ICONIQ Growth 2024 Marketing Budgets and Productivity Report

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

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

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

And together we are the Metrics Brothers.

And we go together like sales and marketing? Is that like oil and water, Ray? What is it?

No, no, that is a powerful combination, though sometimes it can be a little bit like maybe gasoline and fire. It can be a little contentious sometimes.

Well, that healthy friction can lead to a spark, Ray, if done properly.

Well, let's just hope that spark leads to growth. But, you know, As the sales side of our partnership here, I really always look to understand the current state of marketing and the GTM construct. So I thought discussing the latest Iconiq Growth Marketing and Budgets and Productivity Report would be a good episode.

Yeah, it's a good topic, Gray. This is a good report. Uh, before we dive into it, 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 Cap Kellogg and Ray Growth Wright have put the Metrics Brothers podcast on hiatus for remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave at Kelblog and Ray on. LinkedIn @RayReich. Thank you so much for listening to the Metrics Brothers podcast. Okay, Dave. So the Iconiq Growth Marketing Budgets and Productivity Report was just released in November. So just about 3 weeks ago. And here's what I really liked about the report. So it was 150 go-to-market executives. We don't know whether that was head of sales or head of marketing. They just said go-to-market executives. But they actually captured 104 of those from the 2023 report and resurveyed them in 2024. So there's going to be a lot of these benchmarks where we compare '23 versus '24 with the same population. And so many benchmark reports have different populations. So I really like that, Dave.

Yeah, that's— it's good. This looks like a good report, Ray. You know, 150 answers, which again, we got to be a little careful if we start cutting it too finely. Uh, but, but in general, um, I like this report a lot.

And the distribution also was pretty equally distributed between companies under $25 million, $25 to $100 million, $100 to $250 million, and even over $250 million. So great distribution. So I wanted to go to page 6 first. And page 6, I think the title is all, all about the shifting of go-to-market motion. And specifically, Dave, it shows that the bottoms-up versus top-down and hybrid go-to-market motion— and the bottoms-up, which means here selling to users versus executive economic buyers— it went up 6% year over year. From 6% of people had that motion in 2023, 12% had it in 2024. While at the same time, top-down decreased from, I think it's 46% to 33%. So SaaS companies are trying to be more efficient. And one of the ways they're trying to be more efficient is less friction by selling to the bottoms-up. While at the same time seeing PLG motions increase from 40% last year to 54%. So it tells me that companies are trying to deal with whole higher CAC ratios. that I've seen over the last 2 years by going downmarket and trying to sell to users, not just executives. What do you think?

So I kind of, is my view on this, you have to remember in general, VCs, and Iconiq is a VC, have put pressure on companies to be more bottom-up and more PLG. I think that pressure peaked about 2 years ago, but it still lingers, 'cause I think there was the kind of the great white hope for PLG that it would be, you know, oh, it's gonna reduce CAC and, We could just sell to users directly and then magically we can go in and do an enterprise deal pretty easily. Or maybe, well, actually in PLG version 1, I'm not even sure you needed the magic. They would just buy all the users and then kind of the next iteration of PLG came along as a seeding mechanism for an enterprise deal. So I always taste some lingering hangover from that here. The one that expanded the most, Ray, was hybrid models. It went from 48% to 56%. So I think there's some combination of people trying to appease their VCs to say, yes, we're adding a bottom-up motion, Why? For the reason you stated, to reduce CAT costs. You know, the PLG versus SLG question is a little, again, biased in my mind, 'cause the 2 buckets are not symmetric. It's, do you have any PLG motion? Which to me could be as little as like a product trial. And the other bucket is not, do you have any SLG motion? It's, are you SLG only? Right? So they're not really symmetric. So, and again, I think they're a little bit hearing what they wanna hear, Right, they wanna hear that more people are doing PLG, so let's build this asymmetric question to kind of say, look, everyone's going PLG. It's a little bit cynical of me, and I like product trials, for what it's worth, if your product lends itself to it. But I'm not quite sure, given that the hybrid grows so much, I'm just not quite sure.

