B2B Marketing Budget and Productivity Benchmarks

Live from Schenectady, New York, it's SAS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Reich, founder and CEO of Benchmarket.

And I'm CAC, better known as Dave Kellogg, EIR at Balderson Capital, independent consultant, and the author of Kellogg.

And together, we are the Metrics Brothers.

And we go together like marketing budgets and cuts.

Now, that's an interesting take there, CAC, and maybe appropriate for today's episode's topic.

Might be. But I think when we dive in today, that as we cover the Marketing Budget and Productivity Benchmark Report that you did in partnership with Carrie Leditschik from Atlassian, Bill Maciades, formerly of Zendesk and Salesforce and Slack, and John Miller, the Marketo co-founder, I think as we dig into this report, we're going to find that marketing budgets and cuts did not go together, uh, in the most recent year.

That is true, Dave. In fact, I wanted to highlight that this particular benchmark report was our number one report in the last 12 months as measured by downloads and minutes per page of any report. So I'm looking forward to discussing this with you.

Well, it's a 127-page beast, I think, Ray. So we're gonna have a lot to talk about in this episode. But before we do that, let's hear a word from our sponsor.

The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Groth Wright have put the Metrics Brothers podcast on hiatus for the remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave @Kellogg and Ray on LinkedIn @RayReich. Thank you so much for listening to the Metrics Brothers podcast. Okay. So for the next 20 to 22 minutes, we're going to cover this 2025 Marketing Budget and Productivity Benchmark Report that was published in April based upon data that was gathered in the late November through December to early January 2025 timeframe. The total sample size was 202 companies. And it was really nice distribution from companies less than $5 million represented 23% to companies $100 million to $250 million was 11.1%. $250 million above was 9.9%. So we had great distribution on this, Dave.

Nice, Ray. Well, let's jump in.

Okay. So now for those who have downloaded the report, which is available at benchmarket.ai, Under the B2B Marketing and Budget Productivity Report section. The first page we're going to cover is page 9. And what it shows is the actual marketing expenses as a percentage of budget compared to the planned marketing budget as a percentage of revenue in 2025. And the actual was at a median of 9% last year, growing to 10% this year. So up, you know, 1% of revenue, 11% overall. And I thought it was also interesting to see at the top quartile where last year the top quartile spent 20— 16% of revenue on marketing expenses. This year that's going up to 20%. So I see this as positive and maybe some reorientation towards growth. How do you evaluate this, CAC?

A couple things here, Ray. I think I found a math error that we missed in the warm-up. But I know why you're saying 11% now because 1 divided by 9 is 0.11. But in fact, that's in relative terms. They're up 11%. In absolute terms, just in dollars, if they've gone up 1% and these companies are growing at around 20% a year, the budgets are actually growing, right? If you hold percent of sales constant at 10% and you grow by 20%, your marketing budget in dollars is up 20%. So here, I think they're in dollars, they're actually up around 20%, 22%, more like 22%. And I think that's really good news. But the big news here, Ray, in my mind is if we looked at a survey like this a decade ago, I think we would have seen marketing was 20% of sales, not 10%. So, there's been a lot of squeezing of both sales and marketing. I think 10 years ago, it would have been sales and marketing together was 60%, sales was 40%, marketing was 20%. And today, we're seeing sales and marketing together is 30%, sales is 20%, and marketing is 10%. So, they've actually taken the pain equally, right? We preserve that 2-to-1 ratio. But, but wow, have we squeezed GTM efficiency over the past decade. And in some sense, no wonder why people are growing slower.

Well, one of the things I've always said is you should never look at benchmarks across the entire total sample. You want to look at them based upon a company attribute that's similar to yours. And company size is a real good one for budget. And that's on page 10 of the report. And all I really wanted to highlight on page 10 was As companies are smaller, you're going to spend a larger percent of your revenue on marketing. Here, the median last year was 14% in that $1 million to $5 million range. And as you grow, and here all the way over to $100 million to $250 million companies, there's, they're allocating around 7% of their revenue to the marketing budget. So high level here is as you grow, You're going to see the, of course, dollars allocated much higher, but the percentage of revenue allocated to marketing goes down. And I know you have some questions about that, Kaq.

