If you're short on time and want the headline, here's the fundamental difference between the two marketing approaches.
Lead generation and demand generation are distinct marketing strategies with different objectives and methodologies.
Lead generation is a targeted approach aimed at identifying and engaging potential customers early in their buying journey. It uses tactics like gated content to capture contact information from prospects in exchange for value. The goal is to create a pool of leads that can be nurtured and eventually passed to the sales team for conversion.
Demand generation, on the other hand, is a broader commercial strategy that drives awareness and interest across the entire market. It recognises that most of the market isn't ready to buy and may be unaware of their problems.
Demand generation is split into two categories: demand creation, which educates the 95% of the market not actively seeking solutions, and demand capture, which attracts the 5% actively looking to buy. This approach uses content distribution on various platforms to reach a wider audience, focusing on building long-term brand awareness and market education rather than immediate lead capture. It covers every interaction a potential buyer has with the business, from initial discovery to entering the sales process as a qualified lead.
Read on further for a complete breakdown of the two approaches.
Lead generation is a strategic marketing approach that aims to identify and engage potential customers or prospects as early as possible in their buying journey. Its primary objective is to capture relevant information about individuals or businesses that have expressed interest in your products or services, thereby creating a pool of qualified leads.
It involves various tactics and channels to attract and convert prospects into leads, such as:
The goal is to provide value in exchange for contact details.
Once leads are captured, they are typically nurtured through targeted communications, content, and outreach until they demonstrate a strong buying intent. At this point, the "qualified leads" are passed on to the sales team, who then focus their efforts on closing the deal and converting these prospects into customers.
B2B demand generation is a commercial strategy. It has the goal of driving awareness and interest in your offering. It covers every interaction that a potential buyer has with your business – from discovering you in the first place, developing affinity for your brand, educating themselves on your offering (on their own terms), and eventually entering your sales process as a qualified lead.
Demand generation is based on the understanding that most of your market isn’t ready to buy yet, and they’re probably unaware they have a problem. Therefore, it’s split into two categories.
Demand creation is the method for generating awareness of a problem and solution. Then, educating the 95% of your market that isn’t actively looking for a solution. This includes creating and distributing content to a wider audience on mediums such as social media, podcasts, and communities.
Demand capture is the method for attracting and converting the 5% of your market that is actively looking for a solution. This includes ‘capturing’ buyers in channels that they use when they’re ready to buy e.g., Google search, review sites, and your own website.
The primary objectives of lead generation revolve around acquiring contact information and basic details of people who could buy from you, focusing on quantity over quality. Vanity metrics are often seen here, including:
In lead generation, the goal is to gather as many leads as possible, even if they're just email addresses or minimal information. The cheaper the lead acquisition cost, the better, as it allows for a larger volume of leads to be captured.
Once acquired, these leads are typically nurtured and scored in an attempt to convert them into marketing qualified leads (MQLs), at which point they're often passed from marketing to sales. Marketing's role generally ends here, with little emphasis on tracking how these leads ultimately convert into opportunities and customers, as that is considered a sales responsibility.
In contrast, demand generation objectives revolve around attracting high-intent leads that have already expressed explicit interest in your offering. Key demand generation metrics include:
Demand generation focuses on capturing leads that are further along the purchase journey, so the associated metrics naturally align with later stages of the buyer's journey. Since much of the activity in demand generation happens before a high-intent lead reveals themselves, measurement before that point can be challenging and inaccurate, so it's best to avoid them as an indication of success.
As a result, demand generation concentrates on demonstrating true marketing ROI by aligning efforts with commercial objectives like pipeline and revenue. This approach enables marketing investments to be tied directly to bottom-line business impact, providing a clear understanding of their effectiveness.
When it comes to trying to reach an audience the channels used are similar in lead generation and demand generation, but the tactics applied are different.
The aim with search and SEO in lead gen is to attract a visitor to your website, and potentially answer their question, but provide a gated offer to find out more about that particular topic. This is usually in the form of an eBook, guide, or on-demand webinar.
