The Ad Tech industry and R&D Tax Credits

Brady Bryan, CEO

What is advertising technology (“Ad Tech”)? According to the digital marketing glossary, ad tech is defined as follows, “Advertising technology, aka ad tech, commonly refers to all technical or software solutions and services used for delivering, displaying, targeting and controlling online ads.” 

The ad tech industry is one of the fastest-growing industries in the world and demands cat-like agility from those service companies within it. While retailers and others on the Internet are trying to increase sales, ad tech companies are facilitating that experience. But this is far from a static industry. When Google or another engine makes minor (or major) changes, ad tech companies must react. When changes are more severe, reaction is not enough and ad tech companies must be proactive, look into the “crystal ball” and plan accordingly.

A lot of ad tech involves mere buying and selling of ad space, which, absent more facts, will not qualify for R&D tax credits. However, many times, ad tech companies’ activities in developing new and improved ad tech tools and technology can qualify for sizable federal and state R&D tax credits. This can involve not only engineering time, but also direct supervision and support time related to qualified research. Federal credits are dollar-for-dollar reducers of tax of up to 6.5% of qualified expenses. Over 40 states offer similar R&D tax incentives, including California and Texas (which can approach, and sometimes exceed federal realized benefits).

What can qualify or not is determined on a project-by-project basis. Please feel free to contact us with any questions or for your free initial analysis.

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