The other thing that kind of jumped out at me were field sales went down from 27% to 21%. I've always found when you're doing more missionary or evangelistic sales, especially to an enterprise, let's say it's a new AI tool, that you're going to need a higher-end salesperson to sell that than a lot of inside sales. But that's my own bias, Dave.

Yeah, but once again, we have this hybrid, which is, you know, what does hybrid mean? Is hybrid a rep located in the field who spends a lot of time on the phone but can go see customers? Or is hybrid a rep in a call center who once a month flies out to his territory? I don't know. But again, the big winner there was hybrid went from 16% to 55%. So, I think we're kind of proving the answer that hybrid sales motions are the right way to go. The thing I find most interesting, inside sales about a quarter of the time makes sense. Smaller companies, more transactional product, 100% inbound. And then, look, 100% outbound even doesn't— or not outbound, but field doesn't make total sense to me. And only 21% of the people say they do it. But this hybrid idea of, hey, we'll travel when we need to, that one makes sense.

Totally agree. Now, the next slide that really jumped out at me and I just haven't seen it many times before, Dave. And it's slide number 10 or page 10, and it's marketing OpEx dollars as a percent of revenue, but they segmented it by company size. And I was really shocked at this, but I think it's going to help people who are trying to get more budget next year for smaller companies, that for companies between $1 and $10 million, that 56% of revenue is being allocated to marketing. marketing expense. And then it decreases pretty dramatically at 10 to 25. But I really like the fact that they show this marketing by itself, not sales and marketing combined, and that it's so much higher in the early stages.

Yeah, I like the chart. I think you might be able to back into these, all of these numbers from other benchmarks, right? If you've got sales and marketing as a percent of revenue, which is split by size usually, and if you have one other thing like marketing as a percent of sales and marketing or sales-to-marketing ratio, You can get this number extracted by doing some math, but I think it's great to just show this. I'm not surprised by the results, but I think it's great that they have them.

And then I kind of moved on and I looked at page 11, which was the program versus people spend. And nothing really jumped out at me as surprising here, where program spend based upon company size is anywhere from 54% to 57%. And people cost is 43% to 46%. The thing I'd like to see, Dave, is technology costs, because as companies continue to look for more tools, AI tools, etc., I'm seeing 4% to 10% as a range of technology spend. And I think that's going to— would change this chart here.

Yeah, this is one of the ancient questions of marketing, which is what should be your people programs ratio? And I would dare say as back early as the 1990s, we were talking about it and it was 50/50, right? They're just like the The pipeline coverage ratio was and has always been 3 to 1. The people programs ratio was and has always been 1 to 1, with the exception, Ray, that you make, which is the more modern way of looking at this is people, programs, infrastructure. And in order to preserve that 1 to 1, I think it typically runs 45-45-10 or up to 40-40-20. But the first 2 numbers stay the same. They actually stay 1 to 1. And the technology infrastructure comes off the top. So, it would be nice if they did that.

Yeah, totally agreed. Okay, next page. I love the fact that they said online versus offline on page 12. And as we could expect, right? And I only got 2 years of history here. The online percentage of marketing spend went from 58% to 63%. And then they did it by product category, horizontal SaaS versus vertical SaaS. And it showed that infrastructure was the lowest percent of online, but it was still 57%. And that made sense to me because I think of infrastructure as selling to enterprise IT organizations. And there's going to be a lot more offline and even sales-type approach to that CIO-type buyer in a Fortune 1000.

Yeah, interesting data. I don't have a big take on it. I like when they cut it by channel and particularly when they cut the online channel, the online budget by channel, which they'll do in a minute, which I think we should talk about. Whichever slide you want to hit. I can't remember, is it 13 or 14?