SEO from a demand generation perspective also aims at attracting visitors to your website, but because of it's focus on measuring success further down the funnel, there isn't any need to try and capture leads earlier in the buying process. This means information is given much more freely and not hidden behind gates.
Social media will likely be used to reach an audience with content, but the channels will likely be used in a broadcast way that distributes gated content links in the feed, in an aim to get the user to click through to the landing page and convert.
Similarly, social media will be used to reach your audience who are using that channel, but because there is no pressure to generate leads, you can lean into the channel best practices, which are to distribute in-feed content and let the user consume the information directly within the feed without gating anything. In a demand gen approach you're also likely to leverage personal profiles of people who are in the company to get greater reach and build more thought leadership/awareness with your audience.
Industry events and owned events are a key way to reach your target audience. In a lead generation approach, the focus will be on using that event to acquire as many contact details and leads as possible that will then be nurtured and followed up with afterwards. It's all about volume, capturing as many details as possible.
In a demand generation approach, you understand that your audience is at the event, but don't need to be captured in that moment and nurtured afterwards, so the focus is more on quality over quantity. Brand awareness is also important, and is measured further down the funnel via self-reported attribution and subsequent lift.
Webinars for lead gen prioritise collecting contact information, often requiring lots of registration details and even gating on-demand content behind forms. They tend to be more product-focused and sales-oriented, with aggressive follow-up strategies including email nurtures and sales outreach.
Webinars for demand gen focus on providing value and building interest. They typically require minimal or no registration, offer educational content with less emphasis on product promotion, and maintain a softer approach to follow-up (if any), mainly sharing relevant content rather than pushing sales.
Demand generation webinars are also more likely to be freely accessible across various platforms, prioritising audience reach and engagement over immediate lead capture.
Lead generation emails focus on cold outreach and aggressive nurturing. They often include gated content to capture more contact information and push product-focused messages to drive quick results. These emails aim to move leads swiftly through the sales funnel, but recipients view them as spam due to their pushy nature and frequent unsolicited contact.
Emails for demand gen prioritise value and consent. They typically feature carefully crafted newsletters with content directly in the email body, offering value without requiring further action. Product announcements or offers are less frequent and more strategic. Importantly, the audience has explicitly agreed to receive these communications, leading to better reception and engagement.
Lead generation approaches often struggle with podcasting due to limited direct attribution. Many businesses hesitate to invest in podcasts because they can't directly generate or track leads. The metrics focus on aggregate data like downloads and listener counts, rather than identifying individual prospects or companies. This 'dark' information makes it challenging to justify podcasting in a lead gen strategy.
Demand generation embraces podcasting as a powerful medium. It's used to attract and engage a broad audience, building brand affinity and thought leadership. The long-form nature of podcasts allows for in-depth exploration of topics, which can then be repurposed into shorter, more digestible content for distribution across various platforms. This approach prioritises creating value and interest over immediate lead capture, aligning well with the long-term goals of demand generation.
Videos for lead gen are typically product-centric, designed to drive prospects further down the sales funnel. They often feature gated content, requiring viewers to provide contact information to access the full video or related materials. The primary goal is to capture leads and nurture them towards a sale, using video as a hook to get contact details.
Videos for demand gen prioritise education and entertainment to attract a broader audience. These videos focus on providing value, building brand awareness, and establishing thought leadership. Product-related content is more accessible and widely available, without the barriers often seen in lead generation strategies. The aim is to create interest and trust over time, rather than immediately capturing leads.
Lead generation advertising is heavily focused on driving immediate, attributable conversions.
It relies heavily on paid search ads due to their ease of direct attribution. These ads often lead to pages prioritising data capture, sometimes at the expense of providing crucial buyer information. Social media lead generation forms are also popular, as they provide concrete lead details, regardless of quality or intent.
Success is measured by the number of contact details obtained, with campaigns quickly terminated if they fail to generate leads.
This ad by Emplotment Hero is a classic example of a lead generation ad in LinkedIn. It uses the lead generation objective to display a form within the platform itself that can be submitted in return for the content on offer.
