Setting Marketing Budget Benchmarks for Performance Tracking

Faster growing companies invest more in marketing. 🔥 Every time marketing budgets are up for approval, the dance begins. CMOs scramble for benchmarks to defend their asks, CFOs demand proof of efficiency, and CEOs wonder if they're investing enough to outpace competitors. That’s why I recently worked with Carilu Dietrich, Bill Macaitis, and Ray Rike (Benchmarkit) to survey 300+ marketing leaders to generate 𝐓𝐡𝐞 2025 𝐁2𝐁 𝐌𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠 𝐁𝐞𝐧𝐜𝐡𝐦𝐚𝐫𝐤𝐬 𝐑𝐞𝐩𝐨𝐫𝐭. We found there is a direct correlation between growth rates and marketing budget allocation. In other words, growth and investment in marketing go hand in hand. (Admittedly, it’s not clear which comes first. Does marketing drive growth, or does growth allow for more marketing? Let me know what you think in the comments.) Specifically, companies growing >30% allocate more than 2x to marketing than those growing <10%. Among companies above $50M in revenue, the fastest-growing firms invest nearly 3x more than slower-growth peers! The Benchmark report also has these juicy nuggets: 1️⃣ THE PRODUCT-LED REVOLUTION PLG companies invest more in marketing (13% of revenue vs 9% for sales-led) while allocating more to programs and less to people. 2️⃣ THE METRICS PARADOX Over a third of companies still track MQLs as a top-three metric, while only 15% monitor Marketing CAC ratio. And just 8% measure awareness. This reflects how difficult it is for CMOs to move their organizations beyond the "gumball machine" mentality of marketing — insert budget, collect leads — toward understanding the nuanced, complex way marketing actually works. 3️⃣ THE MARKETING-SALES BUDGET SPLIT Marketing receives approximately 1/3 of the total Sales and Marketing budget, and as deal sizes increase, marketing's slice of the pie shrinks — from 36% at companies with <$10K ACV to just 25% at those with >$250K deals. Why? As sales complexity increases, companies shift investment toward high-touch, relationship-driven sales motions. But this risks underinvesting in marketing's ability to shape buyer preferences before that first sales contact — a period when 80% of buyer decisions are already forming. We’ll be going over all this and so much more at a webinar on March 11th at 1:00 PM ET/10:00 AM PT. (Sign up in the comments.)  We’ll cover: 1) Budget as a percentage of revenue for 2024 and 2025  2) Budget allocation across people, process, technology  3) Budget broken down by the functions within Marketing  4) Performance metrics 5) GTM efficiency metrics 6) Marketing budget setting process  7) Growth Rates by Marketing expenses By the way, there’s also an interactive version of the benchmark where you can get data for companies that match your specific profile! Let me know in the comments if you'd like access! #B2BMarketing #MarketingStrategy #MarketingROI #CMO #GrowthMarketing

Establishing and managing a marketing budget should be mostly science, but there is a lot of art to it. Here’s how I approach it. One of the first things I do is anchor my leadership on a range of what the budget needs to be. I start with the 40% rule - the Marketing budget should be at least 40% of the company’s growth delta. So, if we’re trying to grow by $10m, the marketing budget should be at least $4m. And this is across employees + working dollars. Then, I think about the split between headcount and working dollars. This is pretty subjective but I like to be around 50-60% people, 40-50% working dollars. The people costs include freelancers and agencies. Benchmarks in this area are usually in the 50/50 realm. From there, I take my most important KPIs (usually pipeline), and I do a bottom’s up on what it will take to meet the goal. I like to start with marketing delivering 50% of the pipeline. I use a demand model template that I’ve used for years to back pipeline into # of demos. Then I figure out how much of the budget I need for things like ads, etc. to ensure I hit that demo goal. From a budget management perspective, here are some tips I’ve learned over the years: 1. Really think about tradeoffs you can make and surpluses and overages that can balance out. For example, a lot of areas where you have budget assigned can get delayed: hiring, bringing on an agency, etc. And if you pay someone $240k/year (to keep the math simple), that’s $20k/month you’re not spending if hiring takes longer than planned. Make sure to find those surpluses and use them up in other areas that you may not have planned for or that are going over. 2. Talk to your CFO consistently and make sure you’re on the same page. Make the case that not everything you do in marketing is traceable to revenue. And, ensure they understand that if you can only do things that can be measured against revenue, that you won’t be doing good marketing that actually works. BUT, make sure to tell them that what they will be able to measure directly will more than pay for marketing spend. And build confidence that marketing will become a profit center for the business, not just a cost of doing business. 3. Don’t underspend your budget, especially if you’re not meeting goals. And even if you are meeting goals, spend up to your budget and see if you can surpass those goals. 4. Tin cup. If you don’t have budget for something, but another department is asking for something, ask them if they have some budget to spare. When you’re doing events, get a few partners and charge them a sponsorship fee to cover the expenses. Find ways to find money in other areas of the business. If something is important to another department, they will help you find the money. 5. Generally think about your budget as a guideline not a rule. If things are going well and you're hitting your goals, look for opportunities to ask for more budget during the year. I have more but will save for another post!

