What is Marketing Expense?

Marketing expense is comprised of those costs incurred to present an organization's goods and services to prospective customers. Examples of costs that are classified as marketing expenses are:

Advertising
Agency fees
Customer surveys
Development of advertising and other promotions
Gifts to customers
Online advertising
Printed materials and displays
Social media monitoring and participation
Sponsorships

Accounting for Marketing Expenditures

Most marketing expenses are charged to expense in the period incurred, though some printed materials and advertising costs can be treated as prepaid expenses. In the latter case, these costs are initially recorded as an asset, and then charged to expense as they are consumed.

Presentation of Marketing Expense

The total of all marketing expenses incurred is usually presented within the operations section of the income statement as a single line item. It may also be combined with selling expenses into a single line item. The latter scenario is highlighted in the following exhibit, which contains a summary-level income statement.