Examples of Advertising Expenditures

by Sam Ashe-Edmunds, Demand Media
Include the cost of ad creation and media buys in your budget.


sale advertising image by Alex White from Fotolia.com

In addition to media buys, such as radio and TV spots, display ads in magazines and newspapers and banner ads on websites, your advertising budget should include other expenses. These can include the cost of copywriting, graphic design, commissions, lead generation and broadcast production. An accurate advertising budget includes production, overhead, media buys and commissions.

Media Buys

The most obvious advertising expenditure is the cost of placing an ad. Media choices include newspapers, magazines, local shoppers, TV and radio station spots, websites and billboards. With some media buys, you pay for the number of times the ad appears, while other media buys cost you based on the response you get. For example, if a TV station runs an ad for your product or service and includes a toll-free number, the calls go to the TV station or a third party, and you pay a set fee for each call or sale.


Before you can place an ad, you'll need to produce it. Some media outlets include the cost of producing an ad if you buy a set number of ads and create your ad for you. With other media outlets, you'll need to give them a finished ad. Production costs include copywriting, video shoots, post-production editing, layout and design. If you have an in-house staff for this, you can apportion their hours to each ad or campaign to track the expense of each advertising effort you undertake.


With some advertising campaigns, you pay for each lead you get from your advertising. Google's AdWords program is an example of Internet pay-per-click advertising. You choose keywords that the people would use to search for products or services like yours. Website owners then place your ads on their websites, where people who use these keywords may find their pages and click on your ads. You only pay when website visitors click on these ads, often coming to your website. The aforementioned TV spots that generate call-ins are another example of lead generation.


If you use an advertising agency to create and execute your campaign, you may pay them a fixed fee or a commission based on how much you spend buying media. The traditional formula is 15 percent of your media buy. For example, an agency will create a message, produce your ads, recommend specific media outlets and arrange for the ad buys. If you spend $100,000 on media, you pay the agency $15,000. Quite often, media outlets will offer a 15 percent discount on ads placed by an agency. This results in your paying only $100,000 for your media buy, with the agency receiving 15 percent of your $100,000 from the media outlet. If you do enough advertising and have in-house staff, you can create an in-house agency to earn a 15 percent discount. Your $100,000 media buy would then cost you only $85,000.

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