B2B marketers often set themselves up for failure by lumping all their marketing efforts into broad, catch-all categories like “Paid Media” or “Marketing.” This kind of generic reporting doesn’t just hurt your ability to optimize, but it can completely sabotage your entire program when it’s time to justify ROI to leadership. At Evron, we’ve seen this play out too many times. A single underperforming initiative can drain ROI from an otherwise successful program. But instead of isolating and fixing the problem, marketers often report everything under one umbrella, leaving decision-makers like the CFO with no choice but to defund the entire initiative. The Problem with “Lumping It All Together” is that you group all your marketing efforts into broad categories, you lose visibility into what’s actually driving ROI and what’s pulling it down. Here’s what happens: ➡️ Good performance gets overshadowed: If LinkedIn Ads are crushing it but Google Ads are burning money, lumping them together means neither gets the attention or budget adjustments they deserve. ➡️ Decisions are based on incomplete data: CFOs see one big underperforming line item and decide to cut everything, even if parts of the program are working well. ➡️ Opportunities to scale are missed: You can’t identify where to double down and scale if you don’t break initiatives down into actionable segments. We at Evron take a completely different approach. Instead of bucketing everything together, we segment marketing programs into individual initiatives. This gives you full visibility into what’s working, what’s not, and how to optimize accordingly. Here’s how we do it: 1️⃣ Segment by Platform and Initiative ✅ Break down your efforts into specific categories like LinkedIn Paid vs. LinkedIn Organic or Google Ads vs. Facebook Ads. ✅ Treat each initiative as its own program with unique benchmarks and goals. 2️⃣ Set Clear Benchmarks for Every Initiative ✅ Define success metrics for each initiative based on its role in your pipeline (e.g., demand creation vs. demand capture). ✅ Track performance independently to identify positive or negative signals. 3️⃣ Communicate Clearly with Leadership ✅ When you can show the CFO or CEO that LinkedIn Ads are delivering strong ROI while Google Ads are underperforming, you’re better positioned to reallocate budget instead of losing it altogether. ✅ This approach gives leadership confidence in your strategy and helps avoid blanket budget cuts that stifle growth. The Result? Smarter Decisions, Better ROI When you segment your marketing programs, you’re not just optimizing campaigns—you’re creating a system that allows you to make data-driven decisions. Instead of “cut everything,” you can say, “Let’s scale back what’s not working and invest more in what is.” Shoot me a DM if you want to learn more of what this looks like!

𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝘀𝗵𝗼𝘂𝗹𝗱 𝗜 𝘀𝗽𝗲𝗻𝗱 𝗼𝗻 𝗺𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴? 𝗜𝘀 𝗺𝘆 𝗯𝘂𝗱𝗴𝗲𝘁 𝘁𝗼𝗼 𝗯𝗶𝗴? 𝗔𝗺 𝗜 𝘀𝗽𝗲𝗻𝗱𝗶𝗻𝗴 𝗲𝗻𝗼𝘂𝗴𝗵? According to ICONIQ, early stage companies at $1M to $25M ARR, spend 30-55% of revenue on marketing. After speaking with a dozen finance and GTM leaders, here are my most important takeaways around marketing budgets and 2025 planning. __________ 𝗙𝗶𝗿𝘀𝘁, 𝘁𝗵𝗲 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀: Early stage companies at $1M to $25M ARR spend 30-55% of revenue on marketing. Marketing budget or "program spend" is typically 50% of this number. Headcount is the other 50%. Thus for an early stage startup, I’d expect the marketing budget to be about 15-25% of revenue. Source: ICONIQ Capital and Carilu Dietrich. __________ However, you can’t talk about marketing budgets without talking about company strategy. 1/ The CEO sets the company strategy, which includes GTM (sales and marketing). Business goals → GTM strategy → Marketing strategy → Marketing programs. 2/ CEOs shouldn’t stretch revenue targets. The revenue plan is not where you coerce your sales leader to do more with less. It’s where you are making a realistic projection on your business. Good CEOs deliver on the plan. 3/ The GTM strategy is constrained by the revenue targets and financial guidelines (CAC ratio, CAC to LTV). The GTM strategy should also align with the product strategy. Good sellers won’t sell what they don’t believe in. 4/ CAC ratio = sales & marketing expense / new revenue. For every dollar you put in, you get X dollars back. For early stage startups, this should be higher, but I’d question the unit economics if this approaches 2.0. CAC ratio gets more efficient over time because marketing investments compound. 5/ The attribution report is not the marketing strategy. X LinkedIn posts per week is not the marketing strategy. The marketing strategy is the set of programs and experiments best positioned to help the company achieve its business goals. 6/ Marketing leaders should define what programs fall under “productive” spend vs strategic spend (CEO pet projects). Rowan Tonkin recommends spending 55%-75% of the budget on revenue producing programs. Agencies and contractors are great for flexing strategic spend. 7/ Each marketing program should have KPIs that are framed in the context of business goals. Not everything is direct response. My recommendation is to hire program experts who understand the business KPIs and not just the metrics of their platform. __________ There isn’t a right/wrong answer for how much you should spend on marketing. Instead, make sure your marketing strategy aligns with the company strategy. Design programs that have the best shot at helping the company achieve its goals.   Thanks to the many VPs in my network who helped with this post. P.S. I highly recommend reading/listening to: Dave Kellogg, Chris Walker, Carilu Dietrich, Peter Mahoney, Rowan Tonkin, OnlyCFO. Good luck.

Stop wasting money on marketing. Here's my GNRT framework to build the perfect marketing budget: 𝗚 = 𝗚𝗼𝗮𝗹𝘀 First, get crystal clear on your goals: • Brand awareness? • Lead generation? • Customer retention? Your spending should directly match your priorities. 𝗡 = 𝗡𝘂𝗺𝗯𝗲𝗿𝘀 Know your numbers before spending a dime: Track Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV). High LTV-to-CAC ratio = More budget Low ratio = Time to optimize 𝗥 = 𝗥𝗮𝘁𝗶𝗼 Here's the magic ratio for your budget: 70% → Proven channels 20% → New experiments 10% → Brand building This balance keeps you growing while managing risk. Most businesses get this backward: They dump 90% into experiments, hoping for quick wins. Smart marketers double down on what works (70%) while still testing new channels (20%). 𝗧 = 𝗧𝗿𝗮𝗰𝗸𝗶𝗻𝗴 Track religiously: Review your results weekly. Cut what's not working fast. Double down on winners immediately. Marketing = investing, not spending. Pro tip: Use seasonality to your advantage Slow season = Perfect for testing Peak season = All-in on proven channels Most miss this opportunity to get ahead. To recap… Remember the GNRT framework: 1. Goals 2. Numbers 3. Ratio 4. Tracking Make your money work for you. — Every business needs a proper marketing budget. If you need help creating yours, feel free to send me a DM. Always happy to help.

I’m surprised by how many CMOs overlook this: Your budget is limited, yet you're wasting a huge portion of it on underperforming channels. If you don’t know where your money is leaking, you are missing out on reallocating spend to campaigns that truly move the needle. Here’s how to fix it: --------------------------------- → 1. Adopt a unified measurement framework Combine Marketing Mix Modeling (MMM), geo-experimentation, and causal attribution to benchmark each channel’s real contribution. This way you know what’s actually working. → 2. Identify which tactics drive real growth (and which are burning cash) At Lifesight, we help marketers work through the complex measurement maze. We guide them to separate incremental revenue drivers from budget drains. → 3. Reallocate spend to maximize ROI Once you spot underperformers, you can redirect those dollars to high-impact channels. And when you cut out the fluff and double down on what truly works, you’ll be amazed at how quickly your returns climb. Bottom line? Every marketing dollar should be focused on what’s genuinely moving the needle. --------------------------------- How are you making the most of your marketing budget?