Similarly, this ad from Force24 is an example of using LinkedIn Lead generation forms to capture contact information in the platform itself in return for the piece of content.
This ad from Advantage Business Systems is also using a LinkedIn lead gen form, but this time it's to sign up for an upcoming webinar.
Demand generation advertising allows for more creativity and diverse channel usage, as it doesn't require direct attribution.
When using paid search, the focus is on providing upfront educational information and ensuring an optimal user experience for potential conversions. Social ads are used more creatively, prioritising brand awareness and content consumption.
This flexibility in attribution opens up a wide range of advertising opportunities, including connected TV, podcast ads, physical ad banners, out-of-home advertising, sponsorships, and experimental digital formats.
Success is measured through broader metrics such as self-reported attribution, overall pipeline or revenue lift, and pipeline velocity, focusing on commercial outcomes rather than immediate lead generation.
This ad from HockeyStack is promoting a very high-value report on Google Ads benchmarks for B2B SaaS companies. It would be easy to gate a report like this in return for contact data, but HockeyStack understands the benefits of showing this information to as many people as possible. So, they use the ad to direct people to an unrestricted page on their website that shows the benchmark data.
Cognism is at the forefront of demand gen advertising, and this ad shows why. This playbook of high-value educational content could easily be gated behind a form. But Cognism is putting all of this knowledge out there, totally ungated, because they understand the value of building affinity and trust with potential buyers.
This example from us demonstrates effective use of video ads for demand generation. Instead of gating access to a full podcast episode or simply providing a link, we've extracted the best clips and are sharing them directly in social media feeds.
Since social media users prefer consuming content within the app, this video is more likely to be viewed than posting an image with a link to the full episode. By delivering bite-sized, valuable content where the audience already is, we increase engagement and create demand.
The key difference lies in the approach and metrics. Lead gen advertising narrowly focuses on gathering contact information through limited channels, while demand gen advertising employs a wider range of creative strategies across diverse platforms to build awareness, educate, and drive long-term business results. This broader approach allows demand generation to explore innovative advertising methods that may not directly attribute leads but contribute significantly to pipeline and revenue.
Lead generation sales teams typically work with high-volume, low-intent leads. They engage in extensive cold outreach without clear buyer intent and follow up on marketing-generated leads, regardless of their quality.
There's often no clear differentiation between low-intent and high-intent leads, with all prospects treated similarly. This approach can lead to a disconnect between sales-prospected leads and marketing-generated leads, as sales teams may begin to ignore marketing leads due to their low conversion rates, creating tension between marketing and sales.
Demand generation sales teams, on the other hand, focus more on high-intent inbound leads that have a higher likelihood of closing.
They often employ an "allbound" model that effectively combines inbound and outbound efforts. When conducting outbound activities, these teams are more methodical and highly targeted in their approach.
Account-Based Marketing (ABM) is a key strategy, as outbound efforts are concentrated on the highest-value accounts. This approach allows for a more efficient use of resources and better alignment between sales and marketing efforts.
The key difference lies in the quality and approach to leads: lead gen teams deal with high volumes of potentially low-quality leads, while demand gen teams focus on fewer, higher-quality leads with a more strategic and targeted outreach method. This results in better efficiency, higher conversion rates, and improved sales-marketing alignment in demand generation strategies.
Lead generation has long been a cornerstone of marketing strategies, focusing on capturing data and passing it to sales teams. However, this approach is becoming increasingly ineffective due to significant shifts in buyer behaviour and preferences.
Gartner's B2B buying report shows the desire for a self-service purchase process.
Today's buyers prefer independent research and value their privacy more than ever. They're aware of lead generation tactics and often resist them. Their journeys are no longer linear, making it difficult to map effective nurturing campaigns. Content consumption has diversified across multiple channels, and buyers now spend less time with sales teams, instead seeking out trusted information sources.
