In the world of digital marketing, PPC advertising is one of the most popular means of attracting new customers, generating quality leads, and increasing revenue. If you’re an Amazon seller, an effective ad campaign is critical to your business’s success, especially given the increasingly competitive landscape of Amazon Marketplace. Part of this process is developing an Amazon PPC budget.
With a solid budgeting plan in place, you can optimize your digital marketing on Amazon and expand your audience. Before diving into campaign planning, consider the following tips for setting and managing your Amazon PPC budget, as well as the benefits of an Amazon PPC management service.
The Two Amazon PPC Budget Options
Amazon allows sellers to set limits on ad spending. When it comes to your Amazon PPC budget, you have two options available:
1. Fixed Daily Account Budget
If you select a fixed daily account budget, you can limit how much you spend on Amazon PPC per day, and Amazon will implement this limit across all ads on your seller account. Once you reach that fixed amount, your ads won’t run again until the following day.
This option is best if you want to maintain a strict budget or struggle to keep track of daily PPC expenses. By setting a fixed daily budget, you can prevent unnecessary losses and excessive spending while running ads to attract more potential customers.
2. Average Daily Budget for Individual Campaigns
The other option for your Amazon PPC budget is the average daily budget for individual campaigns. Unlike the fixed option that allows you to set a specific amount per day, the average daily budget takes into account the total amount you’re prepared to spend over the course of a given campaign.
To calculate your average daily budget, you’ll need to multiply your daily budget by the number of days remaining in the month.
For example, if your daily budget is $100 per day for the month of January, and you launch your ad campaign on January 15, your campaign will run for the remaining 16 days of the month. By multiplying $100 by 16, you’ll have a total budget of $1,600 to spend for your campaign.
This budget option allows for increased flexibility. For example, if your average daily budget is $100, but you only spend $80, the remaining $20 will go to the following day’s budget. This feature means your average daily spending will change based on whether you reach your budget limit for the day.
How to Determine Your Amazon PPC Budget
One of the first steps in creating an Amazon ad campaign is determining your budget. Consider the following factors to develop a budget that’s appropriate for your business.
Your Average Cost of Sale (ACoS)
Your business’s average cost of sale is how much you spend to generate new leads. This cost includes account fees and manufacturing expenses, which will affect how much you can reasonably allocate to your advertising budget.
Generally, a lower ACoS indicates greater potential for profit. For example, if one of your sponsored products is $100, and production costs come to $60, your current profit margin sits at 40%. To make a profit, your ACoS needs to be less than 40%.
Identifying this metric can help you make necessary adjustments and learn what you’ll need to do to make your ad campaigns profitable.
Duration of Your Ad Campaign
How long do you want to run your campaign? You’ll need to determine how much you can afford to spend each day and use that estimate to decide the campaign duration.
It’s also crucial that you spread your total budget evenly across the campaign’s duration. Setting your daily budget too high can result in a hemorrhage of funds, whereas spreading lesser amounts over a longer period of time may allow you to expand your reach and attract more potential customers.
Return on Investment (ROI)
Your return on investment (ROI) is the profit you make after factoring in production costs. If you overspend on your Amazon PPC budget, you may decrease your ROI as a result.
This aspect of budgeting requires you to set achievable goals before launching your ad campaign. Consider the results you hope to see and adjust your spending accordingly, spending just enough to generate quality leads while putting measures in place to prevent overspending.
When it comes to PPC advertising, proper keyword selection is critical for success. As an Amazon seller, you can include multiple relevant keywords per product, and which keywords you bid on will affect your advertising costs.
To achieve a higher rank in Amazon’s search results, it’s best to focus on long-tail keywords. Long-tail keywords are phrases containing multiple words relevant to your product and generally provide more specificity. For example, the keyword “green linen bed sheets” provides more detail than “bedsheets.”
These longer keywords work in your favor because the consumer who knows what they’re looking for is more likely to make a purchase. By using long-tail keywords, you can target potential customers who are ready to buy and increase your sales over time.
Manage Your Amazon PPC Budget with Click Fluency
Are you struggling with a failing Amazon PPC campaign? The team of experts at Click Fluency can develop effective marketing strategies that will increase sales and maximize your ads. By enlisting the services of our professional digital marketing team, you can keep your ad campaign on track and discover the industry-leading strategies we employ to elevate our clients’ businesses.
Through our many years as Amazon sellers and professional digital marketers, we’ve learned what it takes to build a successful Amazon business and create profitable advertising campaigns. We’ll collaborate with you to build a marketing plan tailored to your business and produce the data-driven results we guarantee each of our clients.
Take the guesswork out of your advertising process. Schedule a free discovery call with our team at Click Fluency today to discuss how we can help you develop the right Amazon PPC budget for your business.