Summary
As a B2B company, have you been struggling for years with whether it’s worth investing in paid lead generation campaigns on Facebook and LinkedIn? Metadata’s long-awaited benchmark report finally offers clarity. In an analysis of this landmark dataset, comes
Chris Walker
, CEO of
Refine Labs
, comes to a disconcerting conclusion: paid lead generation on social media channels is extremely ineffective and yields low ROI. With an estimate of the cost per lead and the associated success rate, it becomes clear why many B2B companies need to stop using this approach. Find out in this article why it’s time to rethink your marketing strategy and aim for a healthy mix of marketing channels for successful lead generation.
How to optimize your LinkedIn?
Data dataset
Metadata has released their second benchmark report for B2B ads and the results are not good. It is an absolutely groundbreaking data set for B2B companies. Especially given the size of the dataset:
- $42 million in total ad spending
- 236,000 total “leads” collected
- And all associated downstream data for pipeline and conversion rates
”Paid lead generation on Facebook and LinkedIn is incredibly inefficient and yields a very low ROI.”
Analysis of the dataset:
- 90% of ad spending was spent on lead generation campaigns ($37 million of total spending of $42 million)
This is consistent with what I see in my own analyses of more than 100 companies. B2B companies primarily use paid social media for lead generation campaigns because of outdated demand waterfall models and digital touchpoint assignment requirements. - “Download” was the most popular CTA, indicating that B2B companies are still using paid social media to drive downloads of secure PDFs.
- The average cost was $126 to maybe get someone to open the PDF.
”Social media is part of your marketing mix. It is not the holy grail. We advise our clients to create a healthy mix. That’s why we develop personalized marketing dashboards where we pay close attention to the cost per newly acquired client. We couple that with our method of achieving regular acquisition of new clients.”
Cost per lead
Walker charted the cost per lead. Based on the data, he estimates that the percentage of lead to deal won is 0.3%. That means sales needs 333 “leads” to win 1 deal, which is incredibly inefficient. This is consistent with what he sees in his own analyses: the average percentage of lead to deal won is somewhere between 0.1% and 0.2%, meaning sales needs 500-1000 paid social media “leads” to win a deal. The
report from Metadata
is similar and confirms these inefficiencies in a very large sample.
Low cost per lead does not indicate true success.
The average cost per “lead” was $172 for all lead generation campaigns. But given the very, very, very low success rate of these leads, we estimate that the ad PAC is $57,000 to win a deal. This is advertising costs only and does not include the cost of Sales staff, SDRs, marketing staff or other marketing programs such as events. It is safe to say that this performance is completely unacceptable.
- The estimated payback period of the ad PAC is estimated at 21 months.
- $38 million in total ad spend on lead generation campaigns resulting in $22 million in realized revenue.
These are advertising costs only and do not include the cost of sales staff, SDRs, marketing staff or other marketing programs such as events. If you include all other expenses, you can reasonably estimate that the total CAC payback period for these programs is more than 48 months (meaning it takes 4 years to recover just the cost of recruiting the customer, not including gross profit).
”There is finally enough data to say definitively that almost all B2B companies should stop running lead generation campaigns on LinkedIn and Facebook.”
Postscript Chris Walker: “This is in no way intended as a criticism of Metadata. They have published a public dataset and I am providing my expert analysis of the data, specifically with respect to lead generation campaigns on paid social media channels.”
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