Total ad spend is the sum of all marketing dollars spent across digital advertising channels.
You always want to keep a pulse on your marketing budget (how much you’re spending on paid marketing efforts at any given time). Tracking metrics such as your total ad spend will help you optimize and plan your future marketing budget as well as understand if you’re getting a return on investment (ROI).
Total ad spend is the sum of all marketing dollars spent across digital advertising channels. These channels include social media platforms, such as TikTok or Meta, Google Ads, etc.
Tracking total ad spend gives you a zoomed-out look at all your marketing channels and how much you’re spending as a whole.
Another advantage to monitoring this marketing metric? It puts other metrics into perspective, such as your return on ad spend (ROAS) and blended customer acquisition cost (CAC).
Once you see how much you’re spending on paid advertising compared with your revenue, you can make adjustments where needed and optimize digital marketing strategies for your ecommerce brand.
Total ad spend = channel A ad spend (A) + channel B ad spend (B) + channel C ad spend (c)
Data sources: Channel A, Channel B, Channel C
Suppose you sell premium chocolates online and run quarterly advertising for your shop across three channels: Snapchat, Facebook, and TikTok. Here’s the breakdown of your spend: (A) Snapchat for $1,000, (B) Facebook for $2,500, and (C) TikTok for $5,000.
The total ad spend for the quarter would be $8,500, which is the sum of (A) $1,000 + (B) $2,500 + (C) $5,000.
Total ad spend is like a s’more.
You start with a graham cracker, then add a marshmallow, and finally a piece of chocolate. When you put it all together, you end up with a delicious treat. You can think of each part of the s’more as a marketing channel.
Understanding total ad spend is essential. It helps you see how much you spend on paid advertising compared to revenue.
Since you want a high ROAS, you’ll want to track how much you’re spending as a whole and then see which marketing channels perform best (and how to leverage these metrics) later.
There’s no one way to budget your ad spend. After all, the costs associated with each marketing channel differ.
Ad spend depends on factors such as category, audience, and even where you are in your business journey—maybe you have a larger budget for paid marketing or maybe you don’t have much. The costs associated with each channel also vary throughout the year, especially when navigating shopping seasons like BFCM.
Bottom line: anything you can set aside at first for an ad budget is a good number. Start there, learn what works and what doesn’t, and then optimize. Nik Sharma recommends starting small and seeing how ad spend reacts.
With Apple’s iOS tracking changes and increased ad costs, brands are testing different channels and finding strategies that work.
Just because it seems like everyone is advertising on Facebook doesn’t mean it makes sense for your audience. On the other hand, maybe Facebook is the best platform for your ad spend, and Snapchat isn’t. You don’t know unless you try, but remember: spend your marketing budget where your audience lives.
How do you get started? First, create a plan. Choose a channel and know how much you want to spend and what you want to test. Then, turn on ads for a channel—TikTok or Meta, for example—and see how it goes with a small budget at first. If you’re a more advanced brand, you might want to hire a paid media expert. Here are a few who might be able to help.
Need help figuring out where to start in terms of your creative? Turn to proven ad formats for your ad campaigns. Watch opening shots, style, and trending content from top brands (Ridge is a great example) to help give you ideas to drive brand awareness. For channels such as Facebook, learn what FB opening hooks catch the viewer’s attention. Don’t expect perfection at first!
You'll find what works as you watch content and test out new ideas.
Limited budget? Make some of your ads yourself, or ask a few friends, to create user-generated content (UGC).
Data gives you insight into what’s working or what needs adjusting. Instead of spreading yourself too thin, start with one channel at first and then expand. Keep an eye on your total ad spend and your ROAS.
Ultimately, omnichannel marketing should be the goal as your audience is on various channels, too, but don’t feel the need to implement an omnichannel strategy right off the bat—especially if you don’t have enough resources for the time being.
Check out this episode of the Purchase Optimized Podcast to learn more about improving your ad strategy and increasing your ROAS.
Total ad spend is just one of many metrics to watch.
In addition to impacting other metrics such as blended CAC, ROAS, cost-per-acquisition (CPA), and cost-per-click (CPC), an increase or decrease in total ad spend impacts your overall brand performance and advertising efforts.
It’s important to note that ad spend is an input to ROAS. If your ROAS is less than 1x, that means you’re spending more than the sales you’re generating from your paid efforts. If your ROAS is greater than 1x, your marketing has paid off.
So, you want to keep an eye on total ad spend as you want to ensure that you’re not spending more than you can handle.