I wouldn't say they're questions. I'd say first, I agree with the general argument that as, you know, as a company grows, the percent of revenue spent on marketing and/or sales and marketing for that matter drops. But my beef on this one is I'm just not sure I believe the data out at the right-hand side of the chart that's saying that, hey, Marketing budget as a percent of sales is 4% at the median. I just don't think it foots at the $250 million-plus level. For example, if you compare to the Maritech public comps, the last 12 months sales and marketing combined expense median is 40%. And if I take that data and try and reconcile it with yours, it means that they're spending 36% on sales and 4% on marketing, which would be a 9-to-1 sales-to-marketing expense ratio, which would be catastrophic. So, I don't— I've seen companies that run at that ratio, but I think there's something up. I think that those numbers are frankly just too low because if you look at big public companies way bigger than $250 million, they're still spending 40% of sales on sales and marketing.

Yeah. Well, fully transparent, the N for greater than $250 million was only 9 companies. So, that's much lower than any of the other segments. So, it could be selection bias at that segment, Dave.

It was just one guy, Ray. Come on, it was Bob.

Okay, well, I'm going to move on to another one that was my Make CMO Feel Good chart, and that's page 14, where it really compared a company's growth rate to the percent of revenue being allocated to marketing. Now, I'm going to caveat this right up front. There's no empirical evidence of the cause or the effect here, but it's still a chart that marketers are going to like, and maybe they can use to at least have a discussion with their CFO. And that is, for companies that were growing less than 20% across this entire sample, at median, they were allocating 7% of their revenue to marketing. But for companies growing 21% to 30%, at median, they were allocating 10% of their revenue to the marketing budget. And for those companies that were growing by 30% or greater, they were allocating 15% at median of their revenue to the marketing budget. And this held fairly consistent even for companies greater than $50 million. So this is a— you grow faster, you spend more on marketing, but we don't know which comes first, Dave.

Yeah, but I like what you— I saw what you did there, right? You said, but hey, go show it to your CFO. And try and get more marketing money. I heard you, Ray. That was the implication. Look, it's not surprising that faster-growing companies are spending more on marketing. This is correlation, not causation. I agree. But there's nothing really surprising here at all. It costs more to grow faster. And more importantly, that cost gets uploaded or it gets front-loaded upfront. So, you need to kind of spend now to grow faster 6 to 9 months from now. So. No surprises here. Faster growers spend more on marketing and presumably sales as well.

Yeah, we didn't actually talk about this as we were preparing for this episode, but I just had a CMO from $130 million tell me, she goes, Ray, she goes, I got my marketing efficiency metrics really improved over the last 18 to 24 months. And that made my request for a larger percent of revenue going to marketing much easier. So efficiency drove more marketing budget in her case.

Yeah, I mean, it makes sense, right? The big thing about marketing budget is, you know, people think half of it is wasted. And the more you're improving marketing efficiency, simply measuring this stuff and doing a good job at measuring it will help earn the confidence of the CFO to help you approve more. So, no surprise there, but a good story.

Okay, I'm going to go to the next topic, and that is how did this survey-based research find that the marketing budget was being allocated across People, programs, and technology. And at the— across the entire sample, it was about 44% to people, 44% to programs, and 10% to technology. That was the median. But interesting thing on slide 18 was that as companies grow in size, what we saw was, especially at scale greater than $250 million, that only 38% of the budget was being allocated to people and a much higher percentage 50% was being allocated to programs. So, what I took away from this, if I just don't do a lot of critical thinking, was as companies scale, you're going to see a larger percent of the marketing budget going to programs. How does this fit with your experience, Dave?

Well, I mean, look, that 250+ bucket I think is a relatively small number of people in. So, I wouldn't overread into it. But look, the overall picture of this chart I like. I've always— my historical rule of thumb for people, programs, technology was 40-40-20. which seems to still hold at the bottom end of your sample in terms of size. But if you ask me today, I say it's 40/40/20 going to 45/45/10. And that's my rule of thumb, which is increasingly that allocation is going from 40/40/20 from people, programs, technology to 45/45/10. And this chart kind of shows that. And it all makes sense to me.

