This past summer, LinkedIn’s B2B Institute published a study in unison with the University of South Australia’s Ehrenberg-Bass Institute for Marketing Science. The study focused on the effectiveness of advertising and began with quite a bang.
“Up to 95% of business clients are not in the market for many goods and services at any one time.”
“This is a deceptively simple fact,” author Professor John Dawes said, “but it has a profound implication for advertising. It means that advertising mostly hits B2B buyers who aren’t going to buy anytime soon.”
Dawes continues, stating that this figure indicates that, “only 20% of business buyers are ‘in the market’ over the course of an entire year; something like 5% in a quarter—or put another way, 95% aren’t in the market.”
Naturally, this means that Dawes believes that only 5% of all B2B buyers are looking to make a purchase at any given time.
While we’re not ones to argue with a college professor—specifically ones who hypothetically have access to kangaroos with kicks that can kill—in this case, we would like to, respectfully, disagree.
More Than 5% of B2B Buyers Are Ready to Make a Purchase
Yes, it’s well worth noting that Dawes’ overarching point that the overwhelming majority of the B2B world isn’t ready to make a purchase remains true. However, even with this acknowledgment, there is far too much gray area that exists within Dawes’ thesis regarding B2B buying behaviors. (More on this in the next section.)
Thanks to our Buyer-Level Intent Data, we can definitively say that more than five percent of B2B buyers are in-market at any given time.
By analyzing more than 24k individual responses and more than 72k first-party buyer-level intent insights from a variety of industries in a myriad of categories, we discovered that 69.8% of B2B professionals were deferring any purchase decisions beyond the next 12 months.
Therefore, this means that 30.8% of B2B professionals are looking to make a move within the next 12 months, with 7.6% ready to make a final decision within the next quarter. Add in a matching 7.6% looking to invest within a three to six-month timeframe and we’re looking at 15.2% of the market that’s ready to play ball quite soon.
We’ve even highlighted which B2B buyers are actively in-market across different industries, sub-industries, job levels, job functions, and more. (There’s a lot more of this data in our 2022 Content Consumption and Demand Report for Marketers, too!
This data may not make for as catchy a headline, but it is factual.
Removing the Guesswork
Understanding how data is sourced and produced is one of the most essential aspects of any kind of research. While Professor Dawes has meticulously cited his references, his writing at the top of page three undercuts his work more than anything else could.
“The 95% figure is not meant to be a precise rule,” Dawes said. “We’re using it as a heuristic to get the idea across that the vast majority of businesses, for a large proportion of products, are not in the market in particular time periods.”
The emphasis on the word heuristic is my own and is done so with purpose. Here is the definition of heuristic:
enabling someone to discover or learn something for themselves.
“a “hands-on” or interactive heuristic approach to learning”
a heuristic process or method.
In plain speak, the heuristic method or process is merely an educated guess.
Granted, you might now look at Dawes’ 5% and our 7.6% and think we’re arguing over semantics. The problem here is one we see quite often on social media: People only skim and read headlines. Twitter recently added a feature that asks users if they want to first read an article’s contents before instinctively sharing. It was added to combat this kind of behavior, as the platform knows that statements without full context can be misleading.
From our perspective, the data used as the foundation of this study is incomplete, outdated, and has resulted in a premise based on an educated guess. Considering the access to real-time data that we have as B2B Marketers (especially those of us at NetLine), we couldn’t allow our peers to view Professor Dawes’ thesis as gospel.
However, this doesn’t mean we should ignore everything that Professor Dawes shares in this study. In fact, there are a number of takeaways and assumptions we agree with.
Today’s Brand is Tomorrow’s Demand
While the study’s lead is the 95-5 rule, in practice it’s about the connection between advertising and brand building. In the summary, Dawes writes that advertising is most effective at establishing memory links to a brand, meaning that when customers are in-market, they’re most likely to remember the brands which have advertised effectively in the past. “If your advertising is better at building brand-relevant memories, your brand becomes more competitive,” he explains.
There’s no denying that building a brand is difficult. Building a B2B brand is even more challenging, a fact we acknowledged in our inside look at The 2020 B2B Marketing Trends Report: Brand, Content & Sales-Marketing Alignment which we created with our friends at ON24. Here’s a very fitting portion from the blog:
Despite the fact that B2B marketers are under pressure to generate direct leads to sales, they cannot forget about long-term brand building. Building an emotional connection with your clients and prospective customers while helping them address their pain points is the goal of every brand-focused marketer.
…. As ON24’s VP of Marketing Tessa Barron put it, “I don’t know how you could be a marketer today and be driving pipeline without a strong emphasis on brand.”
Remember: Today’s brand is tomorrow’s demand.
Advertising vs. Marketing
Advertising and Marketing share plenty of the same characteristics and relatives and even some of the same KPIs, but they are wholly different beasts. Advertising is about reaching as many people as possible at scale. Marketing is about knowing who you need to reach and where you need to be.
“To grow a brand,” Dawes said, “you need to advertise to people who aren’t in the market now so that when they do enter the market your brand is one they are familiar with.” We completely agree with this, just as we did when we recapped The 2020 Marketing Trends report; advertising to your (intended) future customer is a key part of a larger acquisition strategy.
Brands or individuals cannot expect to introduce themselves to their target buyer with the idea of immediate conversion. Research from Hubspot suggests that the average SaaS B2B sales cycle is 83 days. Klipfolio indicates that for the majority of B2B companies (75%), it takes an average of at least 4 months to win a new customer.
Conversion does not occur in a vacuum, of course. Establishing your brand is never a bad thing, but being ready to answer every question your buyers are asking might be the more effective strategy.
How to Address the Needs of B2B Buyers
“Well, Bert, when the economy is good people buy things. When it’s bad, they don’t.”
– Duck Phillips, Mad Men
Advertising is only one way of achieving brand recall. It could be the best way for your brand to reach your ideal audience as quickly as possible, but the most effective method in the digital world is a bit more innate and complex.
The most successful brands use advertising as a tactic in a larger strategy that focuses on gaining the trust of their target buyers.
B2B buyers are looking to address the following:
- What is the crux of my problem? How do we define it? How does the market define it?
- Why are we experiencing X?
- What kinds of solutions exist?
- Which companies provide these solutions? Who is best in class? Who best fits our needs?
- What’s our budget?
- What’s our timeline?
- What does success look like?
In the world of Mad Men, the statement above was believed to be true. But this is mostly addressing the B2C market. If a B2B company truly needs something, they’re likely going to enter the market. You cannot magically create more B2B buyers, but by leveraging content marketing effectively, you can create more intrigue and interest in your business simply by being incredibly helpful.
You Don’t Need the Entire B2B Market to Be Your Buyer
95% of the market may not be in the market for your services, but you didn’t need the entire pie to work with anyway. That’s way too large of a piece of pie, anyway.
Find your niche, understand what they’re most interested in with tools like Audience Explorer, and be ready to execute. If you do that, you’re likely to find that 7.6% of the market that’s ready to buy.