How Much Does B2B Inbound Marketing Cost?

How much should you expect to spend on your B2B inbound marketing campaigns?

It’s a fair question – at least on the surface.

But the short answer is that it depends – not exactly helpful information. It’s probably not even the right question. Rather, it’s more helpful to approach it regarding your marketing ROI goals.

From an ROI perspective, it’s hard to argue the effectiveness of inbound marketing:

• An inbound lead typically costs about 61% less to acquire than an outbound lead
• These costs per lead fall a further 80% after only five months of consistent inbound activities

Instead of a dollar amount, think in terms of the proportion of your overall marketing budget you’ll plan to spend on inbound activities.

• How much do you spend on marketing?
• What specific goals do you want this spend to help you reach?
• What tools and resources do you need to achieve them?

These are the questions you’ll need to answer first. Once you’ve done that, the inbound marketing costs will start to come into focus.

Let’s take a look at the process of determining how much you’ll likely need to spend on B2B inbound marketing from an ROI perspective.

Setting Your Inbound Marketing Budget

Examine Current Marketing Trends

It’s hard to believe, but 49% of companies lack a clearly-defined digital marketing strategy. And to make matters worse, those who do say that 26% of their marketing budgets will be wasted anyway.

To come up with a sustainable strategy that serves your needs, you need start by taking a look at the current inbound marketing trends.

This will give you a sense of what your peers and competitors are doing, and will give you a sense of what types of inbound services you’ll need and what a successful strategy will entail.

According to Hubspot:

• The importance of content marketing can’t be overstated: B2B marketers are allocating roughly 28% of their total marketing budgets towards towards content generation, while 53% of marketers are prioritizing blog content creation
• B2B companies that publish 16 or more blog posts per month receive more than three times the traffic as compared to those companies who publish four or fewer blogs per month. Over time, your ROI will rise dramatically
• SEO is as critical as ever, as 71% of B2B customers begin their research with a generic search
• 83% of all marketers use social media strategies

With these numbers in mind, your inbound strategy will need to involve a mixture of these elements. Since content marketing and SEO execution are long-term strategies, you’ll have to be comfortable committing to the initial amount of time it will take before you start seeing a return.

Marketing Budget Size by Industry

As with any business expense, the percentage of your budget you should allocate towards inbound marketing costs will depend greatly on some factors – particularly your industry.

For starters, the CMO Survey paints an interesting picture of the current marketing landscape by industries, from which we can identify key takeaways:

Image credit: CMO/Deloitte Digital/Wall Street Journal

• Marketing budgets vary wildly by industry type, with consumer packaged goods companies allocating around 24% of their overall budgets to marketing while the energy sector spends around 4%.
• Median marketing spending averages 7.5% of total revenue

Your industry type will therefore have a major impact on the size of your marketing budget. This is largely due to a combination of competitiveness and messaging type factors. But this will give you a good sense of what your overall marketing budget should be.

Inbound Marketing Budgetary Allocation

How much of that should be devoted to inbound?

Hubspot suggests that businesses are allocating around 25% of their marketing budgets for inbound. With that in mind, along with the industry-specific budgetary factors, we can now get a sense of what the minimum inbound marketing spend should be:

(Annual Revenue) x (7.5% Marketing Budget) x (25% Inbound Budget)

• A technology sector company with annual revenues of $10 million might budget a minimum of $187,500 for inbound
• An energy sector company with annual revenues of $50 million might budget a minimum $937,500

It goes without saying, these figures don’t take into account how aggressive your strategy will be, and represent the minimum viable budgets.

However, most businesses in highly-competitive fields tend to go much higher, allocating as much as 50% to 60% of their marketing budgets to inbound. So it’s not uncommon by any means to see inbound budgets in the tens of millions of dollars.

Calculating ROI

While these types of budgets may seem high, it’s important to remember that inbound marketing offers an ROI which naturally improves over time.

Although the ROI will initially be very low during the setup phase – content needs time to be written and indexed while SEO gains will accumulate slowly at first – you’ll find that your return, as a percentage of your spending, will increase dramatically in the long-term.

