How to Set Budgets for Amazon Ads

If you sell on Amazon, then you know how important Amazon ads are to your success. Over the past year, Amazon has been vastly increasing the portion of search results that is given to real estate. For better or for worse, if you don’t buy ads, then the very best you can do organically is halfway down the page.

Okay, so setting aside some money for Amazon ads is important. But how do you optimize your PPC budgets? The best overall PPC strategy is to start with an auto campaign with most of your budget that looks for new keywords, and then gradually shift spend to the manual campaigns that will drive most of your sales.

Let’s dive deeper…

Why have a research campaign at all?

First things first. You should always have an automatic research campaign because before you can hit your PPC targets you must know what targets are reasonable. In other words, what keywords to bid on and how much to bid on them. This requires research. Amazon automatic campaigns have no pre-defined keywords; instead, Amazon will find search terms for you and test them out.

Trying to hit your target without budgeting in money for research will be frustrating and expensive.

How do you allocate your funds between campaigns?

And how should that allocation shift over time?

Split your overall Amazon ads budget into Research and Performance allocations to control costs and optimize sales. As you create more new keywords in manual campaigns, move spend allocation from your auto campaign to your manual campaigns for performance.

How to Structure Campaigns: Research and Performance

For each product group, you should have one auto campaign and two manual campaigns: research (for broad match keywords) and performance (for exact match keywords). As new search terms make sales in your auto and research campaigns, promote them to your performance campaign. This extracts the performance from auto/research into the performance campaign so you’ll want to move budget over as well.

Don’t forget to set negative keywords for the search terms that you pull out of a campaign, so that you can stop “researching” that word/phrase.

It’s tempting to break the lifecycle of your Amazon ads into phases: Research and Sales, and in some sense that’s true. However, remember that research should be ongoing. Having a “research phase” makes it seem like you can stop doing research. Don’t! The market may shift, new competitors will arise, and new search terms may convert. You want to find these.

Let’s Get Specific: How Much to Spend?

Here’s how to set specific budgets that will allow you to scale your performance campaigns without worrying about bad keywords bleeding money.

1.  Set aside a dollar amount for the initial Amazon ads research – $100 at the very least. $500 is better. Larger brands can spend $10,000 or more.

The exact amount for you depends. Some important factors:

• Your product
• How well your listing converts
• How expensive your keywords and product are
• How much your competitors are paying for ads.

2.  Once your Performance campaigns are running well, you should gradually reduce the Research auto campaign to about 10% of your overall budget. 90% should be going to the manual performance campaigns.

3.  Increase performance campaign budgets as long as the ACoS is below your profit margin. Yes you’ll be spending more, but you’ll be earning more as well. Plus, sales from Amazon ads drive organic sales and boost your ranking.

A Note on ACoS Expectations

As keywords are moved from the research campaigns to performance campaigns, expect that the research campaign’s ACOS will increase. This is normal and a sign that you’ve harvested all of the good keywords. The performance campaigns’ ACoS should be much lower.

Need Help?

Prestozon software can make this process easier. In particular, the Rules tools lets you harness algorithms to search for profitable or costly search terms (across campaigns) and create those keywords or negatives in Amazon right away.

Ben Aldern is the chief strategist and cofounder of Prestozon, and an internationally-recognized Amazon PPC expert. You can read more of his writings on Prestozon’s blog and get more tips on their YouTube channel.