How Much Should I Spend on Amazon PPC? A Budget Framework

Spend as much on Amazon PPC as you can while staying within your target ACoS on ad sales and your target TACoS on total sales. For a new product, that means budgeting enough clicks to learn which keywords convert. For an established product, it means funding every campaign that's profitable and capping the rest.

There's no fixed percentage that suits everyone, but there is a clear way to work it out. Here are three methods, with worked examples, and rules for when to raise or cut.

Method 1: Budget by clicks needed (launch and testing)

When you don't yet know what converts, budget for data. You need enough clicks on each keyword to see whether it converts at a rate you can afford.

Monthly test budget = keywords tested x clicks needed per keyword x expected CPC

If your expected conversion rate is around 10%, 15 to 20 clicks per keyword gives you a reasonable first read: one or two orders suggests it works; zero suggests it probably doesn't at that bid.

Example

You want to test 40 keywords, 20 clicks each, at an expected $1.20 CPC: 40 x 20 x $1.20 = $960. Spread over 30 days, that's about $32 a day. Add an auto campaign budget for discovery, perhaps $10 to $15 a day, for a total near $45 a day during testing.

Method 2: Budget by target ACoS (scaling)

Once you know your conversion rates, budget from the sales you want ads to produce. Ad spend = target ad sales x target ACoS.

Example

You want $15,000 a month in ad-attributed sales and your target ACoS is 28%. Budget: $15,000 x 0.28 = $4,200 a month, or about $140 a day. If campaigns hit that ACoS and still have room to spend more profitably (they run out of budget or have low impression share on converting keywords), raise budget. If they can't spend it without ACoS rising past target, the market is saturated at your bids.

Method 3: Budget by TACoS (business level)

Top-down budgeting starts from total revenue. Decide what share of total sales you'll put into ads, based on your margins and growth goals. Ad budget = expected total sales x target TACoS.

Example

A product sells $40,000 a month in total and earns 32% profit before ads. You want to keep at least 22% as profit, so your TACoS ceiling is 10%: a $4,000 monthly ad budget. Our guide to TACoS explains how to read the trend over time.

Putting the methods together

Use the PPC budget calculator to run these numbers for your products.

How Amazon applies daily budgets

Campaign budgets are set per day. Amazon may spend somewhat more than the daily budget on high-traffic days and less on others, but it aims to keep total spend over a calendar month within your daily budget multiplied by the days in that month. If a campaign regularly runs out of budget early in the day, it misses afternoon and evening traffic. Our article on budget running out early covers fixes.

You can also group campaigns in a portfolio with a budget cap, which limits spend across them for a date range or monthly. That's useful when you want a hard ceiling for a product line. See portfolios and budget caps.

Splitting a budget across campaigns

Once you have a total, divide it according to what each campaign is for. Here's an example for a product with a $3,000 monthly budget in its growth stage:

Revisit the split monthly. If exact match keeps hitting its budget at a good ACoS, move money there from discovery. If competitor targeting can't get near target ACoS after a fair test, shrink it.

Keep a reserve

Hold back a small part of the monthly plan, perhaps 10%, for opportunities: a keyword that suddenly starts converting, a competitor going out of stock, or a promotion. It's easier to deploy a reserve than to cut another campaign mid-month. If no opportunity comes up, release it in the last week to whichever campaign is closest to target and capped by budget.

When to raise your budget

• Campaigns hit their daily budget regularly and their ACoS is under target.
• Converting exact match keywords have low impression share.
• TACoS is falling while total sales grow, showing ads are compounding.
• You're heading into a seasonal peak and last year's data showed higher conversion.

When to cut or cap

• ACoS stays above break-even for several weeks with no improvement in organic sales.
• TACoS is rising while total sales are flat.
• Inventory is running low. Spending to sell out early can hurt organic rank when the listing goes out of stock.
• Spend is concentrated on broad or auto campaigns with high waste. Fix targeting before adding money.

Common budget mistakes

• Spreading a small budget across too many campaigns, so none gets enough clicks to learn.
• Setting budgets so low that campaigns stop every morning, then judging them on partial-day data.
• Raising budgets on campaigns that are already above target ACoS.
• Ignoring how quickly CPCs vary by category, which can make the same budget buy very different amounts of traffic.

AdSpark's budget pacing tracks spend against your monthly plan and can reallocate budget across a portfolio, moving money from campaigns that are over target to ones that are profitable and capped. If you're new, start with Amazon PPC for beginners.

FAQ