SaaS Marketing Spend

Goals

Provide an estimate for the total global marketing spend among software as a service companies for each year in the last three years.

Early Findings

Average Marketing Budget of SaaS Companies

  • During the first three years of business, SaaS companies report spending between 80% and 120% of their revenue on sales and marketing. After five years in business, this amount decreases to around 50% of revenue on sales and marketing.
  • According to a global survey, SaaS companies with less than $1 million in ARR spent on average 30% of their ARR on sales and marketing in 2018. For SaaS companies with an ARR of more than $50 million spent around 38% of their ARR on sales and marketing. The highest S&M spend as a percentage of ARR was for SaaS companies with ARR of $20-50M, who spent 42% of ARR on S&M.
  • The average SaaS spends 30% of their sales and marketing budget specifically on marketing, although for companies with internet-driven sales as their primary mode of sales the marketing spend is almost double that.

Company Specific Marketing Spend

  • Salesforce spent 49% of their revenue on sales and marketing in 2016, which equated to $3.2 billion.
  • In 2016, Tableau Software spent 57.6% of their revenue on sales and marketing, around $476.5 million. This was an increase from 2015, where they spent 54.6% and from 2014, where they spent 52.5%.
  • Microsoft, the leading SaaS company, spent $17.47 billion on sales and marketing in 2018, $15.54 billion in 2017, and $14.7 billion in 2016.
  • Atlassian spent much less on sales and marketing than other SaaS companies, spending only 20.4% ($94.4 million) of their revenue on sales and marketing in 2016.
  • Marketo spent 67% of their budget on marketing and sales incentives in 2015.

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