Digital Marketing Companies Are Missing Out on R&D Tax Credits

While research and development activities are generally equated with technical industries, you may be surprised to learn that traditionally non-technical industries may be eligible for R&D tax credits. Digital marketing and media agencies, advertisers and publishers must invest in research and development to survive in a dynamic and ever-increasing competitive environment. 

Software development has become the norm for these industries, who have seen a shift from traditional to digital media. While Google and Facebook are the largest players in programmatic marketing technology, companies of all sizes are investing in marketing R&D and hiring teams of technical staff like software developers, data engineers and marketing statisticians. Furthermore, user experience design and strong search engine optimization are now critical to gaining an edge over the competition.

Today, firms are focusing on marketing that relies on numbers and science, rather than vague estimates. Clients continually want better metrics and performance, creating a need for programs that gather and analyse data. Companies making innovative technical improvements to web technology, software development or data analysis may be eligible for R&D tax credits. As well as the front end development required for firms providing business statistics to their clients, APIs often need to be developed in order to provide real-time data metrics. Other qualifying activities include developing algorithms for advertising campaigns, developing or integrating CRM software and coding new features to tackle difficult business challenges. 

Keep in mind that work in the arts, humanities and social sciences is not eligible as research and development. Research must be technical or scientific in nature. For instance, graphic design and copywriting are not eligible.

R&D tax credits generally equal 15 percent or more of eligible expenditure. Qualified activities must meeting four criteria.

Activities must:

• Be intended to improve or develop the performance, functionality or quality of a product, technology or service.
• Involve experimentation.
• Be technological or scientific in nature.
• Attempt to eliminate an uncertainty.

See whether you could be eligible for the R&D Tax Credit by taking our online eligibility test. If you have any questions, please don’t hesitate to contact our office.