Ad spend
Ad spend is the total amount of money spent on advertising campaigns. Ad spend may indicate the simple cost invested in ads, or it may encompass extraneous costs from ad expenses, ad networks, etc.
How is ad spend measured?
In marketing, ad spend can be calculated using a variety of methods, depending on the goals of the advertising campaign and the ad platform used.
Below are the most common cost models used:
- CPA: Cost per action
- CPE: Cost per engagement
- CPC: Cost per click
- CPM: Cost per mille
- CPS: Cost per sale
- CPI: Cost per install
- CPL: Cost per lead
Marketers can also choose to work with one or multiple models based on their needs and whether the aggregate cost would demonstrate a more precise metric of their marketing spend. Although arranging all the costs together can be a bit tricky for marketers, this happens more than often as ad platforms operate under a range of different measurement techniques and systems. While the model(s) used may vary, piecing together all the revenue data helps marketers get a grasp of how to improve future spends.
Why is ad spend important?
Ad spend is essential for measuring your return on ad spend (ROAS) and making informed decisions to optimize future marketing plans. Keeping track of how your costs are being allocated and whether your spends are receiving worthwhile returns is important in determining the most profitable actions for your business. Based on the ad spend data, marketers can improve on factors such as choosing ad platforms, targeting criteria, and ad creatives to eventually receive a higher level of ROAS and return on investment (ROI).