Yeah, in fact, we can go to that next. So, and we'll just start at page 13 real quick where it shows search advertising for— this is now online marketing budget by channel. Search is 38%, social is 26%, display 17%, partners 10%. But honestly, page 14 was more insightful for me, Dave, because it showed 24% over 23%. Where search advertising went down from 41% of online budget to 35%. Social advertising went up from 23% to 27%. Display went down. And I think it's important that we define what each of these are in a minute. But partner online marketing, leveraging partner for top-of-funnel demand gen, went from 7% of online marketing spend to 12%. To me, that shows companies are looking for more efficient, marketing outcomes by going to partner websites, etc.

Yeah, um, I think I like '14 better than '13 as well because it cuts it by year over year. Um, it does online budget by broad channel category, uh, year over year and also by size. So, and you'll see, for example, that search advertising drops from 41% of budget down to 36% as you go from less than 100 to more than 100. Uh, by the way, once both of those average out to around 10% spent on partners, right, 11% for smaller and 9% for bigger. So I do think partners are on the rise. I've always personally, I've always been a fan of partners at the companies I ran. We got 15 to 20% of our pipeline from partners. So you can get a chunk of your pipeline from them. I guess not everybody does it, but it looks like they're starting to. So I like this. And by the way, they actually have a nice glossary of the channel terms in the back. As Ray and I discovered, we had a, like, what if you do a display ad on LinkedIn? What category does that go to conversation? And the answer was, in their definition, it'll go to social. Yeah, it'll go to social. I think they cared about where you ran it, not what it was. So, so the point being, see the glossary if you get confused. They don't have a glossary for everything, but they do for this.

And for those of you following along in the report, the glossary is on page 31. So the next thing they did was they looked at offline marketing budget by channel. And on slide 15, it shows that events is 66%. Sponsorships are 15% and partners 11%. But the more interesting chart is on 16, where they show the year-over-year changes. And for a person who does lots of events, a little discouraging, but events went from 70% to 66%. Sponsorships went down a point. But once again, partner marketing budgets went up from 7% to 13% this year, showing once again that partners and channels are becoming more important To marketers.

Yeah, so let me— I have a totally different take on this slide that doesn't— it's complementary to yours, which is I always like to try to remember benchmarks in my head so I don't have to open reports and meetings. And the way I try to remember all of this is if you look at a typical marketing organization, it is spending 2/3 online, 1/3 offline, right? Grosso modo. And of the offline, events are 2/3, Others, 1/3. So you can just remember 2/3, 1/3, basically, right? Uh, so the program's budget goes 2/3, 1/3, roughly online, offline. When we go to offline, it's 2/3 events, 1/3 other. And online, I don't think we get such a— yeah, you do actually. You could almost say it's 1/3 search advertising and 2/3 other, right?

Yep.

So you can kind of remember this stuff. So when you're in a meeting, right, nobody wants you to open up a file and say, let me figure out, you know, that you want to be able to be fluent in the numbers and People sometimes ask me why I'm so good at this. The answer is I round it all and I try to create memorable things like this new rule we created, the 2/3, 1/3 rule.

I love that. Round it and make the rules. Hey, page 17, you know, this was about percentage of the marketing spend dedicated to agency outsourcing. Wasn't that interesting to me? Even though it's about 1/5, you know, 19, 18%, hasn't changed materially year over year. The only thing that was a little bit interesting was infrastructure, which once again I correlate to more enterprise-class sales. It was our largest sector using agencies at 22%, but nothing really jumped out at me here, Dave.

Yeah, I like slide 18 better, so I'll cut to that. This shows kind of by area what's insourced versus outsourced. I think there's some surprising stuff on this chart, most notably that one-third of companies don't seem to have a PR firm. And I know that's been a trend over time to either insource PR or to de-resource PR. But in any case, that was the biggest surprise to me. Only 2/3 of people either fully outsource or partially outsource PR. And for what it's worth, when I ran marketing teams, I would always start with one in-house resource, then hire an agency, or I might flip that order, but I'd always try to have somebody in-house running the agency and then kind of scale them. But I always wanted a mix. And a lot of it, let's say the majority would go to the agency, not to the in-house.

