It’s amazing isn’t it? It almost doesn’t make sense. You’ve got a company that has 13 full-time employees, generates absolutely no revenue, and gets sold for $1 billion. I’m of course talking about the early April acquisition of the photo-sharing mobile app Instagram by Facebook CEO Mark Zuckerberg. What’s even more remarkable is that Zuckerberg bought the app knowing that monetizing it might compromise the value that Instagram CEO Kevin Systrom worked so hard to build.

So why did Zuckerberg throw ten figures at an app that is seemingly impossible to monetize?

There’s a new metric business leaders and marketers are beginning to embrace; it’s called return on engagement. When Zuckerberg purchased Instagram, he wasn’t purchasing a novel photo-sharing technology (although that was a huge plus). What he was really doing was absorbing a community of 35 million highly engaged users.

This purchase and many more like it reflect a change in the way we appraise value. Marketers are beginning to understand that it makes more sense to pitch to 1,000 engaged users vs. a million annoyed users (e.g. poorly targeted TV spots, cold-calls, print ads, etc).

Take a look around. Everyone has their face in an iPhone or a computer. People are making their own decisions as to what they want to consume. Everything is “on-demand” and as far as the consumer is concerned, if you don’t give them what they want they’ll find it elsewhere.

So that begs the question: How does a company get their target consumer to listen? Especially if they’re blocking out your ads with TiVo, commercial-free Internet radio, and spamware?

The answer: Inbound Marketing.

How Inbound Marketing works

Inbound Marketing is based on the idea that if you create content that people are genuinely interested in, they’ll gladly spend time engaging with you and your brand.

Social media, blogging, and search engine optimization are the tools marketers use to not only share content with their target market, but to enable their target market to in turn share that content with their networks, igniting referral-based viral brand exposure.

The three pillars of Inbound Marketing

1. Content: This is the bread and butter of any successful Inbound Marketing campaign. Content can be in the form of a blog post, YouTube video, free E-book, etc. If you don’t have time to write engaging content about your industry, hire industry experts who can. This is what’ll attract potential customers to your website.
   • Remember, this isn’t the stage to pitch your product or service. They don’t want to be sold to. They want genuinely useful content that educates and inspires them. This builds trust in your brand and your people – trust that in turn becomes an engine generating quality leads and new customers.
2. Search Engine Optimization: If people can’t find that awesome blog post you wrote, then what was the point of writing it? SEO helps make your content more visible to search engines. It’s a combination of using focused keywords, inbound links, and proper title and headings.
   • Good SEO practice will maximize your ranking in search engines, making it easier for the world to find your blog posts at the very moment they are seeking that precise information online. Given your blog posts live on your website, you have then earned actively engaged site traffic.
3. Social Media: (Facebook, Twitter, Pinterest, LinkedIn, etc) Social media enables your content to reach more relevant people by echoing your content out virally. You post content to your followers, which in turn gives them the ability to re-market that information to their followers, and so on, enabling exponential brand exposure and perpetual growth of online followers. And because re-marketing is essentially word-of-mouth marketing, you benefit from the most credible kind of brand awareness all along the way.
   • Each social network targets a different kind of user behavior. If you’re selling B2B, you’ll probably put more effort into LinkedIn than if you own a boutique hat shop – then you should focus more on Pinterest, Facebook, and Twitter

–Credit: HubSpot

What about TV spots, print ads, direct mail?

I am by no means suggesting that you drop your entire traditional marketing budget for Inbound Marketing campaigns. There’s a place for both, and they can often be executed synergistically. But, companies across every industry have begun the race to own the online conversation in their market, and because success with Inbound Marketing is momentum-based, the time to start is now.

The average portion of marketing budgets dedicated to inbound in 2012 is 35% (43% for small businesses). 89% of businesses are either maintaining or increasing inbound marketing budgets from 2011 to 2012. 81% of business rated their company blogs as “useful”, “important”, or “critical”. 62% of companies said that social media had become more important as a source of leads in the past six months. Why is this seismic shift happening?

• The average cost per lead for outbound-dominated businesses was $346, while inbound-dominated businesses reported their leads cost $135 on average, meaning Inbound marketing-dominated organizations experience a cost per lead 61% lower than outbound marketing-dominated organizations.
• SEO leads are high quality leads, 8 times more likely to close into customers than outbound leads (SEO leads have a 14.6% close rate, while outbound-sourced leads have a 1.7% close rate).

–The 2012 State of Inbound Marketing

Where to begin?

It’s not enough to simply write a blog, post it on Facebook, and expect the leads to pour in. Inbound Marketing is a lot more calculated than that. It’s important to understand the fundamental techniques, strategies, and technology platforms that make up a successful Inbound Marketing campaign. And once you’ve done that it takes time to manage the data and analytics that continuously stream into the tools you’ll use to monitor and adjust your tactics. You can partner with agencies like Setter that’ll do everything from getting your feet off the ground to managing the entire campaign. Some businesses choose to hire dedicated inbound marketing staff.

Frictionless sharing and the endless cycle of content consumption have enabled marketers to understand and connect with audiences in new and deeper ways. You no longer need millions of dollars to reach millions of people. And not only can you drastically increase lead generation and do so for less money, but you can increase the quality of those leads.