Media Ad Allowable is a dollar amount determined to be the maximum media expense that can be spent to sell a unit and exactly breakeven. In other words, the gross profit per unit, less direct selling/fulfillment costs is equal to the media cost.
If a company was to spend more per unit than their media ad allowable, the media buy would not be profitable. If a company was to spend less on media than their media ad allowable, they might be missing out on opportunities to further reach new customers.
By properly determining the media ad allowable, companies can know how much media can be spent to remain profitable as well as acquire new customers profitably.
