Demand gen vs. lead gen: Have we reached a final verdict?

A report from HockeyStack says a demand generation strategy is superior to lead generation. We talked with the author to find out why.

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If you spend any amount of time among the B2B marketers on LinkedIn, you’re familiar with the arguments for and against lead generation and demand generation.

Lead generation is a well-entrenched growth strategy, especially among the marketers at large enterprise organizations. They’ve now spent decades gating content assets, conducting webinars and following up with those leads to drum up business. 

Given the size of many of the brands using the lead gen playbook, it’s easy to see why they support it. Their growth was built on a lead gen model.

Demand gen marketers aim to educate and inform their audience. Their goal isn’t to collect contact information and send out emails. Instead, they want their brand to be at or near the top of mind when their prospect enters a buying cycle. 

In their mind, a well-educated prospect will come to them when it’s time to buy.

Canberk Beker is the head of growth at HockeyStack, a platform that helps marketers better understand how their marketing tactics contribute to growth. He analyzed data from across HockeyStack’s customer base and published a report that, in his mind, delivers the final verdict on the demand gen vs. lead gen discussion.

We spoke to Beker about how he assembled the report, what he found and what’s next for HockeyStack.

A lightly edited transcript of the conversation is available below. 

Podcast transcript

Mike Pastore, MarTech

I’m here with Canberk Beker from HockeyStack, which is a very popular company. There is a lot of buzz around HockeyStack, and Canberk is going to talk a little bit about HockeyStack.But more importantly, what we’re going to talk about is lead generation vs. demand generation.

There’s a piece on the HockeyStack blog. They call it the “Final Verdict,” because which of these two strategies is measurable and most effective has been a matter of great debate, but really hard to measure, until recently.

Canberk, thanks for being here and taking the time to talk. Let’s start with demand generation. It’s a term that gets used and misused quite a bit in B2B marketing. It’s often used interchangeably with lead gen. 

We’re talking about what some people refer to as the “new demand gen.” But walk us through demand gen as it’s going to apply to our discussion here today.

Canberk Beker, HockeyStack

Sure. Hi, Mike. Thanks for having me. And, yeah, as you said, demand gen is a bit of a  juicy topic. And the problem with marketing at this point is there’s so many buzzwords.

There’s old demand gen, new demand gen… I don’t know, demand gen 2.0. But for me, demand gen should be a really simple thing. If you are spending money on your brand, — if you are focusing more on brand than generating MQLs directly from ebooks — it means that you are generating demand.

For me, if you are spending more money for a brand campaign, and if you are just using your re-marketing budget to capture the demand you created, if what you want to achieve is to educate the user, if you want to educate your target addressable market, it is demand gen. 

On the other hand, lead generation is not about educating the market. It is generating last-touch conversions. You don’t really want to educate the market. You don’t really focus on your brand, but you really focus on last-touch conversions.

Mike Pastore

Let’s talk a little bit about HocketStack. Like I said, there’s a lot of buzz around HockeyStack. It’s been a pretty popular name, especially with demand gen marketers. It’s gotten a lot of buzz on LinkedIn.

Take a few minutes to explain what HockeyStack does and how it does it.

Canberk Beker

HockeyStack started as a marketing attribution platform. And from a marketing attribution platform, now it has become an entire attribution and analytics platform. 

Meaning that, last year, the platform was able to track the marketing touchpoints. And it was able to take from the first impression on LinkedIn and on until the revenue. But now, actually, we got even better. And now what we can do is track not only the entire marketing journey, but the entire sales journey.

So, if an SDR has an outbound call, we can also track it. If there’s an outbound email, we can track it. If you are sending gifts, if you are creating events, organizing events, getting a list from those events, you can also upload the data to HockeyStack, and we can actually show you the end-to-end journey.

I’m trying to distance the company from marketing attribution now because it is more than attribution. It is like an entire… I don’t know… GTM attribution, but we can literally now track everything.

Mike Pastore

Lead gen is very entrenched in a lot of B2B organizations because, in part, or maybe entirely, because it’s pretty measurable. To a certain extent. You can count MQLs. You can count SQLs. You can even count revenue even though the attribution has always been kind of a challenge. 