Yeah. So, the next thing we did was we asked for that program investment, The question was asked, how much is allocated to different program types? And this was the big ones were demand gen and events. And what it showed was, you know, as companies were a little bit smaller, they were investing more to demand gen, like 33% and 24% at median to— I'm sorry, on average, that's a mean— to events. But as companies got bigger, a little less on demand gen, a little bit more on events. And for the people who are in the events business, they were applauding this, but Basically, it looks like demand gen and events are going to be taking up almost 60% of your marketing program budget.

Yeah. Look, I think the growth-based segmentation doesn't mean too much to me here. But the overall pattern does, which is you're spending slightly more on demand gen than events. Events are always controversial at software companies. I was quite frankly surprised to see they were so high here. I think it's a good thing. I'm a big believer in events. And To me, the rule of thumb with events is very simple. You get out what you put in. So, if you execute poorly on events, you'll get bad results. But if you execute well across marketing and sales, you can get good results and support these kinds of investment levels.

Yeah, I even found something. I was shocked. I was talking to another CMO and they combined brand investment and events into the same bucket, which was a little strange to me. But she's like, well, because a lot of times we will go to events and it's hard to justify purely on top-of-funnel short-term impact. We're also building brand awareness and brand leadership.

So, if you want to do a real marketing nerd dive, Ray, I have a metric for that, which is I call it the residual value. So, I can take the cost of the trade show, subtract the number of MQLs or opt-ins we generated from it, and that will be the demand gen value of the trade show. And then, the residual value, the residual expense is what we went to brand building. It's a way of kind of backing out, right? They do this when people do brand equity, they kind of back out all the real assets of the company and what's left over is brand equity. It's the same basic idea.

Ah, I like that. So, well, we're going to move to another topic, and that is, you know, we also segmented this by product-led growth companies versus sales-led growth companies and hybrid, so product-led plus sales-led. And the biggest finding here was that product-led companies at median are investing 13% of their revenue to marketing budget versus sales-led only 9%. So it looked like there was almost, you know, I don't want to do bad math here, but almost 50% more marketing budget being allocated in PLG companies than in sales-led. That was my takeaway from this.

Yeah, my takeaway is that PLG is more expensive. I mean, the myth of PLG is that software sells itself. The reality of PLG is these companies tend to be faster growing. So, you do get something in exchange for all the incremental investment. But there's nothing cheap about PLG. They spend more on sales and marketing and on product, right? The belief was, ah, they could spend more on product than your average company, but less on sales and marketing. And the reality in general is they spend more on both. So, and this survey is certainly consistent with that.

And then we are the Metrics Brothers. So we got to talk about some metrics. So we asked 2 different questions. And one was, you know, what are the top 3 marketing performance metrics that you measure. And it was a forced ranking, so you can only pick 1, 2, and 3. And the top 3 came out as pipeline generated by dollars was number 1, pipeline generated measured by opportunities was number 2, and new ARR generated, of course measured in dollars, was number 3. And for those of you who are sitting at your desk, this is page 29 of the report and you can see these details. Did that surprise you or what do you think of this one, Dave?

I think it's good. I mean, I think measuring pipe gen is really good. I wish we could see starting pipeline coverage. You've got pipeline coverage out there. It's not a top 3 metrics coming in at 13%. I would have traded one of the 2 pipe gen metrics. I personally would look either at dollars or opti count. And I would substitute the other one with pipeline coverage. And then, I like new ARR bookings. But I do think it's important from time to time to get out of the CRM, which is why I like measuring things like awareness via market research. So, if I'm trying to get kind of a balanced view of marketing performance, I don't want to over-rotate everything towards demand gen. Demand gen really, really matters. It's the sine qua non, right? If you miss demand gen, you get fired. But, uh, I do like looking at some of the more outside-in metrics as well, like awareness. Yeah.

Well, I was just really pleased that I didn't see things like MQLs or website traffic as a top 3.

Well, MQL is number 4, right? So it's right there champing at the bit to get in. So a lot of people are still measuring them.

Yeah, they sure are.

Yeah.

Yeah. And then what we did, we tried to go away from just kind of the overall marketing performance metrics to efficiency metrics, which is measuring the input to get the output. And here it was interesting. So of course, limited to the options that the participant was provided, but one— number one was marketing costs per dollar of pipeline generated. That was 52% of people said they were measuring that. 48% of companies said they were doing a marketing cost per opportunity. And this is a good plug for our last episode, which was our talking about cost per opportunity and pipe to spend. Number 3 was marketing cost per dollar of new logo ARR. So focused on the ultimate outcome metric that investors care about. And then that was tied, number 4, with the demand generation cost per opportunity. So we kind of blended both overall marketing costs and demand gen costs in this one, which I think we need to bifurcate over time. But any takeaways from this one, Dave?

