In 2022, the global advertising marketing budget is estimated to reach $781 billion. By 2024, it is projected to grow to $885 billion. These staggering numbers illustrate just how important marketing is.
Marketing allows businesses to reach their intended audiences, communicate key messages, highlight their unique selling propositions, and make money. Every business needs to focus on this area of expertise which is constantly changing. Indeed, marketing tactics and channels have greatly evolved in the last few years and decades. There are countless concepts and strategies — many of them new — that are deployed every day.
Among these, growth marketing vs demand generation are two popular and highly debated marketing approaches. Both are used to increase leads and boost revenue. While they’re both effective, identifying the right approach for your company can be challenging.
Evaluating the differences between growth marketing vs demand generation is, therefore, crucial. We’ve covered everything you need to know about the matter below!
Growth Marketing vs Demand Generation: How Are They Different?
The difference between growth marketing vs demand generation marketing is based on their different approaches to the customer acquisition pipeline.
The customer acquisition pipeline or funnel refers to the entire journey that a lead undergoes before becoming a customer. It involves many steps, from searching for a product to making a purchase and becoming a repeat customer.
A brand’s customer acquisition pipeline involves certain stages such as:
- Awareness – being discovered by prospective customers
- Acquisition – turning new prospects into leads or clicks
- Activation – turning leads and click into sales, thereby activating the lead
- Retention – a second purchase is made by the customer due to the company’s effective customer service and satisfactory product
- Referral – existing customers refer the company or brand to new customers
Demand generation and growth marketing are focused on improving the progress of potential customers from one stage to the next as they go through the acquisition pipeline. However, both structures approach these goals differently.
Demand generation focuses on awareness and engagement.
Conversely, growth marketing takes a more holistic approach and uses each stage in the pipeline to boost revenue.
While this is the fundamental difference between growth marketing vs demand generation, there’s more to these two approaches.
What Is Growth Marketing?
Growth marketing is a data-driven marketing approach that relies on data and analytics. Marketers use the data to analyze and identify growth opportunities and potential. They strategize methods to efficiently capitalize on these opportunities.
This approach helps businesses:
- Grow their audience
- Generate leads
- Increase sales
Growth marketing is perpetually changing and evolving since it is based on data. As new data is revealed, growth markets modify their marketing strategies to drive growth based on new information.
Traditional marketing focuses on brand awareness and increasing a brand’s audience base. Growth marketing is driven towards generating leads and sales with the help of innovative marketing strategies and data analysis. If a certain strategy isn’t producing the desired results, marketers shift to another strategy.
Growth marketing aims to improve customer acquisition and retention in a cost-effective manner. This is achieved by focusing on three aspects:
Driving results in these areas can have a positive impact on the exponential growth of a company and is a crucial strategy for scaling a business.
Growth marketers can identify effective marketing activities and optimize their campaigns to generate sales and drive growth by studying the data derived from growth marketing strategies.
What Do Growth Marketing Tactics Entail?
A data-driven approach such as growth marketing is highly effective in enabling marketers to create and seize opportunities. It allows them to divert their efforts toward activities that are proven to give results.
It is a comprehensive approach that uses all kinds of tactics that assist with sustaining growth, some of which are as follows:
Referral Marketing Leverage
Growth marketing makes the most of referral marketing since new customers are more likely to trust the opinions of their peers when purchasing a product. Word-of-mouth is one of the oldest marketing tactics and growth marketing makes the most of it by:
- Incentivizing referrals
- Simplifying the process
- Creating a win-win situation for all parties
Email marketing is an established marketing tool that has proven to be highly effective time and again. It offers a 4,200% return on investment which means that for every dollar spent on email marketing, businesses can earn back $42.
Email marketing is, therefore, a crucial tactic for growth marketing strategies.
SEO-optimized blog posts with 3,000 or fewer words are considered the third most effective marketing tactic. Blog posts offer value to the customer by providing information and education which can prompt customers to visit the business website and make a purchase. This is because blogs tend to improve the authenticity and credibility of a business.
Blogs are also crucial for increasing organic traffic as they target a specific audience base while consistent blog posts help increase the validity of a business.
Customers can gain invaluable information from a blog, thereby enhancing their relationship with a business. This encourages them to purchase products or services from the company which leads to organic growth without explicit marketing.
Focus On Repeat Customers
Growth marketing often focuses on encouraging existing customers to make a repeat purchase through incentives such as special discount codes, limited offers, etc.
Repeat customers are an important metric for measuring a company’s growth and success which growth marketing leverages.
Conversion Rate Optimization (CRO)
Conversion rate optimization refers to the process of increasing the percentage of conversions from a mobile app or website. The ability to convert leads into sales is crucial and can greatly impact the revenue and growth of a company.
Growth marketing thus focuses on conversion rate optimization to ensure that a company can grow and sustain its revenue.
What Is Demand Generation?
Demand generation is a strategy that aims to build brand awareness while generating interest and demand for a business’ products and services. The main aim of demand generation is to create a demand, drive more sales, and grow the business by generating revenue.
Demand generation is sometimes focused on retention and referral but typically aims to get more customers into its pipeline to increase its number of leads.
It thus focuses on short-term sales over long-term optimization to sustain continuous growth.
Demand generation is achieved by strategies that include:
- Offering freebies or samples to incentivize customers
- Guest posting to generate more leads and reach a new, broader audience
- Creating interactive content to engage and involve the audience in the business
- Harnessing influencer marketing to promote the business
Do Demand Generation and Growth Marketing Have Any Similar Tactics?
Demand generation and growth marketing have different goals. The former focuses solely on short-term revenue and sales while the latter is focused on data-driven sustainable growth.
However, they share certain marketing tactics or strategies that are extremely common across business and marketing strategies because they’re highly effective.
Here are similar tactics shared by demand generation and growth marketing:
- SEO content
- Conversion rate optimization
- Email marketing
- Paid ads
- Influencer marketing
Can Growth Marketing and Demand Generation Be Combined for a Holistic Marketing Strategy?
Marketing approaches are not black and white as evidenced by the number of overlapping tactics between growth marketing vs demand generation. Therefore, it may be impossible to exclusively adopt a single approach throughout your marketing. A holistic approach that inculcates different tactics and strategies may be a more effective way of generating revenue and achieving sustainable growth.
Demand generation and growth marketing, though different, can be combined effectively and cohesively. The data-driven methodology used in growth marketing can be extremely lucrative and can help you identify strengths and weaknesses. This information can be extremely valuable in helping you make adjustments to your marketing tactics for maximum optimization and success. You can then use demand generation to further enhance your marketing and drive results.
In fact, demand generation can be a great first step for generating sales and gathering data. Once you have your data, you can study it for growth marketing.
Here are some ways in which demand generation and growth marketing can be integrated:
- Creation and distribution of content across different channels
- Repurposing content by refreshing and updating it based on growth marketing analysis
- Building a community for referral marketing that is crucial to growth marketing, can also aid demand generation as it uncovers new avenues for lead generation
Final Thoughts: Picking the Right Marketing Strategy
Growth marketing is a data-driven approach that seeks to grow a business sustainably over the long run. On the other hand, demand generation aims to build a demand for a product or service through short-term revenue and business growth.
Both are vastly different but share similarities and tactics. Overall, a growth marketing outlook tends to be more beneficial as it is based on concrete evidence and data.
This allows growth marketing to offer measurable results and easily identifiable opportunities which can be leveraged for an effective marketing campaign.
However, both approaches are complementary and a holistic approach that blends the two can be highly beneficial.