Synopsis

Most B2B marketers focus heavily on lead generation, but this short-term approach ignores the critical reality, which is, 95% of potential buyers aren’t ready to purchase and are not in market. 

This blog breaks down the difference between lead generation and demand generation, explains why the optimal budget split is favored towards demand generation and provides practical strategies for implementing both approaches. 

Learn how to balance immediate results with long-term brand building to create sustainable growth and pipeline. 

Building a Marketing Strategy for Long-Term Success

Most B2B marketing meetings will turn towards leads at some point. “How many did we generate last month?”, “how many did we get from that campaign?”, “do we know what the CPL was?” and so on. 

These are all viable, important questions to ask but they do miss the bigger picture. While most marketers obsess over lead generation, they do ignore the 95% of potential buyers who aren’t currently in-market for their solution. 

This is why understanding the difference between lead generation and demand generation becomes critical for long-term success. 

What’s the difference between lead generation and demand generation?

Lead generation focuses on capturing demand that already exists. It’s finding people who have identified a challenge, started their research and are ready to engage with companies to conduct product demos, get pricing from sales or may even be ready to purchase. 

This approach feels comfortable because it delivers immediate and measurable results. It’s easy to count the leads, track conversions and attribute marketing activities to revenue. The C-Suite loves this because the ROI is clear and immediate. 

However, lead generation has a fundamental limitation. It’s dependent on timing. 

You will be competing for the attention of buyers who are actively shopping, which means you’re facing maximum competition and often paying premium prices for that attention. By focusing on in-market buyers, you’re ignoring the majority of potential, future customers who may not be ready today, but could be tomorrow. 

Demand generation takes a different approach. Instead of just capturing existing demand, it works to create and shape future demand too. It’s about ensuring that when prospects do enter the market, your brand is the first one they think of. 

The distinction between lead gen and demand gen is crucial because most B2B purchases aren’t made there and then. Buyers often spend months (or longer) becoming aware of problems, obstacles, researching for suitable solutions, building internal consensus amongst the buying group and all of this before they have even contacted to be tagged as a “lead”. 

Demand generation helps to influence these early stages of the buyer journey. It builds brand awareness, establishes thought leadership, and creates mental availability so your company comes to mind when prospects are becoming active in the market. 

How to split marketing budget allocation between lead generation and demand generation?

There is no right or wrong answer here, it is dependent on the team and their objectives. However, according to research by Binet and Field, they suggest that B2B marketers should allocate approximately 60% of their marketing budget to demand generation and 40% to lead generation to maximize their long-term success. 

The research is from their paper “The long and short of it” - I have a link to the actual research, just need to build reference. 

This ratio acknowledges that while short-term lead capture is important, sustainable growth requires investment in future demand creation. 

If 95% of your potential market isn’t ready to buy right now, investing heavily in lead generation means you’re fighting with a lot of competitors over a small slice of the market (5%). 

Meanwhile, 95% of future buyers are being influenced by the content they consume, the brands they encounter and engage with, and the relationships they build during their pre-purchasing phase. Companies investing in reaching these future buyers are positioning themselves for long-term competitive advantage. 

Brands that maintain higher investment in demand generation during economic downturns often emerge stronger when conditions improve. While competitors cut back on brand building and focus on immediate lead capture, demand-focused companies are building relationships with future buyers while setting themselves up for a period of growth. 

What are the best demand generation strategies?

Effective demand generation requires different mindset and different marketing tactics compared to traditional lead generation. 

Creating content for education

Demand gen content focuses on educating your market about problems they may not even know they have. Instead of promoting your solution, you help prospects understand their situation and guide them towards better outcomes. 

This type of content rarely includes strong CTAs or gated assets. The goal here is to build trust and establish your brand as a valuable resource, rather than capturing contact information for immediate sales follow-up. 

Build genuine thought leadership

Thought leadership means sharing perspectives on industry challenges and providing insights that may help your audience solve problems or make better decisions. It’s about contributing to important conversations, not just promotion of your product or service. 

