Demand Generation vs Lead Generation: Where To Invest Your Marketing Dollars

The main difference between demand generation and lead generation lies in their scope and focus within the marketing funnel.

While demand generation sets the stage by creating interest in your product and raising brand awareness, lead generation follows up by capturing and converting that interest into sales opportunities.

As such, they’re both critical components of an efficient marketing strategy.

So, when it comes to demand generation vs lead generation, it’s fair to say you need both, as the success of your lead generation greatly depends on the quality and efficiency of your demand generation.

In this article, we’ll explain the key differences between demand generation and lead generation, helping you determine when to apply which process to get the best results.

If you’re not a big fan of reading, here’s a quick breakdown of key takeaways. ⤵️

TL;DR

Demand generation is geared toward raising brand awareness and generating demand and interest in a company’s offering.
Lead generation focuses on identifying and capturing prospects who have already shown interest in your offering and nurturing them into conversion.
As such, demand generation and lead generation differ in terms of:
Scope & goals.
Target audience they’re aimed at.
Key activities they encompass.
Funnel stage they operate in.
Metrics by which they’re measured.
Startups and newcomers to the market should focus on demand generation to establish a presence and educate them. In contrast, more established businesses should focus on lead generation to convert existing demand into sales.

What is the difference between lead generation vs demand generation?

When discussing demand generation vs lead generation, there are several key differences to consider.

Scope & goals

The first big difference between demand generation and lead generation lies in their scope and objectives.

Demand generation campaigns have a much broader approach that encompasses a wide range of sales and marketing processes because they focus on:

Creating a market for your offering by educating the public about the pain point you solve.
Raising brand awareness by:

Producing quality content that shows how your product solves a particular issue.
Using social media platforms to reach and engage with a broader audience and build rapport.
Optimizing online presence to ensure your product appears at the top of search results when prospective customers research topics related to your product.

A lead generation strategy, on the other hand, takes a more focused approach geared toward:

Identifying and capturing potential prospects.
Moving them from awareness or mild interest to active brand engagement and readiness to convert.
Scoring and qualifying leads lets marketers recognize and prioritize those most likely to convert.

Demand generation is a longer-term process that takes more time to generate tangible results.

Insightful social media posts, like this one on LinkedIn from our CEO, Max Greenwald is a great example of demand gen in action:

In contrast, lead generation is a shorter process that targets a specific audience group (i.e., qualified leads) and aims to achieve immediate results.

Target audience

The next difference to remember when designing lead and demand generation strategies is the target audience.

Demand generation campaigns are geared toward much wider audiences that include:

Companies and individuals who are not actively looking for a solution right now could benefit from your offering at some point (i.e., businesses and stakeholders that match your ICP).
Companies and individuals who are aware of a certain problem to an extent but haven’t yet started actively searching for a solution.
Individuals and companies in the earliest stage of their buyer’s journey have identified a problem and begun gathering relevant information and exploring their options.

Conversely, lead generation campaigns focus on more specific audiences, i.e., companies and individuals who have already shown some level of interest or intent in the company’s offerings, such as:

Website visitors, especially those visiting high-intent pages (pricing, specific features, demo page, etc.) or recurring visitors that repeatedly return to your website.
Content engagers, including people who have downloaded your guides, case studies, etc., or have attended your webinars and similar events.
Email and newsletter subscribers.
Social media followers.
Individuals who have engaged with your email or social media campaigns (e.g., clicked through marketing emails, commented on social media posts, etc.).

Due to this difference, demand and lead generation also differ in terms of activities that marketing teams take.

Activities

Since it’s designed to create awareness, educate the market, and build interest in a company’s products or services, B2B demand generation includes tactics like:

Content marketing, including various free resources, such as blogs, case studies, whitepapers, guides, etc., with the aim of establishing your brand as an industry thought leader.
Social media marketing builds brand awareness and drives traffic to your website by posting engaging content, interacting with followers, running targeted ads, and more.
SEO helps create a strong online presence and improve your company’s visibility in search engine results, making it easier for potential customers to come across your offering when searching for relevant information.

Effective lead generation consists of tactics designated for capturing contact information from potential customers and qualifying them for sales follow-up, including:

Gated content enables you to collect relevant lead information by offering leads valuable resources in exchange for their contact information.
Creating high-converting landing pages designed to spark visitors’ interest and compel them to fill out web forms or book a demo or a meeting.
Email campaigns that help nurture and engage leads with personalized emails tailored to their needs, behavior, level of interest, etc.
Calls to action (CTAs) that guide qualified leads toward completing an action aligned with the stage of their buyer’s journey (e.g., an action that captures contact information or urges them to sign up for a free trial or book a demo, etc.).

4. Funnel stage

Another crucial difference between demand generation and lead generation is the funnel stage at which B2B marketing teams undertake them.

Due to its nature and objectives, demand generation operates at the top and middle of the marketing funnel - the awareness and interest stages.

On the other hand, lead generation campaigns cover the middle and bottom of the sales funnel - the consideration and conversion stages.

5. Metrics

Different KPIs and metrics measure the success and efficiency of demand generation and lead generation.

To determine how well your demand generation strategy is performing, you should monitor:

Website traffic is a primary indicator of how well your demand-generation efforts are driving awareness and attracting interest. You should especially keep an eye out for:
Visitors that fit into your ICP.
Returning visitors.
Visitors that spend more time on high-intent pages.
Engagement rates help you evaluate how compelling and relevant your content (e.g., blogs, social media posts, etc.) is to your target audience based on whether and how they interact with it (likes, comments, shares, subscriptions, etc.).
Brand awareness measures how familiar your target audience is with your brand and how easily they recognize it. You can assess it through surveys or by tracking the frequency and sentiment of online brand mentions.
Content consumption that tracks how your content is consumed and engaged with across channels, providing insight into what topics and content types perform well and which need to be improved.

