What is ad spend?

Within the context of mobile app advertising, ad spend refers to the cost of acquiring users via paid campaigns and sources. Learn how it’s calculated, how to make the most of your spend, how it differs from ROAS, and how to measure results.

Glossary What is ad spend?

Ad spend is the amount of money an app’s marketing team spends on digital advertising and traditional advertising campaigns. In short, it’s how much money is being spent on advertising. This can be measured per campaign, channel, platform, over a certain time period, and so on. A more granular examination of advertising costs generally includes agencies, personnel, and fees, but most simply, measurement of the cost of ad placements themselves is ad spend.

How is ad spend calculated?

Ad spend is the exact amount of money spent on advertising. The way ads are priced differs by platform and depends on the cost model. Advertising spend can be measured using different cost models, including:

Cost per mille (CPM): The cost of every 1,000 impressions on an ad.
Cost per click (CPC): The cost of each individual click on an ad.
Cost per install (CPI): The cost of each individual, completed install of an app.
Cost per action (CPA): The cost of a specific action taken by a user as defined by the advertiser. This could be, for example, a specific in-app event or an item purchase.
Cost per lead (CPL): The amount of ad spend required per lead (a potential user)
Cost per sale (CPS): The amount of ad spend invested for each sale/purchase completed by a user.
Cost per engagement (CPE): The cost of each individual engagement with an ad.

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 applied by different ad networks—which also use different terminology and schemas—can make performing cost aggregation on fragmented ad spend data complex. This is where mobile measurement partners (MMPs) come in.

Ad spend vs. return on ad spend (ROAS)

Naturally, it is common for marketers—or anyone spending on advertising—to aim to keep ad costs as low as possible. However, when targeting high-value customers who are likely to spend more on in-app purchases, a higher acquisition cost is reasonable. Often, high volume is required for impact. “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 an incredibly important metric 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. Analysis of ad spend and ROAS will empower marketers with the insights needed on which campaigns, creatives, channels, platforms, and more, are driving the best return on their investment (ROI).

Successfully calculating ad spend is essential to accurately measuring ROAS, as the ROAS formula foundationally requires ad spend: ROAS = revenue attributable to ads / ad spend

Before launching a campaign and investing ad spend, marketers should always have these points top of mind:

Ad spend is the sum of money spent (or to be spent) on a specific campaign.
Ad spend does not include all costs, it is only the literal spend itself.
Measuring and optimizing ad spend has become more complex due to privacy restrictions—having a robust SKAdNetwork (SKAN) measurement solution is essential for successful iOS ad spend attribution.
Cost models will diverge across networks and channels, making cost aggregation and essential part of ad spend management and measurement.
All mobile marketers should work with analytics and measurement tools that enable transparent and unbiased visibility into their relevant cost metrics.
ROAS and ROI cannot be measured without accurate ad spend data.

How to effectively measure and manage ad spend with Adjust

Monitoring the performance of campaigns is essential to decision making around allocation of budget and, ultimately, ad spend. Adjust’s Analyze allows marketers to connect the dots on all monetary metrics in real-time, with accurate data and a holistic view of spend, complete with cross-network reporting.

With unified spend, purchase, and revenue reporting (cost aggregation) in Datascape, it’s easy to uncover the highest performing channels and optimize for improved ROAS.

It’s also essential to continue effective budget allocation and ad spend measurement within the context of privacy-centric frameworks that make data collection complex, like Apple’s SKAN or Google’s Privacy Sandbox on Android. By working with an MMP that offers next-gen tools that can extract insights from aggregated data sets, your campaign optimization potential and visibility into ad spend remains future-proofed and compliant.

Learn more about how Adjust can help you measure and attribute ad spend and campaign performance across all channels and frameworks—request a demo today.