We make budgets for all kinds of things. Paying off loans, saving for a house, or trying to put aside some money for a family vacation all require a budgeting strategy. Surely you’ve got sound accounting and budgeting practices for your business too, but are those practices carrying over to your Amazon PPC campaigns?
Let’s examine where your money is really going when you run Amazon PPC campaigns and how your Amazon PPC budget compares to our suggestions.
Constructing Your Amazon PPC Budget
We recently got a question from a user wondering what is the ideal ratio for an Amazon PPC budget. We also hear from sellers frequently wondering what their starting budget and starting bids should be. With all these questions in mind, we want to give you the definitive how-to guide to creating Amazon advertising budgets.
How Much Should You Spend on Amazon PPC
Your starting budget should be large enough to give you an adequate amount of data. If you’re a smaller business with less sales than a giant corporation, your budget should obviously reflect that difference.
The easiest way to get started is by setting a budget that will generate 20-30 clicks per day. If you take a look at Amazon’s suggested bid feature, that can be very helpful to get an idea of what your competitors are bidding.
By establishing a solid estimate for the cost-per-click (CPC) for your niche, you have the foundation for a solid Amazon PPC budget.
Amazon PPC Budget Basics
It’s important to realize when you’re first wading into the waters of Amazon PPC that this is a marathon. In all honesty, the race really never ends. However, you can’t get started without taking a first step, which in this case is your budget for your first campaign.
In order to get meaningful data, you need to be sure that your money isn’t being spread too thin. If you’re looking for those 20-30 clicks as a starting point, having hundreds of keywords isn’t going to do you any good.
Instead, concentrate on a group of keywords that are incredibly relevant to your product, see what data is produced from that first test, and adjust accordingly.
The Three Parts of an Amazon PPC Budget
You’ve gotten started on your Amazon PPC journey. Now it’s time to take a closer look at the finer points of your budget. If you’re unaffiliated with Amazon advertising, it’s important to get an understanding of the three ad types on the platform.
The three types of Amazon ads:
- Sponsored Products
- Sponsored Brands
- Sponsored Display
These three ad types offer a variety of pros and cons and should undoubtedly be in the arsenal of every seller. However, when it comes to budgets, the three ad types are not equally valued.
In the same way that spreading your ad spend across too many keywords can be ineffective, putting too much stock in Sponsored Brands and Sponsored Display can make it difficult for sellers to get the most out of their ad spend when getting started.
Why are these two ad types “less effective” for sellers forming their first Amazon PPC budget?
Sponsored Display ads don’t have negative audience targeting and the attribution model for these ads isn’t clear. Sponsored Display ads also have a CPM model instead of a CPC model which can make performance confusing for beginners.
Sponsored Brand ads are incredibly competitive. Putting three of your products at the top of an Amazon SERP is costly, and while they can be incredibly effective, there is certainly an argument to be made for limiting your ad spend on this ad type.
So what exactly should your budget look like?
We recommend putting approximately 70% of your budget into Sponsored Product ads. Sponsored Products offer the largest volume in terms of click through rate (CTR) and offer beginners the best opportunity to see a return on their initial ad spend and generate quality data to base future decisions on.
There is a caveat to this breakdown though. If you’re only spending small amounts per day on Amazon advertising, let’s say $30, you’ll need to make slight adjustments if you want to explore Sponsored Brand ads. A $6 per day budget on a Sponsored Brand ad isn’t going to get much done, so you’ll need to bump that up to see any kind of significant data.
How Much Should I Spend on Amazon PPC?
You’re rocking and rolling now. You know what your budget should look like and after implementing it you’ve got data rolling in. This brings about the question everyone seems to have: How much should I spend on Amazon advertising?
Guess what? There’s not one answer that fits every seller and their situation. However, we’ve found that a good rule of thumb is your budget should be approximately 10% of your total revenue.
That means that as your campaigns continue to run and your sales grow, your budget will increase at the same rate. By using this 10% method as a measuring point, in conjunction with the proper spread between ad types, you can ensure that your budget never gets out of control.
Setting a budget for your Amazon PPC campaigns is essential to maximizing the return you see from your ad spend. Knowing where your money is going makes all the difference when optimizing your campaigns.
If you’re just getting started with Amazon PPC, setting up a budget that generates 20-30 clicks per day is the perfect starting point. You’ll also want to prioritize Sponsored Product ads during this time as well.
As you gain experience and have more data at your disposal, scaling your budget in terms of your revenue is the best way to make sure your budget stays in check.
Above all, the most important thing is to get out there and start advertising on Amazon. Just getting started with a small amount of ad spend gets you closer to having optimized campaigns that smoke the competition.
Discover Us on our PPC Den Podcast
If you enjoy supplementing your long reads with audio, we cover this topic on our podcast as well.
Listen to it in the episode below or find us on your favorite streaming platform, like Apple, Google, Spotify, and more!
- 1:10 Intro
- 6:00 Getting started with Amazon PPC budgets
- 13:50 Splitting your budget between ad types
- 21:50 Adjusting your budget over time
- 29:30 Some final questions about budgets
- 39:30 How much should you spend on Amazon PPC
- 43:00 Closing thoughts
- How to Get Over 100% Conversion Rates on Sponsored Display Ads
- New Launch Strategy for New Products: Skip the Auto?
