What is ad spend?
Ad spend is the cost of acquiring users using paid advertising sources. It’s the amount of money an app’s marketing team spends on digital advertising and traditional advertising campaigns. The more all-encompassing definition of advertising spend is advertising cost, which includes associated costs such as ad agency retainers or copywriter fees.
How is ad spend calculated?
The calculation for ad spend varies, depending on which payment mechanics are chosen. In short, advertising spend can be measured using different cost models like:
- Cost per mille (CPM)
- Cost per click (CPC)
- Cost per install (CPI)
- Cost per action (CPA)
- Cost per lead (CPL)
- Cost per sale (CPS)
- Cost per engagement (CPE)
The chosen model(s) will depend on the goal of the campaign and the advertising platform. Regardless of the model applied, ad spend is a sum of the dollars spent. However, when using a combination of models, equating value across discrepant methods of measurement (applied by advertising platforms) can be tricky for marketers. This is where mobile measurement partners (MMPs) come in – more on this later.
What is a good level of ad spend?
Naturally, it is common for marketers to aim to keep ad costs low. However, when targeting high-value customers who are likely to spend more on in-app purchases, a higher acquisition cost is reasonable. “Good” ad spend simply means efficient ad spend. A certain level of ad spend will not reliably provide an exact level of return.
This is why across all models, return on ad spend (ROAS) is much more important to measure. To get the best ROAS, advertisers need a clear understanding of how they will measure the success and ad spend of each campaign.
Before launching a campaign, marketers should start by asking themselves:
- What is this campaign’s budget?
- Which regions, countries, and/or cities are the most relevant to target?
- What should the pace of the campaign be? Should any daily caps be in place to ensure the spend is even per day or users are not becoming overexposed to your ad?
- What ad sizes and types should be used?
- Is the creative concept relevant to the target audience?
- Is the overall campaign competitive in the relevant markets?
How to reduce ad spend with Adjust
While a campaign is running, it’s time to monitor campaign performance to make optimizations that will improve your ad spend’s efficiency. Among the many reasons app developers and marketers need an MMP, a partner like Adjust is the most reliable way to get clean, clear results in real-time to facilitate advantageous optimizations and confident allocation of budget.
Adjust provides marketers with a specific “ad spend” tab, detailing total ad spend as well as a breakdown by network. The ad spend dashboard can be filtered by impressions, CTR, clicks, installs, and reinstalls. Further, with Adjust’s Datascape you can identify your most cost-effective channels and make fast, informed decisions to prioritize the highest-performing campaigns and drive ROI. Learn more about how Adjust can help you measure ad spend, campaign performance, and advertising effectiveness to maximize your advertising budget.