Advertising Costs

Date created: Mar 27, 2019  •   Last updated: Dec 2, 2020

What is Advertising Costs?

Advertising Costs is a broad expense category, which typically includes online, broadcast, print, outdoor, and direct mail efforts. Advertising can be used at various stages of the customer journey, from brand awareness and brand shaping, to highly targeted campaigns that are meant to engage existing customers.

Alternate names: Ad Spend, Advertising Expenses

Advertising Costs Formula

ƒ Sum(Advertising Costs)

How to calculate Advertising Costs

A company spends $15,000 on print and outdoor promotions, $50,000 on online search and display campaigns, and an additional $5,000 on marketplace listings each month. Total Advertising Costs each month are $70,000.

Advertising Costs

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What is a good Advertising Costs benchmark?

According to a 2019 survey of 1,500 Canadian businesses by BDC, the average advertising cost for a small business is $30,000 - between 2% to 5% of revenue for a B2B and 5% to 10% of revenue for a B2C. This number doubles, and even triples, proportional to an increase in revenue.

More about Advertising Costs

Advertising Costs refers to the total cost of all forms of advertising, typically including online, broadcast, print, outdoor, and direct mail efforts. These expenses are usually reported under sales, general, and administrative expenses (SG&A) on an income statement.

Advertising can be used at various stages of the customer journey, from brand awareness and brand shaping, to highly targeted campaigns that are meant to engage existing customers. Depending on the size of the business, the industry, and the customer segments, Advertising Costs vary as a percentage of the company’s revenue. Generally, a B2C business will spend more on advertising than B2B businesses because of the wide range of target customer segments. Similarly, a company in the initial stages will incur higher expenses for advertising than a more established company.