Quick win budget limits: More sales, lower costs with Amazon Ads

Quick win budget limits

Generating large profits through small adjustments

We love numbers, we love PPC, and most of all we love good PPC performance. We can understand (occasionally :-)) that not everyone shares this passion to the same extent with us. Does the same go for you? You're lucky: Because that doesn't necessarily mean that you have to give up good performance, even if there's often only little time left at the end of the working day to optimize your Amazon ads. 

Do you have Amazon Advertising campaigns that are on a tight budget? We'll show you a real win, which you can leverage quickly & easily.

Why do budget limits have such a big effect on performance?

If a campaign runs out of budget early in the day, this usually has a negative effect on performance. You can see the reasons why that happens:

Let's say:

  • the traffic is divided over 24 hours
  • you have 18€ campaign budget
  • your average CPC is 0,10€
  • you collect 180 clicks per day

According to this assumption, your daily budget would be spent after 180 clicks on your ads or in that case after 18 hours. For the remaining 6 hours your ads run dry because there is no more budget available – and your campaign does not generate any further clicks & sales.

The Problem: You compete with high bids in a very limited number of auctions.

Instead, we would suggest that you invest your budget with lower bids throughout the whole day. This way, you can participate in 33% more auctions, resulting in more efficient advertising. Why? Because the marginal utility of higher advertisement ranks and higher ads budget is declining: the first ad profits are the cheapest. Each further advertising profit will becomes relatively seen more expensive.

Diminishing marginal utilty in bidding for Amazon Advertising ENG
Diminishing marginal utility in bidding for Amazon Advertising

FYI: During the day your competitors also reach their budget limit. As a result, there is often less competition for the same ad space in the evenings and the CPCs drop. In this case, it is a twice as good idea to advertise later in the day and catch the cheaper traffic.

How to recognize insufficient campaign budgets

With these quick checks you can securely identify campaigns with budgets that are too low:

  1. End-of-day check: Check the current status of your campaigns shortly before midnight. If the message "Budget exhausted" appears in the campaign overview, you should reduce bids for these campaigns. By the way: the earlier you notice that the campaign budgets are exhausted, the more you should intervene. Lower the bids significantly and increase the budgets additionally.
  2. Weekly Check: Look at the costs of your campaigns over time. If your campaigns are stuck at a specific expenditure level and show hardly any noticeable fluctuations over the week, this is a clear indicator that your campaigns have run out of budget over the last few days.

What to do about low budgets

Turn up the budgets: The easiest way to ensure that the campaigns do not easily reach their budget limits is to set the budget limit as high as possible. If you have a fixed budget, you can alternatively try to invest it as wisely as possible throughout the day:

In our example this means, instead of 1€ per hour, you should reduce your expenses to 0,75€ per hour in order to keep your ads up and running throughout the whole day:

18€ / 24 Hour = 0,75€

The bids in this campaign should be reduced step by step till the budget is reached by the end of the day. The result: you get more traffic and sales with the same or even less expenses! Paradoxically, you lowered your bids, but now participate in more auctions than before.

That way, you increase the traffic on your ads – despite lower bids.

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