The Economics of Inbound Marketing for Small-to-medium businesses: Lower Costs, Higher ROI

Integrated inbound marketing is a very effective tool that small and medium-sized businesses can use to help level the playing field against larger competitors. Traditional, outbound marketing may have a benefit for companies with uber-deep wallets. After all, the more expensive campaigns can potentially garner more attention. However, determining the return on investment is much trickier for flashy ad campaigns – especially when compared to the analytical principles of strong integrated inbound marketing.

The Numbers


Research shows that inbound marketing per lead costs are lowered by more than 60 percent when compared to outbound marketing – and conversion rates are much higher. Why? Customers visiting your website and landing pages  have already decided that they are ready to spend their money on products and services you offer; they’re just making up their minds about exactly where they’d like to spend it. This is the true power of content and search-driving marketing.

The Benefits of Small Business

Small businesses have one giant advantage over their larger competition: nimbleness and flexibility. Large, established companies who have been doing business the same old outbound way for years are more reluctant to shift gears and change tactics. On the other hand, small businesses are able to make fast decisions once they see and understand how they can implement successful programs.

The continued, proven success of inbound marketing compared to outbound marketing has led more small and medium businesses to invest a greater percentage of their budget into lead generation and inbound strategies. Larger businesses on the average are only spending about half the percentage of their marketing budgets on inbound programs. So, although smaller businesses may not have the huge marketing budgets that a larger business does, they’re likely targeting those dollars to have a greater impact.

Getting Proven Results

Another challenge of outbound marketing is that results are very difficult to track, which can be frustrating if you’re trying to manage marketing budget, and determine where your efforts should be focused.

Companies who convert to inbound marketing can much more easily track their leads and conversion rates. This makes it easy for companies to see which marketing efforts are paying off, and adjust their tactics accordingly. Regardless of how many dollars are spent on marketing efforts, every one is better placed and more precisely aimed than any form of outbound marketing.

Increasing ROI

Outbound marketing can be expensive, and determining whether that investment is paying off in terms ROI is challenging. We’ve seen an increase in technology that exists specifically to block many outbound marketing efforts, such as Caller ID, spam filters, and DVRs. And while these have made consumers happier, they also have required companies to spend even more on traditional marketing in an effort to try to bypass these and other techniques. Yet despite the high cost of outbound marketing, the resulting yield remains depressingly low.

According to HubSpot, companies who implement integrated inbound marketing programs can expect to see a 25 percent greater ROI than companies who only use  outbound programs. Content-driving marketing accomplishes one vital step in improving the efficiency of your marketing efforts: you reach your target audience easier because they find you through online search.

Compared to older techniques such as magazine advertising or trade shows, it almost seems absurd to think that such vast amounts of money are spent in the hope that maybe someday the right customer will turn to that page, see an ad, and then choose your business. Inbound marketing instead focuses on saving small businesses time and money by appealing directly to the sure bet: the customer who is already looking for a business that offers the products and services they need. So what are you waiting for? Start creating compelling content that helps educate, inform and entertain your potential customers. It may make the difference between you and your competitors.

Written by David Kaufer

David Kaufer is Founding Partner and Chief Dynamic Office in Kaufer DMC. He’s also a huge Oregon Ducks & Microbrew nut, Dad of awesome 8 year-old twin boys, husband, and big Sustainability and Autism advocate.

Published November 14, 2014 by David Kaufer.
Categories: Inbound Marketing, Small Business Marketing