- Amazon PPC Data Trends to Shape Your 2020 Strategy
- How Does Amazon PPC Work With Misspellings?
- Following Amazon’s Suggestions? The Mysterious “Suggested Bid”
- Negative ASIN in Amazon PPC Auto Campaigns: Is it Possible (Part 2)
- Negative ASIN in Amazon PPC Auto Campaigns: Is it Possible (Part 1)
- When You Should DIY Your PPC (and When You Shouldn’t)
- An Introduction to Targeting Options on the Amazon DSP
- Optimizing on a Hunch
- 5 Things You Don’t Know About Product Targeting
- Amazon PPC Stats During COVID-19| April 2020
- Sponsored Brand Ads Update: Now You Can Edit Creatives
- Amazon PPC Stats During COVID-19
- Seller Central Campaign Manager is Moving to Amazon Ad Console in 2020
- Taking Your Amazon Products & Campaigns Global: A Primer
- Best Practices for Selling on Amazon During COVID-19
- Principles and Mindset for Amazon Marketers During Coronavirus
- Coronavirus (Covid-19) and Your Amazon PPC Campaigns
- Incorporate “Adjust Bids by Placement” into Your Keyword Bids (Part 2): Multi-Keyword Campaigns
- Incorporate “Adjust Bids by Placement” into Your Keyword Bids (Part 1): Single Keyword Campaigns
- Grow Your Amazon Campaigns with Demographics Data
- What Consumer Behavior Says About You: Amazon Brand Analytics
- How to Raise Lifetime Value with Market Basket Report
- Search Frequency Rank: How to Identify Most Important Keywords
- Long Tail Search Terms: Amazon PPC Silent Killer
- 7 Tips to Get More Clicks on Amazon Ads
- LIVE Amazon PPC Campaign Audit
- Amazon PPC Keyword Research in 2020: RPSB Revisited
- Our Top Predictions for Amazon PPC in 2020
- 7 Bad PPC Habits to Kick in 2020 (And 3 Good Ones to Start)
- The PPC Tasks We Put on Our Project Management Tools
- A Data- Oriented Approach to Advertising in December
- The Wait is Over… Search Term Reports for Sponsored Brand Ads are Here
- What to Do When It’s Time to Sell Your Amazon Business with Coran Woodmass
- Ramping Up for Cyber Monday and Black Friday with Data-Driven PPC Strategies
- Amazon PPC Campaign Structure: 6 Layers of Complexity
- Amazon PPC Today vs. Yesterday: What’s Changed, What Hasn’t
- Make Your Best Keywords Better with Single Keyword Campaigns
- 6 Levels of Amazon PPC Mastery
- How to Advertise Commodity and Unique Products with Lukas Matthews
- Amazon SEO – Bridging the Gap with PPC
- Amazon’s New Sponsored Display Ads (Beta)
- Listener Q&A: Optimizing Placement Settings
- The Problem With Optimizing Low-Converting Products (And How to Solve It)
- 4 Reasons Why Lowering Your Bids Won’t Always Lower your ACOS
- What to Expect From 30 Days of Running Amazon Ads
- Should You Segment Your Branded Keywords in Amazon Ads?
- Promoting your Products with Amazon Coupons
- Three Effective Ways to Optimize Amazon PPC Bids
- 4 Things Amazon Does Better than Google and Facebook
- Amazon DSP with Kiri Masters
- Increase Conversion Rates for Sponsored Brand Ads
- Clickfraud, Who to Hire, and More Common Amazon PPC Questions
- A Data-Driven Approach to Prime Day PPC
- Improving Your Account With Amazon Reports
- The Complete Guide to Self-Auditing Your Campaigns
- A Round-Table Discussion About Placement Settings
- My 5 Predictions for the Future of Amazon PPC
- The Importance of Indexation for Amazon PPC
- Click Through Rate (CTR) Rundown
- An Introduction To Bulk File Operations
- The Latest Sponsored Brand Ad Updates
- Defining Your PPC Goals & Setting ACOS Targets
- Making Sense of New to Brand Metrics
- Should You Bid on Competitors’ Branded Keywords
- Our Gripes About Amazon Sponsored Brand Ads
- Amazon Advertising Launch Strategy for New Products
- The Ultimate Amazon PPC Roadmap
- How to Scale Using PPC – A Case Study
- The Star-Crossed Lovers (Organic & Paid Traffic)
- Cranking Up Conversion Rates
- All Things Negative Keywords
- The Dreaded Amazon Data Reporting Delay
- What We Love About Amazon PPC
- First Look on New Bid Options in Amazon
- Dissenting Thoughts on PPC Budgets
- The Strangest, Most Popular PPC Strategy: The Keyword Dump
- Product Targeting – Into the Great Unknown
- Campaign Naming Systems
- Hitchhiker’s Guide to Sponsored Products (Part 2)
- Hitchhiker’s Guide to Sponsored Products (Part 1)
- Amazon PPC Advertising Stats
- The Advanced Basics of Amazon PPC
- Amazon’s New Product Targeting Features
- The Bid+ Conundrum
- Why We’re Living In The Golden Age of Amazon PPC
Watch Mike & Stephen on YouTube
If you enjoy supplementing your long reads with video, well, hot diggity dog, you’re in luck! We cover this topic on our YouTube channel too.
Watch it below and please don’t forget to ‘like’ and subscribe.