The traditional view of a buyer moving neatly through top, middle, and bottom funnel (TOFU, MOFU, BOFU) content is oversimplified. In reality, buyers navigate different channels unpredictably, often repeating actions and jumping between stages. This non-linear approach makes it challenging to create an artificial path that truly resonates with buyers.
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This illustration from Gartner shows just how complex the B2B buying journey is.
By adhering to a rigid, predetermined funnel, marketers risk missing critical elements of the buyer's journey. This approach can force potential customers into a path that doesn't align with their preferences, driving them to seek information elsewhere. Ultimately, this can lead to lost opportunities as buyers turn to competitors who better support their preferred journey.
A significant issue with traditional lead generation is highlighted by the 95/5 rule: only about 5% of the addressable market is ready to buy at any given time, with a mere 0.8% likely to consider a specific solution. By focusing primarily on lead generation, marketers target this tiny fraction or risk prematurely pushing the unready 95% into a buying decision.
Lead generation fails to provide value to the broader segment of the addressable market and miss opportunities to engage potential customers at various stages of their decision-buying process.
Source: LinkedIn
The combination of poor conversion rates, high costs, and wasted resources in both marketing and sales departments shows the severe inefficiency of lead generation.
Data from Metadata's B2B Advertising Benchmark Report reveals significant issues with lead generation advertising, particularly on social media platforms.
Here's a breakdown of the key findings and their implications.
Perhaps the most striking finding is that 90% of the total advertising budget — a whopping $37 million — was dedicated to lead generation campaigns.
The data reveals a shockingly low lead-to-win rate of just 0.3%. In practical terms, this means sales teams need to process 333 leads on average to secure a single deal.
The financial implications of lead gen ads are significant. While the average cost per lead was $172, the estimated advertising Customer Acquisition Cost (CAC) was $57,000 per won deal. Even more concerning is the payback period: it takes an estimated 21 months just to recoup the advertising costs, and potentially over 48 months when factoring in all associated expenses. This means companies are often waiting four years or more just to break even on their customer acquisition efforts.
The inefficiency of lead generation advertising creates a ripple effect throughout the organization. Marketing budgets are drained on campaigns with poor returns, while sales teams struggle with an influx of low-quality leads. This not only wastes financial resources but also squanders human capital, as skilled professionals spend their time on unproductive tasks rather than strategic, revenue-generating activities.
Demand generation is a comprehensive marketing strategy that goes beyond traditional lead capture. It focuses on creating high-intent leads through an integrated approach to B2B marketing, from initial discovery to final purchase decision.
Demand gen covers every interaction a potential customer has with your business. It includes the process of discovering your brand, developing affinity, self-educating, and eventually entering your sales pipeline. By addressing all these stages, demand generation creates a more robust and effective marketing framework.
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This diagram shows how each stage of inbound demand generation works alongside the buyer journey.
One of the key advantages of inbound demand generation is its efficiency. It prevents wasted sales time on leads that are unlikely to convert. Marketing and sales efforts become more streamlined, with budgets directed towards activities that genuinely generate revenue. This approach ensures that resources are utilised where they can have the most significant impact.
In an era where privacy is increasingly valued, demand generation supports buyers' preferences to remain anonymous during their research phase. All content is made freely available to aid the buyer's journey, allowing potential customers to educate themselves at their own pace without feeling pressured.
Demand generation opens up opportunities for more creative and engaging marketing strategies. Marketers can explore innovative ways to connect with their audience, moving beyond traditional tactics to create memorable and impactful experiences.
A significant advantage of demand generation is its focus on building affinity and trust with buyers, even when they're not actively in the purchasing phase. This approach ensures that when a buying trigger occurs, your brand is top-of-mind. Potential customers are more likely to turn to you first, before considering other vendors.
By embracing demand generation, businesses can better adapt to the reality of non-linear buyer journeys. This strategy acknowledges that decision-making processes are complex and varied, providing value at multiple touchpoints rather than forcing prospects through a rigid funnel.
When looking at results, lead generation will naturally generate more leads than demand generation, since tha'ts the focus, but when you look at pipeline and revenue generation, that's a different story.