When executed well, thought leadership builds trust and credibility that makes all other marketing efforts more effective. Prospects who recognize your brand as an industry authority are more likely to engage with your lead generation campaigns when they enter the market. 

Implementing long-term nurturing sequences

Demand generation nurturing sequences can span months, or maybe even longer! They’re designed to stay top-of-mind with prospects over extended periods, providing ongoing value without being aggressive on the sales approach. 

Data-driven personalization becomes extremely important here. A sophisticated nurture strategy that adapts to individual engagement patterns and preferences ensures messages remain relevant even over long-time frames. 

How to make lead generation more effective?

A focus on demand generation does not mean to abandon lead generation. The allocation from marketing budget remains vital for capturing immediate opportunities and meeting the company’s short-term revenue goals. 

But effective lead generation in the modern B2B environment requires sophistication from marketing teams. Generic call-to-actions such as “download our whitepaper” campaigns rarely work anymore. Prospects are overwhelmed with content and are becoming more aware of marketing messages. 

Focus on specific accounts instead of broad targeting

Rather than casting a wide net, focus lead gen efforts on specific accounts that match your ICP. By doing a concentrated approach it allows for more personalized messaging and higher conversion rates. 

Use behavioral signals to help identify active buyers

 Using behavioral signals and intent data to identify prospects who are in-market and researching for solutions allows you to time your lead gen campaigns with maximum effectiveness. 

Provide value in every interaction

 Even lead capture mechanisms should provide value. Interactive tools, assessments and calculators that solve problems are more effective than traditional gated content. 

How to measure demand generation success?

The challenge with demand gen is that traditional marketing metrics don’t capture the full impact. Lead volume and CPL tell you how well your lead generation campaigns are performing, but they don’t measure brand building effectiveness. 

Successful demand generation tracks metrics such as: 

• Brand search volume trends 

• Engagement quality across multiple marketing touchpoints 

• Account penetration within target markets 

• Sales cycle velocity and win rates 

Why is brand building important for B2B companies?

Brands that invest heavily in brand building tend to see more sustainable growth and lower acquisition costs over time. This approach balances short-term results with longer-term brand equity. 

Building a brand is about shaping long-term perceptions of your company in the market. It creates the foundation that makes all your other marketing efforts more effective. When a prospect already knows and trusts your brand, lead generation campaigns perform better, the complex sales cycle move faster and win rates improve. 

Demand gen isn’t about giving up lead gen, rather it’s setting the business up for long-term success. Brands that continue to invest in demand today will be the winners when economic conditions improve, future-proofing their pipeline against market fluctuations. 

How to integrate lead generation and demand generation?

The most successful B2B marketing strategies don’t treat lead generation and demand generation as separative activities. Instead, they create integrated marketing plans where demand efforts are fed into and enhance lead gen efforts and performance. 

Prospects who have been exposed to a company’s demand gen content are more likely to engage with lead gen campaigns. They may also convert at higher rates and move through the sales funnel with less convincing as they already understand the value prop and company’s identity. 

Data-driven personalization for nurture sequences, especially with regard to email, is essential to help cut through the noise, improve relevance and align with those complex buyer journeys. 

What’s the long-term impact of a dual approach?

The B2B buyers of tomorrow are being influenced by the marketing they encounter today. While competitors focus on short-term lead capture, investing in demand gen positions your company to win deals that haven’t come to the table yet. 

However, this approach requires patience and long-term thinking, but the payoff is sustainable competitive advantage. The companies that master the balance between immediate lead capture and future demand creation build a more predictable, profitable pipeline. 

At pharosIQ, we help clients develop customer intelligence strategies that support lead generation and demand generation goals. By understanding how prospects engage across their entire buyer journey, we can optimize touchpoints for immediate conversion and long-term relationship building. 

The choice shouldn’t be between lead generation or demand generation. It needs to be about finding the right balance for sustainable growth. Increasingly, that balance moves toward investing in future buyers who aren’t in-market today but will help drive success tomorrow.