And people hate change. So there’s been this tug of war going on for a few years now playing out — especially on LinkedIn, for sure — on a daily basis.

Walk us through the exercise that you conducted to compare lead gen vs. demand gen and to try and come to, as you guys wrote, a final verdict on which is most effective.

Canberk Beker

So the good thing about HockeyStack is now we have more than 100 customers, like close to 200 customers. And all of these customers are B2B SaaS companies. And once they start using HockeyStack, they need to connect all of their platforms. They need to connect all of their CRMs, meaning that we can actually get the entire data, and we can analyze the data really easily.

We started to release these blog posts in the beginning of this year. And the one that we are talking about was the 14th one this year. And I actually don’t know why I had to wait so long for it. 

I was working at Cognism, and Cognism was one of the first companies that was doing demand gen at scale. And even at Cognism… when I joined Cognism, they were already doing demand gen, but the way they measure demand gen was more like spending money on brand. And if you are seeing an improvement in the organic MQLs, it means that demand gen is working, because there was no way to measure it. 

Some people were saying that, “OK, you want to put self-attribution on your forms, so once people submit the form, they will tell you how they heard about you.” However, self-attribution still shows one side of the picture because people have to remember the last part of the journey. 

You might be seeing my ad on YouTube.You might be seeing my ad, or you might be seeing my logo in a trade show. You only remember one part of the journey. So it is still broken. And, at Cognism, I saw HockeyStack and I was like, “OK,  can you do that?” And they said, “Yes. We can do that.”

And back then, I got HockeyStack for Cognism and what they did was to match my LinkedIn impression data with my conversion data, on the MQL level, SQL level and revenue level. And for the first time, we were able to see the exact impressions and exact contributions of each campaign to revenue, even if there was no click, even if there was no engagement, we were able to see it. 

And we were like, “OK, we can see this organic lead, but apparently, they have been seeing our ads for the last two weeks, more than 50 times, therefore, it cannot be organic.”

And this report [the final verdict post] itself was long overdue. This time, we analyzed almost 90 B2B SaaS companies. And we tried to split those companies, 50-50 [using a demand gen strategy vs lead gen strategy]. But I guess — I have to see the numbers — but I suppose it is maybe 45 to 40.

And when we analyze that data, there were more than 250,000 MQLs. There were, like, 260,000 MQLs in the data set. And there was more than $100 million in ad spend, and we analyze half a billion in pipeline and $70 million in revenue from Q4 2023 and Q1 2024. 

What we found out was not surprising. It was the stuff I was already seeing at HockeyStack, at Cognism. But this time, yeah, I wanted to give it a stronger name like “a final verdict,” because it was the most extensive research. 

At Refine Labs, they were releasing resources like that, but they had, like, I don’t know, 30 clients, maybe 40 clients at most. Other companies were publishing their own numbers, but it was only about one company or two companies.But this was the most extensive research that has been done.

In terms of methodology, obviously, as you said, there’s so many definitions of demand generation, and none of the definitions will make everyone happy. So we had to choose the definition that would make the most sense to us.

And for us,  if a company doesn’t spend any budget on any gated campaign, such as ebooks, white papers or any gated content campaign, we classified them as companies that do demand gen. Zero spent for any kind of gated content. 

And we classified companies under lead generation if they spent more than 50% of their budget for gated content. And there are also some companies that were spending, like, 20% of their budget, 40% of the budget, we simply excluded them, just for the sake of simplicity because we want to compare the true lead generation motion to the true demand generation motion. So we did not include any company that hit lower than 50% spent for lead generation. 

Then, the other interesting thing was how we classified the MQLs for demand gen companies, because I got comments about it. Apparently, it was not very clear. So I’m going to be very clear in this podcast: MQLs coming from companies doing demand generation, and this includes any kind of high-intent form submission, so demos, pricing page, contact sales — any kind of high-intent form submission. 

On the lead generation side, those MQLs include all of the gated MQLs, plus the demo form submissions, high-intent form submissions.

And the reason we did this sort of a distinction on the lead generation side was that companies might be focusing more on lead generation, but this doesn’t mean that these companies are not generating any MQLs from their demo forms or their contact us forms.They are still generating those MQLs. 