Yeah.

So, the other things you see there that are heavily insourced, I would say, would be product marketing is heavily insourced. I don't even know how you could outsource it, frankly. So, 90% of people insource product marketing, 80% customer marketing. Interesting because sometimes a PR firm can do that if it's just creating case studies. And then content marketing is actually one of the most— it's the second most outsourced activity where about two-thirds, once again, are outsourcing all or in part content marketing.

Yeah. You know, the one thing that I know we talked about and it jumped out at me was, you know, where is SEO and SEM? And I think we said it's probably somewhere in demand gen or lead gen, but it'd be nice if that was broken out.

Yeah, it would be nice because I think that's usually outsourced, uh, or, or at least hybridized. But, but it's rare to do that 100% in-house. It's just like PR. To me, it should be rare to do it 100% in-house, even though a third of people apparently do.

Okay, next slide. It was my favorite topic, but not my favorite slide. And that's slide 20, where they asked, what are the key metrics by which your marketing team measures impact? And that I'm all about, you know, efficiency and what's the impact of all the marketing dollars spent, things like CAC ratio. But Dave, they used basically a free text response here. And even the highest one, which is conversion rates, and I guess people typed in things like, You know, MQL to SQL win rate, only 21% of companies said through the free text form that conversion rates were a metric being used to measure impact. What say you?

Yeah, if we wanted to have a SaaS metrics 3-star wizard test, I would show people this slide and say, what's wrong? And of course, of course, Ray is a 3-star wizard, so he passed that test. And Ray said, how can only 21% of people be using conversion rates? And that's a, yeah, I think 80, 90, maybe 100 use conversion rates of some sort, but a number like 20 is a giant red flag. And then if you're a good 3-star wizard, you say, okay, what are we looking at here again? What are they counting? And you'll see it says percent of companies by mention in free text response. So they literally, as far as we can tell, and this is another argument for people who run surveys, Ray, to release the survey instrument. But I'm thinking they said, They put a question in the instrument that said, what are key metrics by which your marketing team measures impact? And they gave you an open text box to type. And somehow I think there's been a lot of information loss in their kind of text extracting the contents of that box. So this slide, in the interest of time, it's worth looking at. I think it gets the right answer grosso modo. Like the ranking is not bad. Hey, the conversion rates is the most popular. Unit economics are the second most popular. Lead volume is the third most popular. Probably shouldn't be. to be honest, but I believe it, right? Because, because in the end, the only purpose of a lead is generate pipe or opportunities. I don't even see opportunity count anywhere. Oh no, they put opportunities under pipe. So, so lead volume is questionable. But, but again, I'm not doubting the survey because I think the problem isn't the survey got it wrong. The problem is too many marketers count leads as the primary metric, right? Because the question was, what are the key metrics? And that word's doing a lot of work, right? If you wanted to make a better question, you might have said, what are your top 3? Or even the best question would be to List a list of metrics and either rank them or categorize them, right? Use it as a primary metric, use it somewhere, don't use it, right? That would be nice for a long list of metrics, but they didn't do that. Then they go down to bookings and revenue, which is like, it's not a key metric for marketing. It's key, but it's not a key marketing metric, right? I mean, so, so now we're back to the, what does the word key mean, um, et cetera, et cetera. So roughly speaking, I think the order's correct, but as Ray talked about, the data's kind of suspect.

So, and then they went from conversion rate to top, still only at 21%, but they showed some conversion rates from, you know, new leads all the way to closed won. Dave, I'd like for you to take the lead on this one because you had some good perspectives when we were talking about this.

