Why Is It Important to Plan the Budget of Your Amazon Advertising Campaigns?
As an Amazon seller, campaign budgets enable you to figure out how much you want to spend on PPC advertising. You need to plan your campaign budgets on Amazon so that you can get the maximum effect on your overall sales and revenue.
Without planning your Amazon Ad budget, running your Ad campaign can be risky. And you need these Ad campaigns to get more people to purchase what you are selling. In short, part of polishing your Amazon Ad campaigns is spending your budget properly and smartly.
Types of Budgets
There are two types of budgets you can set up in the Amazon Ad campaigns: Average Daily Budget and Fixed Daily Account Budget.
Setting up an average daily budget for an individual Amazon Ad campaign is compulsory. You can calculate your maximum expenditure per calendar month using the following formula:
Daily Budget X Number of Days Left in the Calendar Month = Maximum Expenditure Per Calendar Month
For example, your Ad campaign will start running on 6th January, and you have an $11 daily average budget. So, your total Ad budget spent per month will be $286. However, you only spent $8 on that date. Thus, the unused $3 will roll over the next day. Meaning, your budget for the 7th of January will be $14.
- Fixed Daily Account Budget
This type of Amazon Ad Сampaign Budget will help you to figure out how much you can spend per day. If you plan to run the Sponsored Product Ads continuously, this one can help you run a campaign on multiple days to gain more exposure. You can limit the general level of expenses for Ad campaigns per day if you want to cap off the total daily expenditure to get more control over the budget.
For example, you launched 2 Ad Campaigns, each of which has a daily budget of $25. At the same time, you set a Fixed Daily Account Budget of $40. As soon as the total cost of the two campaigns reaches $40, both of them will be stopped until the beginning of the next day. And your Ads will no longer be shown, even if it happened before the lunch of the day.
If you are tightly limited in your Ad Campaign Budget, setting a Fixed Daily Account Budget can help you to avoid unplanned expenses. Such a limitation of the budget of Ad Campaigns can also be a useful option if you expect a significant increase in traffic over a certain period, for example, during sales. Since with a large flow of interested buyers, the number of clicks will be much larger, which will lead to an increase in advertising costs.
However, setting up such a Fixed Budget can also be a bad strategy. For example, if your Advertising Campaigns are profitable, but you have set a limit, you may lose some traffic, and therefore some potential buyers too. Therefore, you should use this option with caution when setting up Ads on Amazon.
How Are Money Spent in Each Advertising Campaign?
Setting limits on the Average Daily Budget and the Fixed Daily Account Budget depends on the marketing goals you pursue, and what TACoS your advertisement has. We have already discussed ACoS, Break-Even ACoS, TACoS. For now, just say that if your Advertising Cost of Sales (ACoS) is within the target range while the Campaigns are fully using the daily budgets, then you can raise the campaign budgets. In case if your campaigns fail to reach the daily budget, then it’s time for you to lower the budget. You also need to reallocate the budget to other campaigns that perform well to drive more traffic.
From this Amazon Ad budget explanation, you learned that planning your budget cleverly can help you to prevent yourself from high advertising costs. Using any of the average daily budgets and fixed daily account budget makes it easier for you to allocate and spend your campaign budgets on Amazon efficiently.