What we wanted to understand was the average of these companies doing lead generation, so that we could actually compare apples and apples. And after we had those distinctions, which took the most time to be fair, we started analyzing the data.

And on the demand generation side, we analyze around $60 million, just about $60 million spent. And on the late generation side, the spend was around $45 million. And, obviously, when we first looked at it, what we see is that on the lead generation side, the number of MQLs is higher and the cost per MQL is lower. I think the number of MQLs was, like, 50% higher, and the cost per lead on the lead gen side was almost 2x lower.

So when you first look at it, you say, “Oh my god. Lead generation is working. Lead generation  is working. You can generate more leads and you can generate more leads for a cheaper price.”

It is the ultimate dream of every CRO or every CFO over there.

Mike Pastore

Now is that… I wanna jump in with a quick question here because I feel like maybe if you go back a few years, that’s sort of as far as people got with their analysis. And that is why lead gen was so popular and became so entrenched. If you get to this point, you go, look, it works. But now…

Canberk Beker

Funny thing about it, actually. Like four years ago, five years ago, I was working with this CMO, and I was building the marketing budget and marketing forecasting for the next year. And it was just before the investment round, so I had to create this forecast for the next two years. And we were doing lead gen, so I had to use the cost per lead and I had to make the calculations with the cost per lead that we had back then.

And, obviously, there were lots of mistakes. I knew that the cost per lead would never stay the same. As the demand was increasing in the market, as new companies were going into the market, the price was going to go up. So I said, that would be increased maybe in every quarter, maybe like 5%. 

And then she said something that I haven’t heard before. She said, “OK, but we are going to be investing in events. We are going to be sponsoring podcasts. Even though we cannot prove that in this spreadsheet, we need to take into consideration the impact of brand. This impact of brand will decrease the cost per lead, will increase our brand awareness and it will bring more form submissions.”

It was a theory, but obviously, we had no way to prove that. So we basically said, “OK. That’ll be a 5% decrease in the cost per lead,” because that’s what our gut tells us.

So, as you said, it was as far as we could go. And, yeah, that was it.

But now we could actually go down even further, and we could actually look at the pipeline data. We could actually see the entire revenue funnel. And, obviously, the most exciting and most juicy thing to be fair is the conversion rate from MQL to SQL. And, obviously, there’s a lot of definitions about MQLs, lots of definitions of SQL and lots of definitions of deal sizes.

I put the methodology in the beginning of the report, but for SQL, for us, it basically means once the salespeople put an amount into that deal. If they put an average ACV to a deal, we take it as a SQL. And when we look at the MQL to SQL conversion rate between demand generation and lead generation MQLs, we could exactly —  and right away — see the difference.

The MQL conversion rate for the demand gen side was above 20%. While, for lead gen, it was lower than 5%.

It was more than 4x higher than lead generation, which was the first signal for us. OK, we are on the right track. We are now seeing what we are already seeing at HockeyStack, but we are already seeing what I already saw at Cognism.

Even at scale, now we can prove it. But, obviously, we didn’t want to stop there, and we also want to see, “OK, the conversion rate might be lower, but what about ACV?”

Because my assumption was that ACV wouldn’t change that much. Like, a lower percent of the MQLs might end up becoming SQLs, but if SQLs become SQLs, the ACV should stay the same. Like, all of the opportunities should be similar. And, yeah, like, basically, we have seen maybe 10%, 5% difference between demand gen to lead gen ACV on the deal deal side. However, it was not a huge difference. So even if it is a lead gen opportunity or a demand gen opportunity, the ACV is the same, which was expected.

Mike Pastore

Why do you think demand gen works compared to lead gen? 

Canberk Beker

Because in demand gen, you are not pressuring anyone. They come to you when they are ready. While in lead gen, you don’t give them a choice. Like, I don’t remember the last time I downloaded an ebook because I know that I will get harassed. Even though I find an ebook topic, ebook subject, interesting, I’m like, “I know that as soon as I download this, someone will be calling me, someone will be emailing me.” I don’t want to do that. 

It is more like lead gen is for numbers, but demand gen is more like, guiding the audience throughout the journey. There’s no pressure, and you don’t do anything until they come and they raise their hand. That’s why I believe the match is more successful.

