inbound marketing is a marketing methodology that was developed at the onset of the internet and the formation of business websites.
This methodology focuses on acquiring customers from various inbound marketing sources like social media and organic search and driving them to your website. Simply stated, people are seeing your search listing on google, viewing your social media post, and clicking a link to visit your website.
To achieve success in inbound marketing, you need to create content that catches the user’s eye and is relevant to the problems they are looking for a solution to. This piece of content is the starting point of another concept called the marketing funnel.
Inbound marketing uses a marketing funnel that guides the customer from initial discovery to their final purchase. The initial discovery portion of the funnel is called Top of Funnel (TOFU). At the top of the funnel, this is where you would have a blog or social post that has the goal of acquiring new customers.
The next portion of the funnel requires the company to nurture their leads and get them marketing qualified and sales qualified. This occurs at the middle of the funnel (MOFU) or the bottom of the funnel (BOFU). Leads are nurtured with emails and content describing the solution to their problems until they are ready to make a purchase, which is usually done by an outreach by a salesperson.
What Are The Characteristics of Inbound Marketing?
Inbound marketing tends to be a warmer approach to gaining new customers. The approach is less intrusive because the customer is the one doing the outreach, not the other way around.
Inbound Marketing Uses Customer Opt-In
One characteristic of inbound marketing is the use of a form opt-in on websites. With form opt-in, users complete forms on the site but before submitting need to check a box stating that they are opting in to any marketing communications from that company.
The outcome of this means that the company will only be sending marketing messages to potential customers that have agreed they are interested in receiving messages related to the product or service being promoted.
In a world that is becoming more aware of digital privacy, more governing bodies have been developing data regulations like GDPR or California Consumer Privacy Act that encourage the use of opt-in. Businesses that use web forms without opting in, run the risk of violating data privacy laws which can lead them to a disastrous lawsuit.
Inbound Marketing is Content Marketing and Email Marketing Focused
Since inbound marketing relies heavily on opt-ins from customers, content marketing and email marketing are the main drivers in this methodology.
The inbound methodology needs content to get people into the funnel. This content can be blogs or articles that describe a solution to a person’s problem. On these pages, they usually opt-in forms that provide access to more gated content like downloads or infographics.
Once a user completes the form and gets their download, the company now has their email information and usually enters the user into some type of email automation workflow.
People received messaging related to learning more about the product they were interested in, ultimately nudging them through the marketing funnel to their final purchase.
Inbound Marketing Traffic Sources
Traffic sources are very inbound focused. Meaning that the potential customer is taking the first action to visit your website. Various sources include, organic search listings like Google, Bing, or Yahoo search engines, paid social media ads like Facebook ads, or organic social media posts linking to your website.
Inbound marketing is generally content-driven. You need to come up with compelling ads or content that will lure potential customers into your marketing funnel to get them to convert.
What Are The Advantages of Inbound Marketing?
Inbound Marketing is Generally Not Spammy
One of the advantages of inbound marketing is that it is less spammy. Actions are taken by the customer instead of you actively having to reach out to them. You know for sure that there is an interest in whatever you are promoting. As long as you follow the generally accepted best practices across all your marketing methods, you won’t have to run into the issue of spam complaints.
With that said, you will be abiding by the data privacy laws so you don’t have to worry about GDPR, CANSPAM, or the California Consumer Privacy Act and mitigate the risk of a large lawsuit.
Inbound Leads are More Likely To Convert
With inbound marketing, your path to conversion is laid out. You probably have a marketing funnel that maps out the customer journey from start to finish.
A major component of inbound marketing is the MOFU or middle of the funnel where you’re actively nurturing the lead. You realize that a large bulk of customers are simply not ready to purchase as soon as they see your ad or landing page. You need to warm them up and give them more information to make an informed decision once they are ready to purchase.
What’s great about using inbound marketing is that you can determine whether someone is ready to purchase by monitoring their activity in the funnel-like how many emails they open or how many times they visited your website.
Most CRM or email marketing tools today have these features to help you track the user’s journey through the marketing funnel. You can create automated email flows based on activity and send specialized messages. So instead of having a sales team, cold call leads as soon as they come across their screen, with inbound marketing you’re warming these leads up hoping they’ll be more receptive to your offer because they have more information about it and are already aware.
What Are The Disadvantages of Inbound Marketing?
Inbound Marketing Can Potentially Be High Cost
The cost of acquiring leads might be a lot for some businesses. If you’re running paid search campaigns for broad keywords in competitive industries, you might not see great results as your cost per click price will drive up your lead cost per acquisition. If you spend too much working on acquiring leads but not accounting for that in your final product price, you will lose most of your investment.
It Takes Time
Building a proper inbound marketing funnel takes time. Unfortunately, time is something that a lot of small business owners who aren’t too versed in digital marketing seem not to have. They expect to see results as soon as they can.
