Ecommerce adspend, an essential part of ecommerce accounting, refers to the money spent specifically on advertising to drive traffic and generate sales for an online store. This includes expenditures on paid search ads, social media campaigns, display advertising, and influencer collaborations. Ecommerce businesses often allocate a significant portion of their budget to adspend, as it’s vital for visibility and reaching new customers. However, ecommerce brands must be strategic about how they distribute their ad budget across different platforms to maximize ROI and decrease marketing costs.
Tracking ecommerce adspend, both variable and fixed, is crucial for measuring the performance of marketing campaigns and understanding how much money is needed to acquire new customers. In addition to tracking adspend, ecommerce brands should monitor related metrics like Customer Acquisition Cost (CAC) and Return on Ad Spend (ROAS) to ensure their advertising efforts are cost-effective. By continuously analyzing the results of adspend, businesses can optimize their marketing strategies, cut wasteful spending, and ultimately grow their customer base.
By subtracting variable adspend from gross profit, you will be able to see what your ecommerce contribution profit is.
Read our in-depth article about ecommerce adspend.