At the same time, lead generation is measured by tracking:

The number of generated leads monitors the total number of leads collected through various lead generation channels and activities.
Conversion rates measure the percentage of leads who complete a desired action, such as filling out a form or signing up for a demo.
Cost per lead calculates the average cost of generating a single lead, helping you assess the financial efficiency and sustainability of your lead generation efforts.
Lead quality, which evaluates how likely leads are to convert into paying customers by measuring their intent level, ICP fit, etc.

When should we focus on demand gen vs lead gen?

Choosing between demand generation and lead generation depends on your business's current needs, market conditions, product development stage, and overall market presence.

As mentioned above, demand generation focuses on the top and middle of the sales funnel, meaning it’s a better choice for startups and businesses without a well-established brand.

Lead generation, on the other hand, is better suited for the middle and bottom of the sales funnel. It focuses on companies and individuals that have already shown interest in your product or are highly likely to be interested in it based on certain ICP attributes.

As such, lead generation can be more beneficial for businesses that have already generated sufficient demand and interest in their offering and are now looking to monetize it.

Here’s a helpful guide on when to focus on each. ⤵️

Focus on demand generation when:

Launching a new product or entering a new market - It’s essential to build awareness when you’re at an early stage with your product, educating your target audience about your brand, the problems it solves, and the general value it brings to the table.
You need to create or improve brand awareness - Demand generation can help establish your brand’s position and enhance brand visibility, especially if you’re in a highly competitive industry that requires an efficient way to cut through the noise.
Educating the market—If your product is highly innovative, complex, or tackles a niche issue, educating your potential audience on all the benefits it can bring them can go a long way.

Focus on lead generation when:

You already have an established market presence - Lead generation is more beneficial for businesses with a clearly defined market and a known brand, as it allows for capturing and nurturing qualified leads from an audience already aware of your product and possibly interested.
You want to nurture existing interest - If you already have an audience of individuals or companies interested in your offering, apply lead generation tactics to nurture those leads and guide them to conversion.

Pro tip: You can also use lead generation tactics to attract and convert your competitors’ audience. If a certain market segment is interested in your competitors’ offering, chances are they are a good fit for you, too. Therefore, it’s always a good idea to keep an eye on the competition’s performance and monitor leads’ buyer intent across digital channels.

You’re looking to optimize marketing spend - Lead conversion focuses on specific, high-ROI goals, enabling you to achieve ROI and measure it more accurately than with demand generation.

Keep in mind, though, that the key to success lies in striking the right balance between the two. You can’t expect your lead generation to succeed if you haven’t adequately prepared the market for your offering.

A combination of demand and lead generation strategies is critical for the best results, especially for startups that have yet to establish their brand presence.

You can best understand this through a practical example.

Case study

VioletX, a fast-scaling startup in the virtual CISO space, applied both demand generation and lead generation in its journey, enabling it to experience a 400% growth year after year.

It relied on Warmly, a signal-based revenue orchestration platform, to help them tackle various segments of demand generation and lead generation, including:

Website traffic tracking enabled VioletX to determine whether its website is attracting its intended audience or if its messaging and awareness-raising strategies need improvement.

Data-driven website redesign - Using insights Warmly provided, VioletX’s team enhanced its website and landing pages, making them better suited for its audience and their needs.
Understanding website intent - Warmly allowed VioletX’s team to gauge which website visitors were most likely to convert based on how they interacted with their web pages, content, chatbots, etc.
Gaining insight into third-party buying intent - Warmly tracks visitors’ buying intent across levels, including the topics they research on the web, visits to competitors’ pages, interactions with their ads, etc., enabling VioletX to get a complete picture of a lead’s readiness to convert.
Streamlining communication - VioletX’s sales team was able to reach out to the hottest leads while their interest was at its peak, thanks to Warmly’s automated and live engagement features. It was also enabled to nurture qualified leads who weren’t ready to convert yet by including them in personalized outreach sequences.

Refresher

Although the aim of this article isn’t to define lead generation and demand generation, a small reminder of what each strategy entails can’t hurt, helping you better understand their nuances and use cases.

What is demand generation?

Simply put, demand generation is a marketing process that creates awareness and interest in a company's products or services.

It consists of a broad set of activities designed to reach and engage potential customers at the top and middle stages of the marketing funnel, from initial brand awareness to generating interest and engagement.

What is lead generation?

Lead generation is a more focused marketing process designed to identify and nur

ture potential customers for a business's products and services.

It involves specific activities geared toward capturing prospects' interest and converting them into leads who have provided their contact information, allowing sales teams to take over and design personalized sales strategies.

Wrapping up

Understanding the differences between lead generation and demand generation - including different methods they employ, specific goals, and ways of measuring their impact - is essential when deciding which strategy to apply.

However, to get the best possible results, you should use both approaches, depending on your brand’s size, online presence, target market, and business objectives.

Hopefully, this guide helped you decide when to use demand generation vs. lead generation and which tactics to use for each.

Good luck!

If you need a tool that can help you generate demand, capture qualified leads, and convert them, Warmly might be the best choice.

Book a live demo with our team and find out what Warmly can do for you today.