Yeah, this is slide 21, and it's trying to do benchmark conversion rates, which are a little bit hard to come by. I've seen them before, but you don't find them everywhere. Uh, they're comparing '23 to '24, and they're looking at companies below $100 million and above $100 million. And the good news, per my rules of thumb, is that below $100 million in 2024, it is roughly a third, a third, a third, i.e., a third of new leads convert to MQLs. That's the first bucket. A third of MQLs make it to SQLs, which is the second bucket. A third of SQLs get won. So, if you're just trying to remember the benchmark, we're back to the rule of thirds.

Yeah.

For 2024, sub-$100 million. For above $100 million, all those thirds drop to quarters. So it's, it's instead of roughly a third or third or third, it's actually bang on the money exactly 25%, 25%, 25%. So if you're trying to remember benchmarks, that's good. They also look at demo to close rate. Look, I have a blog post called Demo Is Not a Sales Cycle Stage because it's not, right? But everybody treats it like one. And people do measure demo to close rate, which I accept, even though demo's not a sales cycle stage in my mind. Like, anyway, we can talk about that. Maybe we'll do a separate episode on that, right? But their demo win rate is 40% regardless. So if you wanna remember, below $100 million, it's a third, a third, a third, 40%. Above $100 million, it's a third, a third, a third, 40%. Now let's just talk about those numbers. I think the SQL to close rate is high. I think 15 to 25% is a more typical average. I've seen as low as 5. I've seen as high as 40, so I don't think they're radically off. I think the MQL to SQL also disturbs me. So I don't have those figures handy, but I usually, I think I see that one lower, like a lot lower, but I don't have the benchmark in my head, Ray. So rather than me guess, I'll just tell you, this is what they found. And the one I'm sure where I have an opinion is SQL to close rate, and theirs seem high.

Well, I have another strong opinion. By the way, the MQL to SQL and the benchmarking research we did with Lean Data at Benchmarkit, it was closer to about 18 to 20%.

By the way, I'm going to slap these guys with a ruler. They call SQL to close rate the win rate, which is a massive problem because, right, because what they're saying is, uh, if you make 100 SQLs, how many of them close? Usually that means in the fullness of time Right. Which makes it a cohort-based metric. And most people use win rate as a milestone-based metric, i.e., they say this quarter, how many deals we win, how many deals we lose, what's our win rate, right? And I, again, I have a blog post on this, which is called Your Pipeline Target Coverage Should Not Be the Inverse of Your Win Rate. It should be the inverse of your close rate. Uh, and there is a difference between the two. So there's some sloppiness here that they're perpetuating. Make sure you understand that blog post and reach out to us online if you don't, because this is a common mistake and they're making it.

We also did, we did a SaaS Talk episode on this about 3 months ago, that win rate is not the inverse. So we got 2 great pieces of content. Good for us. Okay, let's move to the next one. I always like to look on page 22, by the way. I love to look at cost per opportunity, but I like to look at cost per opportunity in context of my ACV? And I think you have an even maybe better perspective on that, Dave.

Yeah, I mean, the fundamental rule is what you pay for something should be a function of what it's worth. So the best way to look at cost per opti is relative to how big the optis are when they close, i.e., average contract value. So that one's covered. In the interest of time here, Ray, so this data is marginally useful. I wish they'd cut it the other way on slide 22. Let's skip 23, but let's wrap up where you think with 24 and 25. And maybe you want to hit those?

No. Why don't we do— why don't you do me a favor? Because 24, it jumped out at me that sales was generating a lot higher percentage of pipeline than I thought. But then we talked about, well, sales development must be hidden in there and marketing seemed very low. So that was my bottom takeaway from slide 24.

