Managing ad spend wisely is one of the most important steps in running a successful campaign. Whether you’re trying to promote a product, reach a niche audience, or build brand awareness, knowing where and how to spend your advertising budget directly affects your results.
In this guide, you’ll learn what ad spend is, why it matters, how to measure it, and how to make every dollar count.
Key Takeaways
- Strategic Budget Allocation: Spread ad spend across platforms based on performance and goals to improve ROI.
- Clear Performance Metrics: Use key metrics like CPM, CPC, CPL, and ROAS to evaluate ad effectiveness.
- Ongoing Optimization: Regularly review campaign data to make real-time budget and targeting adjustments.
- Platform-Specific Focus: Tailor spending strategies to suit the strengths and users of each platform you advertise on.
- Goal Alignment: Keep your ad spend tied directly to business goals to support long-term marketing performance.
What is Advertising Spend?
Advertising spend refers to the total amount a business allocates to run paid campaigns across different platforms. This includes digital channels like social media, search engines, and display networks, as well as traditional options like TV, radio, and print.
Ad spend plays a central role in shaping campaign strategy. It helps marketers reach the right audience, test creative approaches, and generate measurable outcomes.
Digital advertising continues to grow, with global spend expected to increase by 7.9% in 2025—reaching more than $798.7 billion, up from $740.3 billion in 2024.
The size of your budget—and how you manage it—depends on your goals, audience, and how competitive your industry is. To get the best results, advertisers track spend closely and tie it directly to business outcomes like leads, sales, or revenue.
Why Is Ad Spend Important?
Understanding ad spend is important for several reasons. First, it helps advertisers and marketers allocate their budgets effectively across different ad platforms and advertising campaigns.
By knowing how much they are spending on each platform, they can measure ad spend and adjust their strategy to improve the campaign performance.
Another reason why ad spend is important is that it allows businesses to compare their ad costs with the revenue generated from those ads. Retail media experienced a significant 21% year-over-year growth. In 2024, U.S. retail media ad spending is projected to increase by 26%, reaching $54.28 billion. This figure is expected to grow further, hitting $128.87 billion by 2028.
Meanwhile, paid search and paid social advertising also saw year-over-year increases of 6% and 13%, respectively. These trends highlight the growing emphasis on digital platforms in the overall ad spend strategy.
This comparison, often referred to as return on ad spend (ROAS), helps determine if the ad spend is generating a positive return. If the ROAS is high, it indicates that the advertising campaign is successful. If it’s low, it may signal the need for campaign optimization.
Additionally, understanding ad spend is crucial for mobile marketers and those involved in mobile app advertising. With the rise of mobile marketing, knowing how to allocate funds between different ad networks and mobile ad platforms is key to reaching the right audience at the right time. In 2024, mobile ad spending is projected to represent 54.6% of the total advertising spend in Canada, underscoring the growing importance of mobile channels in the overall advertising strategy.
How Is Ad Spend Measured?
Measuring ad spend involves using different metrics to assess the effectiveness of your advertising campaigns. Here are several methods that marketers can use to measure ad spend:
Cost Per Thousand Impressions (CPM)
One common way to measure ad spend is by calculating the cost per thousand impressions (CPM). This metric measures how much it costs to display an ad 1,000 times. Digital video ad spending, a significant part of digital advertising, is projected to exceed $62 billion this year, marking a 16% increase from the previous year, according to IAB predictions.
CPM is particularly useful in digital advertising and search advertising, where the goal is often to reach a large audience at a relatively low cost. By analyzing the CPM, marketers can determine whether their ad placements are cost-effective and make adjustments if necessary.
Cost Per Lead (CPL)
Cost per lead (CPL) is another key metric for measuring ad spend. CPL measures the cost of acquiring a new lead through an advertising campaign. This is especially important in mobile marketing and app download campaigns, where the goal is to drive users to take a specific action, such as signing up or making a purchase.
By tracking the CPL, advertisers can determine how well their ads are performing and whether their ad spend is yielding the desired results.
Return on Ad Spend (ROAS)
Return on ad spend (ROAS) is a critical metric for evaluating the success of an ad campaign. ROAS is calculated by dividing the revenue generated by the ad spend.
A higher ROAS indicates that the ad campaign is successful and that the ad spend is generating a positive return. If the ROAS is low, it may suggest the need for campaign optimization or adjustments to the ad spend strategy.
For example, despite uncertainty in March 2024 due to a potential ban, TikTok’s ad spend still increased by 19% year-over-year, demonstrating the platform’s continued value to advertisers.