The standard formula to calculate ROI is as follows:

(Gain from Investment – Cost of Investment) / (Cost of Investment)

For example, a monthly inbound marketing spend of $30,000 may seem unreasonably high. But if your new revenue acquisition for the month is $1 million at a 30% gross margin, then that $30,000 investment has generated a very 900% ROI.

Inbound Marketing Components

At the end of the day, successfully reaching your goals depends on the services, tools, and resources you deploy to make it possible. These will typically include:

• Marketing Strategy
• Reporting & Analytics
• Search engine optimization
• Content and media asset creation
• Website Development
• Design
• Marketing Automation
• Conversion optimization w/ AB testing

Inbound Agency vs In-House

When implementing your inbound marketing strategy, you’ll ideally want to partner with an agency that not only has the necessary expertise to execute it properly, but is also capable of working within your niche.

Attracting and converting B2B leads within your sector requires specialized knowledge, and your inbound partner has to be able to speak your industry’s language while understanding their pain points and their buyer journey.

Plus, you’ll need strong SEO expertise to help ensure the leads start to arrive and convert.

That aside, if you were to hire and assemble a team yourself, this is what the average salary breakdown would look like:

This represents the minimum staffing levels for one inbound team.

However, the larger your inbound campaign, the more people you’ll need. It doesn’t account for automation tools, training, nor represent the amount of time investment required to execute campaigns.

Consider the following key marketing challenges identified by companies:

• 63% report generating traffic and leads is their top challenge
• 40% report proving ROI of marketing activities is their top challenge
• 26% report identifying the right technologies is their top challenge
• 26% report managing their website is their top challenge
• 19% report training team members as their top challenge

Without the experience base of a dedicated B2B inbound marketing agency to guide you, these challenges can easily become overwhelming.

Because of the collaboration and cross-departmental workflows required, doing your inbound marketing can leave you without the targeted number of traffic and leads, significantly reducing your ROI.

Inbound B2B Agency Costs

When hiring an inbound agency to manage your campaigns, you’ll get access to a fully trained and optimized team of marketers at a fraction of the cost you would incur in house.

For example, a typical full retainer which provides access to the same set of team members listed above would cost you 6 to 12K USD per month, on average.  This is a fraction of the 35 – 40K USD monthly base cost you would incur in house.

And as your campaigns ramp up and gather steam over time, your ROI will rise dramatically as inbound has a “J-curve” exponential ROI relationship.

The added advantage of using a dedicated agency is that they give you the resources and capabilities to scale and pivot as needed.

An inbound agency can help you grow 10 times faster than your competition by eliminating the overhead associated with excessive in house staff, training, tools, and risk.

Industry specialized agencies are usually able to deliver much higher ROI as their domain knowledge allows for much quicker optimization and faster time to ROI.  This means they are not learning on your dime.  Often the premium associated with such trusted agencies is far outweighed by the significantly higher ROI that they are able to generate for your business.

The expotential ROI for Inbound also highlights an interesting point:  as you begin to implement the campaigns, every incremental increase in resource will start to drive exponentially higher results.  This is again far easier to test and leverage when outsourcing to a team as you do not have to commit to hiring more full time resources.

Typical cost structures for specialized B2B inbound agencies:

Read More About B2B Digital Marketing:

• What to Look for When Hiring a Digital Marketing Agency
• The 4 Core Components of a Successful B2B Digital Marketing Strategy
• B2B Buyer’s Guide for Hiring a Digital Marketing Agency
• App Development Cost

Choose the Right B2B Inbound Marketing Approach

Should you partner with an inbound marketing agency, or should you develop your own, in-house team?

The reality is that going this route alone is only viable for extremely large businesses who can justify building an agency in house.  Typically this is the case with extremely large E commerce companies. Even then those firms engage agencies for various specialized services.  Our experience shows that the ROI is far lower on in house teams for B2b companies.

Specialized agencies are forced to drive efficiency and productivity from their marketing team and in doing so they are able to drive significant ROI for their clients.

At Jumpfactor, we have proven experience delivering world-class inbound digital marketing services in the B2B space. Contact us today to book a free 30-minute strategy session to learn how we can improve ROI and achieve your objectives.