ABM vs. Demand Generation: What’s the Difference?
Wide vs. Narrow: While ABM targets high-value, personalized accounts, demand gen casts a wider net to generate a higher volume of leads.
Revenue vs. Lead Flow: ABM relies on long-term relationships and high-revenue deals. Demand gen. aims for consistent lead flow and broader market reach.
Personalized vs. Generalized Content: ABM uses personalized content tailored to specific accounts and decision-makers, while demand gen uses broad content to attract large audiences.
Which would you go with in the perennial ABM vs. demand generation debate?
Times have changed. Gone are the days when selling software was more straightforward. When you could pick up the phone, charm your way past a few gatekeepers, and give a slick pitch that wins you a meeting with the sole decision-maker.
Decision-makers are more numerous than ever before: these days, you’re likely to encounter 6-10 key stakeholders on average on any given deal (Gartner, 2019). Rather than addressing one person’s needs to win the deal, you have to consider how your product affects a range of personas and departments.
I sound biased, right? I do think there are differences between account-based marketing (ABM) and demand generation. The question is, which approach—or which mix of approaches—is best to help your company maximize marketing ROI?
What Is Account-Based Marketing (ABM)?
ABM is a marketing strategy focusing on a carefully targeted list of high-value accounts; it’s typically most appropriate for larger accounts with higher revenue potential.
As an ABM practitioner, you aim to identify key decision-makers within each account, deliver personalized messaging to nurture each relationship and build internal champions to advocate for your product.
Another hallmark of ABM frameworks is that they require tight alignment between marketing and sales. Both teams are driven by shared metrics and collaborate on a unified funnel.
While the term “ABM” has emerged within the last couple of decades, it’s based on time honoured marketing practices, according to Melinda McLaughlin, the former CMO of Extreme Reach:
“I define ABM as the new name for the age-old practice of intensely studying the customer and applying that meaningful insight to the development of masterfully choreographed sales and marketing plans.”
What has changed in recent years is the emergence of sophisticated ABM software that makes it possible to guide stakeholders at each account through personalized customer journeys. When orchestrated well, ABM has the potential to shorten sales cycles and drive serious revenue: Forrester found that 58% of ABMers saw the size of their deals increase.
What Is Demand Generation?
Rather than focusing on a few high-potential target accounts like ABM, traditional demand generation aims to create awareness among a broad audience and generate a larger volume of leads.
The key to making demand generation work is to focus on perfecting each step of the customer’s journey through your marketing funnel
Demand generation campaigns often rely on content marketing, SEO, social media, and email marketing. The goal is to cast a wide net to attract new leads, guide them through the buyer’s journey, and nurture them until they become qualified leads ready for a sales conversation.
Account-Based Marketing vs. Demand Generation: Differences
Though both ABM and demand generation aim to drive business growth, their approach to campaign strategy, goals, and metrics differ.
Here are the key differences between ABM and demand generation:
| Account-Based Marketing | Demand Generation | |
| Campaign Objective | Focused on nurturing high-value accounts | Focused on attracting new leads from a broad audience |
| Customer Focus | Prioritizes key decision-makers at high-potential target accounts | Attempts to generate demand across a wide range of potential customers |
| Campaign Approach | Personalized outreach and targeted lead magnets to influential stakeholders | Emphasis on top-of-funnel tactics like SEO, content marketing, paid ads, and social media to generate a higher volume of leads |
| ROI | Measured by account engagement, pipeline velocity, and revenue per account | Measured by lead-to-customer conversion rates and revenue per lead |
| Marketing and Sales Alignment | High level of alignment between marketing and sales teams, with shared metrics and collaboration on nurturing and closing target accounts | Less direct collaboration; marketing passes leads to sales after scoring or qualifying them. Metrics are usually different for each team |
| Content Strategy | Highly personalized, account-specific content (case studies, whitepapers, webinars) | Broad content appealing to a wider audience (blogs, landing pages, social media posts) |
| Success Metrics | Engagement of high-value accounts, deal closures, and upselling | Lead volume, MQLs, cost per acquisition, and conversion rates |
| Ideal For | B2B companies with complex sales cycles and high-value deals | SaaS, mid-market companies looking to generate consistent lead flow |
Let’s take a deeper look at each of these differences.