Cost Per Click (CPC)
Another way to measure ad spend is through cost per click (CPC). CPC measures the amount advertisers pay each time a user clicks on their ad. This metric is commonly used in search advertising, where ads appear alongside search engine results.
By monitoring the CPC, marketers can assess how well their ads are attracting clicks and whether their ad spend is driving traffic to their website or landing pages.
Attribution Models
Using attribution models is an advanced way to measure ad spend across multiple channels. Attribution models allow marketers to attribute ad spend to the specific touchpoints that led to a conversion.
For example, if a user saw an ad on social media, clicked on a search advertising link, and then made a purchase, the attribution model would help determine how much of the ad spend should be credited to each interaction. This approach provides a more accurate view of how ad spend is contributing to overall campaign performance.
What Is a Good Level of Ad Spend?
Determining a good level of ad spend depends on various factors, including the size of the business, the goals of the advertising campaign, and the target audience. There is no one-size-fits-all answer, but there are some guidelines that marketers can follow to ensure their ad spend is appropriate.
One key consideration is the industry in which the business operates. For example, advertisers in highly competitive industries like technology or e-commerce may need to allocate a higher percentage of their budget to ad spending to stand out. In contrast, businesses in less competitive markets may not need to spend as much.
Another factor to consider is the campaign performance. If a campaign is performing well and generating a high return on ad spend, it may be worth increasing the ad spend to maximize the impact. Conversely, if a campaign is underperforming, it may be necessary to reassess the ad spend and consider campaign optimization.
Businesses should also consider their overall marketing budget when determining their ad spend. A good rule of thumb is to allocate a percentage of the total budget to advertising based on the desired reach and impact. For example, a business might allocate 10-15% of its total budget to ad spend if it’s focused on growth, while a more established company might allocate a smaller percentage.
Questions Marketers Can Use When Determining Their Ad Spend Budget
When setting an ad spend budget, marketers should consider several key factors. Below are some key questions that can guide the decision-making process:
What Are the Goals of the Advertising Campaign?
Understanding the goals of your advertising campaign is critical when determining the ad spend required. Are you looking to increase brand awareness, generate leads, or drive sales? The specific goals will influence how much you should allocate to your ad spend.
Who Is the Target Audience?
Knowing your target audience is key to spending wisely. Understanding where they spend time—on social media, search engines, or mobile apps—lets you focus your budget on the platforms most likely to drive results.
What Is the Expected Return on Ad Spend (ROAS)?
Estimating the potential return on ad spend (ROAS) can help you decide how much to invest in your ad campaign. A high expected ROAS may justify a larger ad spend, while a lower expected ROAS may suggest a more conservative budget.
How Will the Ad Spend Be Tracked and Measured?
It’s important to have a clear plan for tracking and measuring the effectiveness of your ad spend. Consider using tools that provide accurate data on ad costs, campaign performance, and conversions. This will enable you to make informed decisions about where to allocate your ad spend in the future.
What Is the Cost of Advertising on Different Platforms?
Ad platform costs can differ significantly, so it’s important to compare them. Look at CPC, CPM, and CPL to find which platforms offer the best value for reaching your audience.
How Does the Budget Align With Overall Business Goals?
Your ad spend budget should align with your overall business objectives. If your company is in a growth phase, you might allocate more towards ad spend to drive rapid expansion. Conversely, if the focus is on maintaining market position, the ad spend required might be lower, with more emphasis on campaign optimization.
FAQs
How can small businesses maximize their ad spend?
Focus on high-ROI platforms, utilize targeted advertising, and regularly analyze performance to make efficient adjustments.
What tools are recommended for tracking ad spend?
Tools like Google Analytics, Facebook Ads Manager, and specialized platforms such as Camphouse are effective for tracking and managing ad spend.
How often should I review my ad spend?
Regular reviews, such as weekly or monthly, help ensure campaigns are on track and allow for timely budget adjustments.
What are some common mistakes in ad spend allocation?
Overspending on underperforming channels, neglecting to track ROI, and failing to adjust budgets based on campaign performance are typical errors.
Can reallocating ad spend improve campaign performance?
Yes, shifting budgets to higher-performing channels or campaigns can enhance overall effectiveness and maximize returns.
Smarter Ad Spend Starts with a Better Budget
Camphouse makes it easier to plan and track your advertising budget in one place. Allocate spend by campaign, channel, or objective—and see what’s working in real time.
With built-in performance views and flexible budget controls, you’ll stay on top of your spend and make smarter, faster decisions that maximize ROI.
Stop guessing. Start budgeting with Camphouse. Schedule a tour of Camphouse today!