Hockeystack, an attribution platform, published a report that analysed the results from lead generation vs. the results from demand generation, and the results speak for themselves.
Here's an overview of the findings:
We've highlighted some of the key insights below, but check out Hockeystack's full report to get all the details.
Lead generation:
Demand generation:
Lead generation appeared more efficient, producing 1.9x more MQLs at 54% lower cost. However, the author cautions that this seemingly ideal outcome may oversimplify the situation.
Lead generation:
Demand generation:
Despite lead generation's initial advantage in MQL volume and cost, demand generation showed superior conversion rates (4.37x better) and ultimately generated more SQLs, deals, and pipeline value. This suggests that the higher intent of demand generation MQLs offsets their higher initial cost.
Lead generation:
Demand generation:
Demand generation showed a 26% better close rate and significantly higher deal volume, resulting in nearly four times more revenue. While lead generation produced more MQLs, demand generation's higher-quality leads led to superior conversion rates throughout the sales funnel and ultimately generated much more revenue.
While lead generation initially appears more efficient by producing a higher volume of leads at lower costs, the data reveals a different story. Despite its surface-level appeal, especially to executives seeking quick wins, lead generation ultimately falls short where it matters most.
Demand generation, though seemingly less efficient at first glance, proves far more effective in the long run. It may generate fewer leads at a higher cost, but these leads convert significantly better at every stage of the sales funnel... nearly four times more revenue compared to lead generation strategies.
This comprehensive analysis, covering over $100 million in spending and more than 250,000 MQLs, sends a clear message: quality trumps quantity in B2B marketing.
Companies should resist the temptation of cheap, numerous leads and instead focus on creating high-intent leads through demand generation. This approach, while potentially more challenging to implement, offers a more sustainable path to growth and profitability.
On our podcast, Demand Decoded, we dedicated an episode to this report and have unique insights on findings, discussing what it means for B2B marketers.
Understanding that demand generation is the best strategy for B2B marketing going forward is the first step, but if you're looking to move on from an outdated lead generation model, here's what you need to know.
In Episode 13 of Demand Decoded, we covered practical insights about how to move from lead generation to demand generation. Watch the recording below:
The first thing you need to do is make sure that your entire business is out of the lead generation mindset. Everybody from the top down must understand that lead generation is not the optimal strategy for generating revenue and the go-to-market method. And change is good.
One simple way to demonstrate the ineffectiveness of your lead generation efforts is to use a split funnel analysis.
A split-funnel analysis separates leads that have converted on lead generation campaigns and leads that have converted on high-intent forms. This is where someone is expressing explicit interest in your product or service. From here, you can analyse how many opportunities and customers were produced by your lead-generation campaigns and high-intent forms segments separately.
What you’re likely to see is that leads who submit your high-intent form convert into opportunities and customers at a much higher rate. Even if there are fewer leads overall. On the other hand, whilst you can generate lots of leads through lead generation campaigns, they don’t convert effectively into opportunities and customers.
This data alone should let you to make a case for demand generation, which focuses on creating more high-intent form submissions.
Here’s a tutorial on how to do a split-funnel analysis:
Once you’ve got buy-in from the business, the next step is to align on the demand generation metrics that you will be tracking. This means no longer reporting on leads to measure the success of your marketing, but reporting on metrics that are closer to revenue, such as:
Be sure that you have complete clarity on your data so that you can have confidence in what you're tracking.
Now you know what the end goal of your marketing is, it’s time to start planning and executing your demand generation strategy. We recommend breaking it down into three parts:
Select a high-level goal that can be used in all your marketing, for example – make your ideal buyer aware of a problem they might have.
How are you going to achieve your goal? For example, create value-driven content, optimise your content for in-feed social media, or create zero-click content.
Decide which channels you'll use to reach your buyer. For example, utilise LinkedIn ads to distribute in-feed content.
We help B2Bs generate inbound demand and grow pipeline. Let us help you get started on the road to demand generation success with a consultation.