Yeah, I think you need to separate this into 2 questions as you mentioned, which is we should look at demand gen efficiency metrics and overall marketing efficiency metrics. For overall marketing, because otherwise you end up with the permutations in here. And in your permutations, you missed my favorite, which would be pipe to spend. There's also a naming convention thing. But you've got cost per dollar of pipe, which is not the same metric. as pipe to spend. It's the same concept. So, I think we have some cleanup to do in the naming of the metrics. And also, I would just separate overall marketing efficiency where it would be metrics like marketing as a percent of sales, marketing as a percent of new ARR, marketing CAC ratio, ARR per marketing head, right? Those would be kind of overall marketing efficiency metrics. Maybe sales to marketing ratio. And then, we look at the demand gen, which is really looking at pipe to spend, really looking at cost per opti, We're looking at cost per new ARR dollar. We're looking at marketing per new ARR dollar, demand gen per new ARR dollar, etc. So, I'd split this one in 2. It, you know, the report is pretty clear that people are very focused on pipeline, which is a good thing. And almost surprisingly, kind of champing at its heels, nipping at its heels is measuring marketing on ARR, which I think might actually be a bridge too far. But certainly, I'd put it in the CMO's comp plan. But I'm not sure I would make it a marketing efficiency metric. We could drill into that distinction later if you want.

Yeah. You know, Dave, we didn't talk about this in our briefing, but we've got like 3 minutes left. So, I'd love to ask you a question that you're not prepped for. And that is using—

My favorite. I love when you do that, right?

Using benchmarks to help with the marketing planning and budgeting process. Is it something that you would leverage or how should a CMO leverage these?

I mean, look, in any planning process, you're usually trying to converge on some goal, whether it be a CAC ratio of less than 1.5 or whether it be a cost per opportunity of $4,000 and you're currently at 6 or a pipe to spend of 12 when you're currently at 10, right? So, the use of the benchmarks I always call this glide slope planning, Ray, where I say, here's what it was 2 years ago, pipe to spend, we'll pick. Here's what it was last year. Here's what it was in this year's budget. And then, here are the benchmarks. Here's BenchmarkIt's benchmark for pipe to spend. Here's somebody else's benchmark for pipe to spend. They're cut by different things. This is one by growth rate. This one's by size, right? So, I kind of line up a few, 3 ideally, benchmarks out there to say, look, Here's our history. Then, here are a couple benchmarks, not just one. And not just because I'm trying to get away from kind of cherry-picked, which is the board's worry. And then, I would put target. And target is kind of a 3-year target, a long-term target. It's based on our history and based on these benchmarks. And by the way, I'm a big believer in the hidden column. I've got 5 more hidden columns if you want to go there. Hit the plus button. So now, I've got 5 other benchmarks. Based on those 8 benchmarks, right? Here's what we think the target should be for us. And then you want to show convergence to that. And that's a really useful thing in planning to get long-term alignment. Like, you can't get pipe from spend to 8 to 15 over 1 year, right? If you've been historically running at 8, and if you think the benchmark's 15 for companies like you, you're just not going to do it. So, you want to tell the board, hey, our 3-year goal is to get to 15, and this year you can see we're going from 8 to 10. So, so that's how I use benchmarks in planning, Ray.

Okay, well, great. This has been a really fun conversation. For anybody who wants to see the entire report, and once again, lots of credit to Carrie Lou Dietrich, Bill Mositis, John Miller, and by the way, Dave Kellogg did provide some input into the initial questions. So appreciate all that. Go to benchmarkit.ai and just look for the B2B Marketing Benchmarks. Thank you, Dave.

Thanks a lot, Ray. The Metrics Brothers: AI, SaaS, and More is a production of The Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that The Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray, information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of, or God help you, reliance upon the information presented here. Ray Grothreich is based in New York City and available on X @rayreich. Dave Kellogg is based in Silicon Valley and available on X @davekellogg. Kellogg. Schedectity, which is French for unspellable, is not our actual production location. Thanks for listening.