Varos Glossary

Total Ad Spend

Your organization's total ad spend is exactly what it sounds like — the sum total of how much money you've spent across all advertising channels. These channels include, but are not limited to Snapchat, Facebook, TikTok, Meta, and Google Ads. If your organization is not engaged in any paid advertising, this metric is not especially relevant. 

Why You Need to Know Your Total Ad Spend

Tracking your eCommerce brand's total ad spend is important for several reasons.  

  1. It will allow you to determine the return on investment for your digital advertising efforts. 
  2. It will help you identify and eliminate potential bottlenecks or shortcomings in your ads. 
  3. It can help you contextualize other metrics such as customer acquisition cost (CAC). 
  4. It can help guide your overall marketing roadmap and strategy. 
  5. It allows you to visualize your overall advertising budget. 

How to Calculate Your Total Ad Spend

Caption: Varos makes it easy to track your ad spend across multiple channels. 

Calculating total ad spend is simple. All you need to do is add up spending for each of your marketing channels over a given period of time. Let's say, for instance, pay for ads on both Google and Facebook. 

All you need to do is look at the dashboard for each platform, and you should be able to find and tally up the numbers. 

How Much Should You Spend on Advertising? 

Depending on who you ask, your marketing budget should represent between 2 and 10 percent of your total revenue. As for how much of that should go towards advertising? There's really no universal golden number. 

There are many variables which directly impact how much you should spend on ads:  

  • Your total marketing budget. 
  • Your core audience. 
  • The time of year. 
  • Your primary region or regions. 
  • Channels on which your customers and competitors are active. 
  • Your specific eCommerce niche. 

For an organization that exclusively focuses on Facebook ads, total spending will be different than for a business that targets both Google's paid advertising alongside TikTok ads. You need to carefully consider your own circumstances before you start spending

It's also important to understand that with paid advertising, how much you spend matters much less than how you spend. You cannot simply throw money at your ad campaigns and not bother monitoring and optimizing.

You need to approach this strategically. 

How to Optimize Your Total Advertising Spending

Caption: In addition to tracking ad spending, Varos can help contextualize your data with a range of other metrics and benchmarks. 

To optimize your total ad spend: 

  1. Ensure your marketing and advertising strategies have clearly-defined goals, and that these goals align with your organizational objectives. 
  2. Understand your eCommerce store's core audience. Where do they congregate? What platforms do they use? What do they care about, and what are they looking for? 
  3. Consider tracking total ad spend growth over a period of time. Measure it against metrics such as revenue, average order value, and new customer acquisition.
  4. For each new ad, test and deploy multiple variations, monitoring how each one performs. 
  5. Treat advertising as both an essential part of your sales funnel and an ongoing process. Like it or not, it is. 
  6. Acknowledge and understand the importance of quality and your marketing. Know that if your ads are of poor quality or don't resonate with your audience, you are likely wasting money.