Amazon PPC Budgets: The How-to Guide

August 5, 2020
By The Badger

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:

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?

amazon ppc budgets amazon advertising budget

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.

Key Takeaways

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.