Mike Pastore

It sounds like some of the companies… I just want to get your take on this: some companies, obviously, are all in on the demand gen strategy. There are companies that have been doing lead gen for years. There’s still millions and millions of dollars spent on lead gen. So it’s obviously still being done. People are happy with the performance.

Are there companies doing a little bit of both? You talked about how you classified the companies. Are there people who are kinda dipping into both buckets and saying, “Maybe we don’t wanna pick a side. We’re just trying to get in front of people that we think would be interested in our product.”

Canberk Beker

Yeah. That’s the thing. For me, I think demand gen is the answer, but I’m saying this because I haven’t worked in a company that has more than 1,000 employees.

I know that we will never be able to change the way Microsoft does marketing. We will never be able to change the way Oracle does marketing. We’ll always stay here. These enterprise companies will never do demand gen. They will always be doing lead gen. 

And there are some companies, and there will be some companies, who will be focusing on both of the parts. And I think it is about what the marketing team is measured on.

If the marketing team is measured on pipeline, it gives the team more creativity to try and test out different stuff. But if the team is measured by the number of MQLs, obviously, they would be focusing on lead generation because it’s easy.

If my CRO would come to me and tell me that now I’m measured by the number of MQLs, I’m like,”OK, now I’m going to be publishing some ebooks, and we are going to be doing lead gen.” 

So it comes from the top, but, if a marketing team is measured by both number of MQLs and pipeline —  if they have, I don’t know, a minimum number of MQLs they need to hit as a soft target, but also a soft pipeline target — then I think that company could be focusing on both, really easily.

But other than that, I cannot, to be fair, understand how really it is possible to do both if you are measured by only pipeline or if you are only measured by number of MQLs..

When I think about it, that would be a switch period obviously; like if a company wants to do only demand gen, they shouldn’t just change everything today and go to demand gen. It needs to be a gradual process. 

When I was with Cognism, it starts with 10% of the budget, first with demand gen, then 20%, then 30%. So, if they are gradually changing the system, then it makes sense to have 30%, 70% budget, 50% for some budget, but in the long run, I don’t see them living together very well.

Mike Pastore

OK, so if this is the, this is the final verdict on demand gen versus lead gen, what’s next for you and HockeyStack? And what are you going to be talking about next?

Canberk Beker

We actually released… this was our 14th report, and we started launching these reports in the beginning of the year .So, this is, like, the 19th week of 2024, and it is the 14th report. We are trying to release a report every week. And we have reports to release for the next three weeks. 

But I’m genuinely asking other marketers to tell me what they want to know. Up until this point, I have literally been writing about the stuff that I genuinely was curious about. And I think I’m in that lucky spot. I always say this because, with HockeyStack, I am my own ICP. So I just write the stuff that I find interesting. 

Mike Pastore

Marketing to marketers is fun, isn’t it?

Cancer Beker

It’s so fun. Like, it’s so fun. I’m like, “OK. Do I like this content?” I like this content and then ship it.

But, yeah, now next week, we are going to be talking about PLG versus SLG: How does free trial, interactive demos and a normal demo impact the entire sales journey?

Then the other report will be about the buying committee, like what ACV looks like if the buying committee is bigger and what ACV looks like if the buying committee is smaller and what the sales cycles look like.

But if you have any other ideas, please let me know, listeners, Mike, you too, because I’m genuinely asking for other ideas because I’m running out of ideas.

Mike Pastore

So help Canberk Beker’s content marketing, reach out to him on LinkedIn with your ideas, what you wan to see. Canberk Beker, thanks for joining us here on the podcast.

Canberk Beker

Thank you so much for having me, Mike.

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About the author

Mike Pastore
Mike Pastore has spent nearly three decades in B2B marketing, as an editor, writer, and marketer. He first wrote about marketing in 1998 for (later Jupitermedia). He then worked with marketers at some of the best-known brands in B2B tech creating content for marketing campaigns at both Jupitermedia and QuinStreet. Prior to joining Third Door Media as the Editorial Director of the MarTech website, he led demand generation at B2B media company TechnologyAdvice.

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