Demand generation is arguably one of the most ambiguous and misunderstood functions within marketing. Perhaps this ambiguity stems from the obliqueness of the name (how does one generate demand?) or the fact that demand generation is seen almost exclusively within B2B. More likely, it’s that demand generation encompasses many different disciplines within marketing that fall in and out of fashion.

This guide will demystify demand generation and suggest useful frameworks for understanding it.

Can you create demand?

Without delving too deep into foundational principles of economics, demand describes the aggregate willingness of a market to consume a given product. We measure fluctuations in demand in months and years over large populations. Demand rises and falls because of macroeconomic shifts in buyer behaviour, advances in technology, and a variety of other external stimuli.

Companies can, of course, influence the overall demand for their products and services. However, even in instances where new markets or categories emerge, the initial demand seen for these products are considered “untapped” or “latent” as if the demand was always there, it was merely waiting to be fulfilled.

So how can a single function within marketing be responsible for such a seemingly herculean task? The answer is that, well, they’re not.

Demand generation, in its essence, is the practice of uncovering and activating the demand that exists in the market. It is so named because it is fundamentally proactive. Consider ad campaigns seen before the internet: their primary functions were to inform or remind the consumer that the company’s solution exists and to build an association with the product and the problem it solves in the consumer’s mind. The consumer would then know to seek out the solution when they experience that problem—be it now or in the future. Modern demand generation, by contrast, is less interested in waiting for the consumer to make the first move. Instead, demand generation is about materializing latent demand by proactively setting up opportunities for potential customers to engage with a company, urging them closer to purchase.

How is demand identified and activated?

Identifying demand can take several forms. However, in its simplest, demand generation marketers use basic segmentation. Concerning themselves only with the people that resemble their “ideal customer profile” is an exercise in demand identification. Using information like the company someone works for, their job title, age, or location helps marketers make informed guesses about where demand may be.

More advanced than simple demographic (or firmographic) targeting, modern demand generation marketers use digital signals to understand where demand is. Signals like web traffic, search engine queries, or related purchases can be analyzed and interpreted to mean the person in question is demonstrating a potential need for a product or service. This “intent data” is the digital body language that marketers use to refine further the scope of whom they target.

Once demand generation marketers have determined their segment of potential buyers using demographic, firmographic, and intent-based data, the work of activating demand can begin.

Before one can understand a typical demand generation campaign, it is critical to understand the notion of the funnel. With few exceptions, demand generation campaigns bring new people into the funnel and accelerate their progression through it.

For demand generation marketers, who work almost exclusively in a B2B setting, the demand funnel usually looks something like this:

Stage Description
Pre-market Prospects in the stage are anonymous web visitors or people within an advertising segment. They have not yet identified themselves as having any need for the product.
Lead A prospect becomes a "lead" when they identify themselves by taking some action (like downloading content or signing up for an event). The creation of a lead corresponds with the creation of a record in the company's lead database.
Marketing-qualified lead (MQL) In most cases, anybody can become a lead, even if they are outside of a company's ICP. Marketing-qualfieid leads are the subset of all leads that are within the ICP and who have demonstrated sufficient buying intent (through their behaviour) to be passed to the sales team.
Sales-qualified lead (SQL) In most organizations with direct sales teams, MQLs need additional vetting to be accepted and qualified by sales. This step is typically manual and occurs after the salesperson has spoken with the individual lead. At this stage, there is a strong potential for the lead to become a customer.

Campaigns ought to be designed with a specific objective in mind. Is the goal to create more leads? Generate more MQLs? Convert more SQLs to closed business? The tactics used differ based on these goals.

The anatomy of a demand generation campaign

Who does what?

Demand generation campaigns are a sort of microcosm of the entire marketing function. As a result, campaigns require alignment with other marketing functions.

While demand generation marketers are responsible for the execution of the campaign, product and brand marketers need to have crafted the design, determined the message and written the copy (words), and weighed in on the segmentation.

Demand generation marketers have many tools at their disposal for executing campaigns. A large part of a demand generation marketer’s job is to continuously experiment with new methods and channels to stay ahead of changes in where their ICP may be.

However, most modern campaigns use a combination of digital advertising, email marketing, marketing automation, and content marketing.

Let’s consider an archetypical demand generation campaign.

  • Acme Corp sells productivity software to other companies. Their primary users are Human Resources managers. The demand generation team at Acme has decided to run a campaign to generate more leads.
  • Working with product marketing, the team produces an eBook about transitioning to teams from in-office work to being fully remote.
  • Product marketing and demand generation collaborate on writing copy for digital ads, a landing page, and a series of emails. The approved copy moves to the design team for production.
  • The demand generation team then runs these ads on LinkedIn to anyone who has a “Human Resources Manager” title and who works at a company in the United States with more than 500 employees.
  • The ads compel views to click through to the landing page where visitors can download the eBook after submitting their name, email address, and company information through a webform.
  • Acme Corp’s marketing automation system creates a record in its database for this newly minted lead and then sends the lead an email with the link to the eBook they requested.
  • Over the next several days, the marketing automation system continues to send the new lead a series of informational emails about the challenges of remote work, slowly introducing Acme’s product to the lead as a solution to these challenges.
  • Ultimately, the lead may become a marketing-qualified lead by taking another action like requesting a demo of the product or by signing up for an account.

If the campaign is successful, Acme will have created new leads without exceeding its advertising budget. Over the next months, the team will track the portion of these leads that progress to the next stages of the funnel. If these leads result in new business for Acme, the team will repeat or expand this campaign further and make small changes to the ads, landing page, and emails to see if they can increase the conversion rates and reduce the time it takes for the leads to convert.

That is demand generation.