We, as human beings, spend our day making budgets for all our daily activities. Most probably, we are skilled at accounting and budgeting practices for our business too. Yet, are those practices being implemented to your Amazon PPC campaigns?
In today’s blog post, we are going to 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
Let’s start by discussing the ratio for an Amazon PPC budget as well as what the starting budget and starting bids should be for new Amazon family members.
How Much Should You Spend on Amazon PPC
Your starting budget should be high enough to give you a significant amount of data. If you’re a smaller business with fewer sales than a big company, your budget should obviously reflect that size gap.
So, the easiest and smartest way to get started is by setting a budget that will more or less generate 20-30 clicks per day. If you take a look at Amazon’s suggested bid feature, this will help you get an idea of what your competitors are bidding on.
By establishing a solid estimate for the cost-per-click (CPC) for your target, you have acquired the basics in order to run a solid Amazon PPC budget
Amazon PPC Budget Basics
It’s important to realize when you’re first getting into the family of Amazon PPC, that this is a long race which really never ends. However, in order to get started, you need to take a first step, which in this case is your budget for your first campaign.
So that you get meaningful data, you need to be sure that your money isn’t being placed in too many places. 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, focus on a group of keywords that are very relevant to your product, see what data is retrieved from that first test, and adjust accordingly.
The Three Parts of an Amazon PPC Budget
Once you have gotten started on your Amazon PPC journey, it’s time to take a closer look at the more detailed segments of your budget. If you’re unfamiliar with Amazon advertising, it’s important to understand the three ad types on the platform.
That is why we gathered up 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 definitely be in the mind of every seller. However, when it comes to budgets, the three ad types are not equally valued.
While spreading your ad spend across too many keywords can be ineffective, allocating too much stock in Sponsored Brands and Sponsored Display can make it hard 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?
It is because Sponsored Display ads don’t have negative audience targeting and the attribution model for these ads isn’t still clear. Sponsored Display ads also have a CPM model rather than a CPC model which can make performance hard to understand for new Amazon family members.
Sponsored Brand ads are extremely competitive. Putting three of your products at the top of an Amazon SERP can get really expensive, and while they can be incredibly effective, there is certainly a reason for limiting your ad spend on this ad type.
So what exactly should your budget look like?
According to Amazon, brands should allocate around 70% of their budget into Sponsored Product ads. Sponsored Products offer the highest 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.
However, there is a downside to this. If you’re only spending small amounts per day on Amazon advertising, like 35$, you’ll need to make slight daily adjustments if you want to explore Sponsored Brand ads. On the other hand, a $5 per day budget on a Sponsored Brand ad isn’t going to get much done, so you’ll need to boost that up to retrieve any kind of significant data.
Major Takeaways
Hence, setting a budget for your Amazon PPC campaigns is crucial in order to maximize the return you get from your ad spend. Knowing where your money is placed or invested, makes a big difference when optimizing your campaigns.
Again, if you’re new 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 more experience and collect more data, boosting your budget in terms of your revenue is the best way to make sure your budget stays in check.
Above all the things we mentioned in this post what matters the most, is to get out there and start advertising on Amazon. By just getting started with a small amount of ad spend, you get closer to having optimized campaigns that fight your competition.
That it is for today’s post!
If you liked it or have any questions on it, leave a comment down below and we’ll be happy to answer your questions!
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