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Amazon Advertising Budget Part 2: Allocating Budget Strategies by Ad Type

Mike Zagare
Founder PPC Entourage
August 25, 2021
4 min read

Amazon PPC advertising helps sellers to temporarily own valuable real estate on the Amazon marketplace by placing their products in front of shoppers at the right time with paid ads

At the heart of every successful Amazon advertising campaign is a carefully thought-out advertising budget that enables sellers to engage shoppers at every stage of the Customer Buying Cycle

In Part 2 of Amazon Advertising Budget, you will discover strategies for allocating ad campaign budgets according to where a potential customer may be in the Customer Buying Cycle, and by Ad type.

If you haven’t had the opportunity to do so, please read Part 1 of Amazon Advertising Budget, which presents recent budget updates from Amazon and the importance of creating and managing budgets for Amazon PPC advertising campaigns.

Amazon Advertising Budget

In order to have effective Amazon ads that generate profitable sales and get the highest possible return from every ad dollar spent, sellers must manage their Amazon Advertising Budget. Knowing where and how to allocate Ad Spend is a critical part of effectively optimizing any ad campaign.

What is a good budget for amazon advertising?

Sellers should adapt their advertising budgets to align with the goals that they are currently pursuing within their Amazon businesses and in response to campaign results. 

A reasonable starting point for most sellers is to allocate approximately 10% of their total revenue. New sellers should set up budget allocations that allow for the generation of between 20 and 30 clicks per day and prioritize using Sponsored Products ads initially.

After a seller has identified what budget is most appropriate to reach their business’ objectives, it’s time to apply that budget to the different ad types that will target and engage their potential customers at every stage of the customer buying cycle.

Amazon Advertising Budget customer buying cycle

Types of Amazon Advertising ad + Budget Allocation by Customer Journey Phase include: 

Sponsored Products ads

Sponsored Products ads cover the largest amount of real estate or ad inventory and are the easiest to set up. Sponsored Products ads also offer the largest volume in terms of click through rate and give new sellers the best opportunity to see a return on their initial Ad Spend, while generating quality data to base future decisions on. It is generally recommended that sellers place approximately 70% of their budget into Sponsored Product ads.

Customer Buying Cycle Budget Allocations for Sponsored Products ads

 

Sponsored Brands ads

Sponsored Brands are cost-per-click ads that feature a seller’s brand logo, a custom headline, and multiple products. These ads appear in relevant shopping results and help drive discovery/awareness of a seller’s brand to potential customers. The allocation for Sponsored Brands ads is roughly 20% of the overall ad budget.

Customer Buying Cycle Budget Allocations for Sponsored Brands ads

  • Discovery Phase = 15% Total SB Budget Allocation,
  • Consideration Phase = 20% Total SB Budget Allocation,
  • Decision Phase = 45% Total SB Budget Allocation,
  • Post Purchase Phase = 5% Total SP Budget Allocation

 

Sponsored Brands Video ads

Sponsored Brands Video ads are used by sellers in order to stand out in desktop and mobile shopping results. This type of ad helps shoppers to discover a seller’s brand and products. Ads are keyword targeted, pay-per-click, and link potential customers directly to the product detail page where they can learn more and purchase. The allocation for Sponsored Brands Video is 15 % of the total SB budget allocation or more.

Customer Buying Cycle Budget Allocations for Sponsored Brands Video ads

  • Discovery Phase = 6.25% of Total SB Budget Allocation or more
  • Consideration Phase = 6.25% of Total SB Budget Allocation or more
  • Purchase Phase = 6.25% of Total SB Budget Allocation or more
  • Post Purchase Phase = 6.25% of Total SB Budget Allocation or more

 

Sponsored Display ads

With views targeting, Sponsored Display ads promote the most relevant product that has the highest chance of conversion from the list of products a seller has added to their campaign. This type of ad engages shoppers during their purchasing journey, on and off of Amazon. The allocation for Sponsored Display ads is roughly 10% of the overall Amazon Advertising Budget.

Customer Buying Cycle Budget Allocations for Sponsored Display ads

  • Discovery Phase = 15% Total SD Budget Allocation
  • Consideration Phase = 50% Total SD Budget Allocation,
  • Purchase Phase = 20% Total SD Budget Allocation,
  • Post Purchase Phase = 15% Total SD Budget Allocation

 

Figuring out your advertising budget is a huge part of any seller’s PPC strategy, whether you’re a new seller or have years of experience. It’s always a good idea to take a step back to consider if you’re taking full advantage of every dollar of your Ad Spend budget.

 

Entourage: Software to Scale Amazon Ads and Results Driven Management.

playbook series

There are several unique strategies available to sellers to utilize inside of the Entourage Playbook Series, to capitalize on the different Amazon advertising ad types in order to generate the most sales based on which phase of the customer buying cycle shoppers are in.

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