1. Target Audience Focus
ABM campaigns focus on a list of carefully targeted companies that have the potential to generate significant revenue. Choosing which accounts to target requires analyzing the similarities between your most successful customer relationships.
"You want to use your data and look at which of your customers are becoming advocates. What do they have in common? Is it size? Is it the industry? Is it the type of products they came in on and they expanded to?" asks former Terminus CMO, Natalie Cunningham.
She continues, "Sometimes it's less about who they are, and it's more about the sales process of what we sold to them and what makes them most successful. Sometimes its geo or region, depending upon what your product is, that might make a big difference."
Depending on your account-based marketing tactics, your campaign might target hundreds of accounts or just a handful. When marketing teams use a programmatic 1:many ABM approach, they target an average of 725 accounts (Demandbase, 2020). A 1:few ABM approach relies on a much narrower list of 50 accounts. 1:1 ABM campaigns— these are highly personalized—average around a dozen target accounts.
Demand generation, in contrast, aims to reach as many potential customers as possible. A 2017 HubSpot survey found that companies generate an average of over 1,800 leads per month, with the highest-performing companies generating over 10,000 leads per month.
Audience targeting is still important in demand generation campaigns. However, rather than hone in on specific accounts, traditional demand generation focuses on targeting at scale through channels like SEO, paid ads, and social media.
2. Campaign Goals and Objectives
An ABM campaign aims to engage a handful of high-value accounts and, using a personalized approach, guide them through the buyer’s journey. Building long-term relationships is key. However, while ABM can shorten sales cycles since you don’t waste time by pursuing unqualified leads, the typical ABM campaign still takes months to see success.
ABM campaigns often focus on:
- Maximizing revenue from key accounts
- Creating long-term partnerships with high-value customers
- Building a reputation as the go-to provider in a specific industry
- Increasing lifetime customer value through upselling, cross-selling, and expansion opportunities
Demand generation focuses on driving a high volume of new qualified leads into the marketing funnel. A demand gen. campaign aims to build a steady pipeline of MQLs and convert them into sales opportunities.
Demand gen campaigns tend to focus on the following:
- Generating a steady flow of opportunities
- Building awareness of your brand among a broad audience
- Increasing market share and driving growth within multiple verticals
3. Content Strategy
With ABM content strategies, you rely on account-specific collateral like case studies, webinars, and personalized messaging that speak directly to the challenges of a given account.
For example, Payscale, a compensation management platform, created annual reports like its Compensation Best Practices Report to use as lead magnets; then, the company used machine learning to identify the right people at each target account to reach out to.
Since demand generation content is more top-of-funnel, it tends to target a broader audience. Look at the typical SaaS blog, for example, while each article might target a certain customer persona, the overall set of topics covered is usually driven by high-volume keywords.
While demand generation content strategies also include channels like paid ads, webinars, and social media content, search engine optimization is a pillar of demand gen strategy. In a series of interviews, Qualified asked CMOs about their most essential demand gen. budget items. Many, like Raj Khera, the former CMO of WealthEngine, cited SEO:
"Without question it’s search engine optimization. That is the basis of how we start a lot of our strategies because it gives us information on what people are looking for. And I think the big thing there is to make sure that you pay attention to the long tail strategy."
He continues, "A lot of times people will just look at one or two really short keywords and say, ‘well, that's so broad people. I don't know what they're searching on,’ but you really have to look a little bit deeper and figure out where there's opportunity there — where there's a good search volume and low keyword density."
4. Marketing and Sales Alignment
ABM requires marketing and sales teams to work in sync. They select target accounts jointly, share goals and metrics, develop collateral collaboratively, and nurture accounts together. They also use integrated tools so that each team can see what the other is doing, and marketers may even jump on sales calls to better understand each account's needs.
