Convince and Convert Hubspot IPO ArticleEarlier this week Convince and Convert published a post titled, “Is Inbound Marketing Actually Profitable or Just a Slogan.”

In the post, Tom  Webster (writer at brandsavant.comasks some provocative questions about what Hubspot’s IPO—and the peek into their finances that provides us—actually says about  the overall profitability of inbound marketing.

After creating the term “inbound marketing” and spending 8 years educating marketers and businesses on the value of content marketing, it seems the company has failed to be its own best case study.

Webster’s main question is, what does it say about the model if one of the leading experts in the field (Hubspot) doesn’t implement it effectively?

Content Marketing Is All You Need (Nope!)

There are two separate but equal arguments I want to add to this discussion.

The first is that in all the time I’ve been reading Hubspot’s blog, pouring through their academy content, and analyzing their inbound strategy, I can’t recall a single time they’ve said that content marketing is all you need.

And, well… just as love isn’t all you need, content marketing isn’t all a business needs to thrive. In fact, there are a heck of a lot of other mitigating factors.

Hubspot knew that. To quote their S-1 (the document they filed that Webster is going on about):

Businesses typically need to use one point application for website content management, a different point application for blogging, another point application for social media management, another point application for email and marketing automation, another point application for content personalization, another point application for analytics, another point application for sales management and CRM and yet another point application to alert salespeople of key customer signals in real time. [emphasis mine]

I’ve italicized here the things I consider part of inbound, and bolded the things I consider outbound—analytics I left as-is, because while it should inform both, it isn’t really either.

So what? That means there are an awful lot of factors that have nothing to do with their inbound marketing efforts that might have an impact on their costs for acquiring and retaining customers (the metric Webster pays particular attention to).

Was Hubspot Doing Inbound Right?

Even if Hubspot’s claim is that inbound marketing lowers cost of customer acquisition and lessens the cost of retaining (gain, the metrics Webster is using), there is at least one factor where I would venture Hubspot wasn’t following its own model: Niche marketing.

From the start, I’d argue that Hubspot was trying to offer a lot of services to a lot of people. They sell themselves as a “one-stop-shop” model for marketing.

A screenshot from Hubspot's S-1 where they claim to be an all in one marketing solution

From Hubspot’s S-1 Filing

Then, as mentioned by Robert Rose in the comments section of Webster’s post, in 2012 Hubspot made a pivot to target primarily Enterprise customers. This seems to have muddied the waters further. 

Rather than focusing their efforts on their blog and in their inbound marketing efforts on one type of business or even one type of prospective customer, they divided up their blog into sections.

If you click on the “blogs” link on their site today it lists four categories: Marketing, Sales, Insiders, and Opinion.

In a post on their site titled, “Why Inbound Marketing Is Perfect For Your Niche Business,” dated from June 2012, one of their content marketers wrote:

Do you consider your business to be “niche?” If so, inbound marketing was made for you! Think about it: if you’re in a niche industry, any large-scale outbound marketing initiatives (TV ads, billboards, newspaper ads) will reach an audience that is 99% irrelevant to your business. Inbound marketing, on the other hand, lets you attract the most qualified prospects to your business, wherever they are. In fact, some of the most dramatic successes we’ve seen with inbound marketing come from businesses in niche industries.

I think the primary struggle Hubspot was experiencing in this arena (customer acquisition / retention) was that inbound doesn’t work well when you’re targeting many verticals that are very different from each other with a B2B product.

Yet because it was their strategy, and they were espousing it to their customers so strongly, they had to “lead by example.”

Examples Of Inbound Marketing That Work

When you look at examples of inbound marketing that work, it’s almost always a niche business.

— Copyblogger Media

Brian Clark commented on the Convince and Convert piece that his business is a good example of inbound working, and working well (he mentions Copyblogger Media is expected to make $10M this year, all built on inbound).

— Boost Blog Traffic

Back in April, Jon Morrow (former associate editor of copyblogger, former editor of KissMetrics and now “his royal highness at Boost Blog Traffic) posted that his website was making a cool $100,000 PER MONTH.

Yes, you read that right.

And he, too, uses a strategy that’s largely inbound (though with a slightly different business model… but I’ll publish a post on that one of these days).

— Social Triggers

Derek Halpern at Social Triggers offers absolutely nothing for sale on his website (one exception: when he launched Zippy Courses he posted about it with a link to a buy page). He only makes his products (largely classes) available to those on his email list. While I don’t have profit numbers for Social Triggers, my guess is he isn’t doing too poorly…

— Hubspot’s Own Case Studies

A glance at Hubspot’s case studies page even shows that most of their case studies are of businesses operating in niche industries. I don’t think that’s an accident.

So, where did Hubspot go wrong?

IF you’re going to argue that Hubspot went wrong (which I’m still not convinced they have… just that their results have been less impressive than they argue inbound is capable of delivering), where did that happen?

Despite all their talk about customer personas, ultimately I think Hubspot fell into the same trap so many businesses do: wanting to be all things to all people.  

It’s really hard to make inbound marketing work when you’re targeting a broad customer base. Inbound works best in niche industries.

And Hubspot today targets marketers, sales people, thought leaders, and more. They have too many different audiences. Their inbound marketing has become too fragmented.

That doesn’t say anything about the possibilities of inbound marketing… but it might say something important about Hubspot.

Disclaimer: I’m a HUGE Hubspot fan. I think they’ve done a lot of things right. I think they’ve provided a ton of thought leadership and without their educational material, I personally would not be where I am today. This post is by no means meant to slam them—rather, it’s to discuss why their costs per customer and retention rates may be higher than you’d expect based on the stats they share about the results of inbound marketing.