Establishing a search-optimized content strategy can take months almost years to perfect. You may have to spend lots of time to find the perfect email template and email timing in your automation flow to get customers to convert. You’ll need to create a dataset to make better marketing decisions that’ll optimize your marketing funnel.
Inbound marketing is not a set it or forget type of thing, you need to spend the time to build it out correctly and constantly be making changes to optimize.
What is Outbound Marketing?
Outbound marketing, more popularly known as direct marketing takes a much different approach than inbound marketing. With Outbound marketing, the company takes the first step and uses efforts to begin the conversation with the customer directly.
This approach is more traditional as it was what marketers had to rely on before the digital age. Think about the show “Mad Men”.
You can consider outbound marketing as more of a cold approach, customers generally are not aware of their problems but you are jumping the gun to put the idea of the solution in their head.
With outbound marketing, you need to have excellent creativity because you only have one chance to make an impression most of the time. You also need to have a quality sales team and process on standby because once you do receive a lead from direct marketing, you need to convert as soon as you can.
What Are The Characteristics of Outbound Marketing?
Outbound Marketing uses up front Messaging
Outbound marketing relies heavily on sending messages directly to potential customers. Direct marketers tend to send these physical mailings directly to their home address, call them on their phones, or send cold emails to their email inboxes.
This type of messaging is cold as opposed to warm messaging like inbound marketing.
Direct marketers tend to be very upfront in their offers. They explain what the offer is and why they are contacting the customer. With that said, their rejection rates are much higher than that of an inbound marketer.
Outbound Marketing focuses on Traditional Methods of Marketing
Outbound marketing typically uses more traditional forms of marketing like direct mail, newsletters, billboards, etc.
In the digital world, other forms of outbound marketing may include native advertising where ads are placed on popular websites that look just like an image or content you are seeing on the page. The hope is that web page viewers see the ad and think it is a part of the article and click on it to visit a website.
With this in mind, native advertising allows direct marketers to reach a large audience at a low cost per impression and cost per click, much lower than what you’ll get on most inbound paid media networks like Google Ads or Facebook ads. Popular native advertising platforms include Taboola and Outbrain.
What Are The Advantages of Outbound Marketing?
Outbound Marketing is Low Cost
Sending outbound marketing messages is very cheap. Direct mail or acquiring a list of email addresses can cost direct marketing agencies fractions of cents per individual unit. With this in mind, agencies with larger budgets can reach audiences more cost-effectively than inbound marketers and potentially have a better return on investment if the campaign generates results.
Broad Audiences Means More People to Target.
Unlike inbound marketing where audiences are very targeted, outbound marketing takes a shotgun approach. The goal of most outbound marketing campaigns is to reach as many people as you can, and hope that you’ll find enough people that would be interested in the promotion being offered to manage a return on investment.
This reasoning is why outbound marketers tend to use methods that reach a wider scale and ultimately prove to be cheaper on an individual unit level compared to inbound marketing. It’s not like you’re targeting everyone in the world but rather if you are selling life insurance, you’ll most likely acquire a list of individuals eligible or interested in life insurance. You won’t have a buyer persona generated but you’ll target everyone on that list in hopes that a few will convert to your offer.
What Are The Disadvantages of Outbound Marketing?
Outbound Marketing May Be Considered Spammy
Since the targeted audience isn’t warmed to receiving a message from the direct marketer, they’ll most likely ignore or mark your marketing effort as spam. You are reaching people that don’t know who you are, what you do, or how you got their information.
You also have to be very careful with compliance because there are numerous privacy laws out there. If broken, you may have a large lawsuit on your hands.
Lack of Flexibility
Since you rely heavily on print media or other forms of media to the masses, your margin for error is very small. One mistake on copy for print media and it’s thousands of dollars down the drain if the media is already printed. You only have one chance to make a good impression.
This is unlike inbound marketing because with inbound marketing you are running digital campaigns that can be paused or edited at any time. For direct marketing efforts like mailings or billboards, you do not have this luxury without a significant cost associated with it.
Which Should I Use For My Business?
The answer to this question largely depends on the industry your business is in. If you are running an online eCommerce business, inbound marketing is 100% the way to go. Your website needs to work and make money for you. You can easily make up for your cost per acquisition (CPA) if your product is priced correctly and the demand is there. This will mean you will most likely achieve a positive ROI.
If you’re in industries that require a personal selling touch or might be hard to get leads like insurance or medicare advantage, you might look to use outbound marketing methods. These industries are very competitive which might drive your cost per acquisition for a single unit of purchase to be very high. With outbound marketing techniques you’ll most likely acquire lead data at a cheaper price point bringing down your CPA and giving you a shot at balancing your return on investment.
Conclusion
Inbound marketing is becoming more of an accepted method of generating leads in the modern world. However, there are certain use cases where outbound marketing would still be more cost-efficient and effective like niche industries like life insurance or medicare. You need to assess the industry you are in and how you generate your revenue, the best way to reach your ideal audience is to decide which form of marketing will work for your business.