While this alignment can be incredibly effective, it’s such a paradigm shift that Jon Miller says that it’s one of the biggest challenges to adopting an ABM approach:
The traditional demand generation process doesn’t require as much collaboration between sales and marketing. There’s a much neater division of labor:
- Marketing focuses on generating awareness and attracting, nurturing, and scoring leads.
- Hand-off of leads from marketing to sales.
- Sales focuses on qualifying leads, building relationships, educating prospects, and closing deals.
One key area of collaboration is that marketing and sales need to agree on what constitutes a “marketing-qualified lead” to ensure that the marketing team can properly vet the leads it generates before passing them to sales.
5. Return on Investment (ROI)
In account-based marketing, ROI is closely tied to the quality of engagement with high-value target accounts and the revenue generated from those specific accounts. 76% of marketers report a higher ROI with ABM than other marketing avenues (ABMLA, 2020).
Key ABM ROI metrics include:
- Account Engagement: How target accounts respond to your campaigns.
- Deal Velocity: How quickly deals move through the pipeline.
- Lifetime Value (LTV): ABM campaigns often focus on long-term relationships that result in upsells, cross-sells, and renewals.
- Revenue per Account: ABM campaigns are carefully tailored to the needs of each high-value account, often leading to larger purchases or multi-year contracts.
With demand generation, the focus is more on scale than personalization. That means ROI for demand generation campaigns is measured through metrics emphasizing volume, conversion, and cost efficiency.
Key demand gen. ROI metrics include:
- Marketing Qualified Leads (MQLs): The total number of leads that meet MQL criteria.
- Conversion Rate: The percentage of leads that move from one stage of the funnel to the next (e.g., from lead to MQL or MQL to SQL).
- Cost per Lead (CPL): By tracking CPL, demand gen teams can funnel their budgets toward the most efficient marketing channels.
- Customer Acquisition Cost (CAC): CAC takes into account all of the expenses that went into acquiring a customer, helping you gauge campaign profitability.
6. Success Metrics
Success in ABM is defined by the depth of engagement with high-value accounts and the eventual closing of those accounts. Metrics—like account engagement and revenue expansion—incentivize nurturing relationships and driving growth from a select few accounts.
One key to navigating ABM metrics is looking at each account’s engagement holistically, according to Robin Matlock, the former CMO of VMware:
"Getting insights on an account level vs. an individual level was a huge paradigm shift. Thinking about Coca Cola as a holistic account as opposed to ‘I have a lead and I’m tracking this one individual through a buying journey,’ when the buying journey is made up of tens of individuals and an account is made up of many leads."
In demand generation, success is typically measured by the volume of new leads entering the funnel, the conversion rates of those leads, and how effectively they are nurtured through the buyer’s journey. Typical demand gen success metrics include MQLs, cost per acquisition, and conversion rates.
Should You Use ABM or a Demand Generation Strategy?
There’s not necessarily a need to make a wholesale choice between a demand gen. or an ABM strategy.
For example, you could run an ABM campaign but supplement it with a demand generation-styled brand awareness campaign, or you could put most of your efforts toward a top-of-funnel demand gen strategy while personalizing campaigns for a few higher-value enterprise prospects.
However, both ABM and demand gen. take up a significant chunk of resources, so you probably need to choose where to prioritize.
- ABM is ideal for businesses with complex sales processes, longer sales cycles, and multiple decision-makers on the buyer side. Your deal size and customer lifetime value should also be higher to justify a more resource-intensive ABM approach. For example, a company selling HR software to enterprise clients would benefit from this approach.
- Demand generation is a better fit for companies with shorter sales cycles looking to scale quickly and generate consistent leads. Ideally, fewer decision-makers are involved, and deal sizes are lower. For example, a SaaS company selling marketing software to a general audience (like small businesses) would benefit from a demand gen approach.
Stay Ahead With ABM And Demand Gen Insights
Whether you opt for an ABM or demand generation approach—or a mix of both—the most effective strategies will continue to change. For more insights on ABM and demand generation, check out our guides to How Marketing and Sales Work Together and How to Modernize Your ABM Strategy. And don’t forget to subscribe to The CMO Club newsletter for more strategic insights designed for marketing leaders.
