December 18, 2024

Demand generation’s death spiral: New CMO Huddles survey exposes troubling trends in B2B marketing

by Guest Post

NEW YORK — Dec. 12, 2024 — New research from CMO Huddles, the only community of marketing leaders dedicated to inspiring B2B greatness, has revealed a troubling trend in B2B marketing: The over-reliance on demand generation (demand gen) is creating a “death spiral” that threatens the long-term success of marketers and their businesses.

The survey, which polled several hundred B2B marketers, highlights the continued prioritization of demand gen despite its diminishing returns and growing inefficiencies. The data shows:

  • Fifty-one percent of marketers plan to allocate more budget to demand gen in 2025, even though many reported lackluster outcomes from similar investments in 2024.
  • Only 22% plan to increase spending on brand and reputation-building, a critical area for fostering trust and differentiation.
  • Thirty percent of marketers are hiring for demand gen roles, perpetuating a cycle of reliance on short-term tactics.
  • At the same time, investments in innovative skills like generative AI (10%) and data analytics (22%) remain limited.

Drew Neisser, Penguin-in-Chief of CMO Huddles, described the issue bluntly: “Marketers are doubling down on demand gen — even when it clearly isn’t working. They’re throwing resources at a flawed approach, often driven by pressure from private equity (PE) firms and CFOs demanding immediate ROI. Meanwhile, they neglect the foundational work of building awareness, trust, and a differentiated brand. They are going down a rabbit hole that is only getting deeper.”

Why Demand Gen fails

Demand gen, often seen as the shortest path to revenue, is proving to be a flawed strategy. While demand gen programs can help identify the approximately 5% of prospects who are in the market for your product/service at any given time, it ignores the 95% who aren’t. It’s also a game of diminishing returns – the more you spend on it, the less efficient you become.

Importantly, in order to execute, measure, and optimize demand gen campaigns, B2B marketers are spending up to 20% of their overall budgets on martech. Much of this technology gets underutilized and pulls dollars from programs that actually touch prospective buyers. 

Further compounding the issue, the majority of leads fail to convert:

  • Sales teams report success rates as low as 20%, with many opportunities lost to inaction rather than competition.
  • Buyers often cite a lack of urgency or trust in brands as reasons for not engaging further.

The path forward: Tear down and rebuild

Neisser advocates for a complete overhaul of the current demand gen-first mindset to break this cycle. “We need to stop separating budgets into silos and think holistically about positioning, campaigns, and multi-channel communication,” he said. “Get back to basics. Brands must make the case to customers as to why their products are “must-have” versus “nice to have” solutions to a significant business problem. They must find a simple and compelling story to tell over and over again. Like water dripping on rocks, eventually marketing carves critical space in the customer’s brain, mind space that creates awareness, trust, and eventually, pricing power. Brands aren’t doing the work of differentiating themselves. You can take 10 different websites in any category, and if you take the brand name off, you cannot tell the difference between these companies.”

Successful brands are focusing on:

  • Brand clarity and differentiation: Establishing a strong, memorable brand position.
  • Customer-centric strategies: Delivering value through their communications 
  • Integration of efforts: Ensuring consistency across all marketing and sales channels.

Educating the C-suite

One of the biggest hurdles is educating CEOs, CFOs, and PE firms about the long-term value of brand-building. Many executives expect marketing to perform like a “gumball machine” where inputs equal immediate outputs — a mindset that undermines long-term growth.

B2B marketing is at a crossroads. As the current methods falter, marketers must resist the temptation to double down on demand gen and instead prioritize building trust, differentiation, and long-term relationships. As Neisser warns, “Increasing demand gen budgets guarantees even shorter tenure for already under-the-gun CMOs.” 

About CMO Huddles

CMO Huddles is the only community of marketing leaders dedicated to inspiring B2B greatness (and that donates 1% of revenue to the Global Penguin Society). Whether you’re a full-time B2B marketing leader or in transition, CMO Huddles helps you gain the confidence, colleagues, and coverage you need to succeed. From timely programming to personal brand building and Drew’s penguin hat, CMO Huddles is THE community of choice for perpetually curious B2B CMOs. Join us at CMOHuddles.com.

Media Contact:
Brent Shelton
Brent@bospar.com