Breaking up with cold emails – a 3 part blog series
Part 3: Cold emailing vs. ad-based strategies: which one is worth your marketing dollars? – The Solution
A solution-driven guide to smarter lead generation strategies.
This is Part 3 of a 3-part series where we dive into why cold emailing is no longer effective and what you should do instead. Check out Part 1 and Part 2 to continue learning about better lead generation tactics.
When it comes to lead generation, marketers are increasingly being pushed to stretch their budgets while still being expected to drive strong lead volume. Cold emailing might seem like the cheaper option, but when you dig into the details, it becomes clear that the true cost goes way beyond the initial spend. Let’s break it down.
The high costs of cold email: not as “cheap” as it looks
Let’s take a look at a common data provider and an ABM (Account-Based Marketing) solution. Broadly, we’ll call these “cold contact” strategies – where you're sending messages to people who haven't engaged with you or requested any communication from you.
Key takeaways
Terminus: Not terrible. With a cost per lead (CPL) of $37, it seems reasonable, but the customer acquisition cost (CAC) of $927 is still on the high side, and that’s because of low sales conversion.
ZoomInfo: A trainwreck. The CPL skyrockets to $745, and with zero sales, the CAC can’t even be calculated. Oof.
Though costs may seem cheaper up-front compared to a full demand gen strategy, the numbers tell a less than stellar story. Overall, you end up with an average CPL of $71 and a staggering CAC of $1,855 for cold contact campaigns. That’s like paying first-class prices for a coach seat.
Ad-based strategy: a smarter way to spend
On the other hand, let’s take a look at the performance of some standard demand gen and demand capture ad channels.
Key takeaways
Google Ads comes out swinging with a stellar CPL of $40 and an impressive CAC of $118. With 51 sales, it’s clearly the top performer here.
LinkedIn offers high-quality leads but needs work on conversions—no sales here, making the CAC shoot up. It might need more optimization, but for awareness and top-of-funnel activities, it’s a solid option.
Bing and Capterra are quite expensive, but Capterra’s single sale proves that lead quality can sometimes justify the cost.
Aggregate analysis: cold contact vs. ad-based strategy
Though cold contact vendors may offer a cost-effective contact rate or initial CPL, the quality is inconsistent at best, impacting CAC and skewing the cost comparison in favor of channels that drive better lead quality.
Treating contacts holistically: an overlooked perk of an ad-based strategy
Comparing a cold email strategy to a robust demand generation strategy is a lopsided comparison. A well rounded ad strategy covers three main portions of the sales funnel: brand awareness, demand generation, and demand capture. In contrast, cold email is a more transactional one-time interaction that stretches the term “strategy” to its limits.
With an integrated marketing strategy, you can repurpose existing content across owned channels like LinkedIn and YouTube to build and maintain relationships with your target audience. While this initial interaction likely won’t generate any flashy KPIs, it’s essential for positioning your product or service, highlighting your unique value, and making a strong first impression.
From this foundation, you can continue to provide value, answer questions, and help prospects understand the problem you solve and how you do it differently. As you build rapport and trust, the likelihood increases that they will choose you when they are ready to make a decision or recommend you to others.
Once prospects are ready to purchase, they typically have a short, targeted list of contenders. By this stage, they’ve likely made their decision but want to ensure due diligence. At this point, it’s essential to retarget them with relevant messaging, ensuring your brand shows up first in their searches. Once they’re ready to talk, they become a lead, and if you’ve done your job right as marketers, your sales conversations will focus on closing rather than selling.
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