What’s the difference between demand generation and account based marketing (ABM)? While both involve proactively marketing to key members of your target audience, demand generation is the broad term encompassing using content to create demand for your product, whereas ABM is a type of demand generation that precisely targets a small number of specific, high-value prospects.
Despite being a subset of demand generation, ABM is used in different contexts than demand generation as a whole. ABM is typically deployed in markets with a few very large buyers, whereas demand generation is applicable to a much wider range of scenarios. For a variety of reasons, many companies choose to invest in either ABM alone, or demand generation without an ABM component.
Demand Generation vs. ABM: Advantages and Disadvantages
Now that you know the difference between the strategies, let’s compare the pros and cons of each:
| Demand Generation | Account-Based Marketing (ABM) | |
| Definition | An awareness-driven customer acquisition strategy that strives to both increase your company’s overall visibility while creating lead nurturing content, thereby generating interest in your product or service. | An intentionally narrow customer acquisition strategy in which specific high-value prospects are identified, and marketing and sales efforts are highly personalized to target each of those specific prospects. |
| Example | “We want to target IT administrators and decision makers at major hospitals” | “We want to target IT decision makers at St. Mary’s Hospital chain.” |
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Despite their differences, demand generation and ABM have significant overlap. Both techniques place heavy emphasis on lead nurturing, maintaining consistent contact with prospects. In ABM, lead nurturing is an essential pillar, featuring content created specifically for each prospect. Demand generation also employs lead nurturing content, but by contrast this content is targeted at an entire stage of the marketing funnel rather than a specific lead.
Customer research is also a key component of demand generation and ABM. ABM necessitates the creation of highly detailed profiles of each targeted prospect. Demand generation instead focuses its research on customer segments, creating similarly detailed customer personas that serve as representative examples of their customer segment.
This overlap between demand generation and ABM means that for many companies, choosing to invest in both can result in significant cost savings compared to focusing on a single strategy. Customer profiles developed for an ABM campaign can be generalized to describe customer segments, thereby serving as personas for demand generation. Likewise, demand generation content can serve as the foundation for more heavily personalized ABM content. That being said, there are clear use cases in which one technique outperforms the other.
The Best Use Cases for Demand Generation vs ABM
Many companies will choose to invest in both demand generation and ABM, but there are clear scenarios in which one technique excels:
- High initial investment products: ABM. If your product requires a high initial investment from your customers, the highly personalized approach that ABM takes is extremely helpful for closing sales. Prospective leads can be shown exactly how their business will benefit from investing in your product.
- Flexible products with many use cases: Demand Generation. In contrast to the previous scenario, demand generation is particularly effective when your product is broadly applicable to the needs of many businesses due to its inherently broader reach.
- Small industries with few large players: ABM. Some industries (for example, Oil & Gas or Aerospace) have a small number of major players that account for the vast majority of available business. Here, ABM is at its most effective as your company will need to target these businesses with any strategy you pursue.
- Smaller marketing budgets: Demand Generation. ABM is a relatively expensive technique, with campaigns often experiencing frequent delays before closing a sale. Few companies should invest only in ABM, and as a result, businesses need to have a marketing budget that can support ABM in conjunction with other marketing channels.
Outsourcing Demand Generation or ABM
Even with a complete understanding of the advantages and disadvantages of each strategy, the reality of developing and executing either a demand generation or ABM campaign poses a significant challenge. Making matters more complicated is the fact that both approaches require a highly skilled team, making the process of assembling an in-house campaign difficult and time-consuming.
For that reason, many smaller companies choose to work with an experienced partner. We are a full-service agency specializing in combining SEO and thought leadership for demand generation. If you’d like to discuss a partnership, contact us.