Yeah. Slide 24 for the audience is percent of pipeline generated by different teams. And for example, they don't give you an average across all companies, but I'll just pick the $25 to $99 million bucket. It says 52% comes from sales, 33% from marketing, 14% from customer success, 1% from other. The problems Ray and I both had looked at that is like, wow, sales is really big. If sales means AE outbound, it's 2 to 3 times too high. We think sales includes SDR inbound and SDR outbound. So that includes that. Marketing at a third is a little light. I personally like it better at two-thirds. I think Ray benchmarks it around 40 to 50%. I think roughly customer success being in the mix suggests this is both new and expansion pipeline, neither of which like that. We think if you're benchmarking pipeline, you should separate new from expansion because they behave super differently, right? Expansion pipeline might close at a 60% ratio, whereas new pipeline might close at a 20% ratio.

Exactly. And then, you know, in the interest of time, page 25. This is one of the favorite things I like to look at is pipeline by inbound versus outbound. Inbound highly correlated to marketing investment, right? And here we get closer to 50%. You know, $150 to $250 million was down at 37%. But what I really like to see here was by ACV on the right-hand side of this chart, we're over at $200K. So truly an enterprise, that's 61% of that still from outbound and only 39% was from inbound.

Yeah, the bigger the deals, the more you get from outbound. That's a good rule of thumb. And conversely, uh, to wrap this up here, Ray, I'm going to hit 26. They talk about published pipeline coverage here. They've made a mistake in the slide title or the chart title. They say pipeline coverage ratio, parentheses, unweighted pipeline per AE. Well, pipeline's measured in dollars, AE is measured in count. So the result of that is not a coverage ratio, it's just pipeline per rep. And that's what they're showing. They're actually showing a coverage ratio. So the title is correct, if you will, but the parenthetic comment is wrong. And the other thing that I don't love about this is they're not saying over what time period. Right? They're just saying, hey, people below $100 million and above $25 million have a 3.9x pipeline coverage. But pipeline coverage is not a per rep metric. You can measure it per rep. But when I say, what's your pipeline coverage? I'm asking you for this quarter, comma, usually, what is your pipeline of this quarter opportunities, uh, divided by your sales target? And it's, it's just not a per AE number. We can go look at Joe's Uh, coverage and say, okay, what's Joe's target? What's Joe's pipeline? But, but inherently it's not a per rep. And somebody else, maybe they've done this before, but somebody else has been doing this. It's driving me nuts.

And the thing that jumped out at me was, you know, we always used to say, hey, 3x pipeline coverage ratio is pretty good. But it shows here by growth rate, those companies are growing over 50%, their pipeline coverage ratio they say is 4.2x versus those growing less than 20% was 3.5. There's other variables that can impact that, but I got to go find out more about that 4.2x leading to a higher growth rate, Dave, because it was counterintuitive to me.

Yeah, no, it actually makes sense to me, which is if you're going to grow faster, I think you're investing more in building pipelines, so you'll have more pipeline around, particularly if that's not current quarter pipeline, Ray. If that's rolling 12 months forward pipeline, it better be bigger because you're growing faster. So again, not knowing what pipeline they're looking at makes it hard to interpret that. The other thing I'd say on this slide for the marketers out there is this represents the ongoing trend of kind of pushing the growth monkey onto marketing's back. The old rule of thumb for decades was pipeline should be 3x, and now it's 4x. Now here, marketing is only owning a third of the pipeline, so it's sales's problem too. But, but the more marketing owns a high percentage of the pipeline and the more we want 4x coverage, not 3x, we're actually kind of pushing the monkey onto somebody else's back to get that coverage. And if we're trying to change our business model, that's great. If it's just that CMOs aren't good negotiators, it's not good at all. And we need to go to the CFO and try and explain, has anything actually changed in our business such that we need these ratios? Why are these numbers changing other than me getting outwitted by the CRO?

Exactly. Well, we have so much to cover here, Dave. I think we need to wrap up. But, you know, for those of you who are listening, the Iconiq Growth Marketing Budgets and Productivity Report I think it's well worth downloading it and take a look at it.

Thanks, everybody. See ya.

Thanks, Dave.

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 Kellogg. Schedectity, which is French for unspellable, is not our actual production location. Thanks for listing.