The typical business spends 10.8 percent of its budget on marketing and advertising, according to the The CMO Survey from Deloitte, a 2018 survey of nearly 3,000 marketers. Chances are, this is one of your largest business expenses. But unlike other expenses like payroll and rent, which often need to be covered with cash, you can pay for business advertising with a credit card—and earn rewards. Here's how to make sure your business credit card is properly rewarding you for this advertising spend.
Different Cards, Different Rewards
To attract new customers, most business credit cards offer some sort of reward program. Some of the possibilities include:
- Cash back. For each purchase, you get a small percentage of money back.
- Travel. Your purchases can help you earn flights, hotels, rental cars and even fund your next company retreat.
- Merchandise and gift cards. Your points can be swapped for products or gift cards at participating retailers.
As long as you pay off your card balance in full each month, you won't owe any interest.
Earning Rewards for Business Advertising
Each business credit card with rewards has a different setup for how you qualify. Some offer a flat rate for everything, like 2% cash back on every single purchase. Others earn a higher reward rate for different categories. For example, a card may earn one reward point on most spending but more points when you spend on, say, travel. Advertising is one category that can earn a higher reward rate with certain business credit cards.
Some cards are more flexible and automatically adjust the bonus category based on your spending. They'll look at where you spent the most money and that's where you get the highest reward rate. For example, it could be advertising in June, travel in July and office supplies in August.
The Benefits of the Right Card
If the thought of doing a side-by-side comparison of every credit card out there has your eyes glazing over, I don't blame you. But finding a program that even gives you a small boost in your reward rate can make a big difference for your bottom line.
For example, let's say a company has a $5 million annual budget and spends 10% on marketing and advertising, slightly less than the average cited in the Deloitte survey. This means the company spends $500,000 a year on advertising. Let's look at three ways they could handle these expenses:
- Pay by cash = nothing in rewards
- Pay with a business credit card with a flat 2% reward rate = $10,000 in cash back.
- Pay with a business credit card with a special 3% bonus rate for advertising = $15,000 in cash back.
As you can see, finding the right business credit card can mean thousands of dollars in extra rewards for your business. That research might pay off after all.
Look for Possible Rewards Restrictions
Before signing up for a business credit card with rewards, check the fine print for how they define advertising. They may restrict it only to certain types of business advertising, like print, radio and television. Or they may limit it to certain markets, like only ads in the United States.
When it comes to rewards cards, you have plenty of options, but the key is to take advantage of the ones that make the most sense for your business, especially if advertising makes up a large part of your budget.
In particular, see whether a card includes digital advertising—including social-media ads and paid search-engine traffic—since this kind of spend is increasingly important. The CMO Survey found that while businesses still spend more on traditional advertising versus digital ads, within five years the roles are expected to reverse and businesses may be spending more on digital marketing.
If you're unsure about whether your advertising spend will qualify for the higher bonus rate, you could make a test purchase on a new card and see how many points you earn on your account statement. That way you can see which purchases earn the regular rate versus the bonus rate for advertising. Or you could call the card's customer service line for clarification. Just don't assume that all your advertising spending will qualify because there can be restrictions.
Picking the Right Card
As you research a business credit card with rewards, consider these factors as part of your decision:
- Type of reward. Cash back is the simplest because you can do anything with the money, but other rewards like travel can earn a higher return per dollar spent, provided your business can put those rewards to good use.
- 0% introductory period. If your business is starting out or needs help with cash flow, consider a card with a 0% introductory period. During this time, you can carry a balance and won't owe any interest, so it acts as an interest-free loan for your advertising and other expenses.
- Annual limit for bonus rewards. When cards offer a higher reward rate for advertising, they may cap the amount per year that qualifies, like only the first $50,000 of advertising spending, for example. Compare these limits against your projected advertising budget.
- Annual fees. Business credit cards can charge an annual fee, especially those with more generous reward programs. Weigh this against your potential rewards for the year. If you sign up for a card with a high annual fee, make sure you're spending enough to balance out the annual fee.
Finally, remember that you can take out more than one business credit card. Maybe one program works best for all your business advertising spending, while you use another to cover other business expenses such as office supplies and travel.
When it comes to rewards cards, you have plenty of options, but the key is to take advantage of the ones that make the most sense for your business, especially if advertising makes up a large part of your budget. Ask the right questions, make a checklist of what you need and you could see a boost in your bottom line.
Photo: Getty Images