With campaign budgets Amazon allows you to determine the maximum amount you want to spend on your PPC campaign.
There are 2 different types of budgets you can set up:
Setting up the average daily budget for each ad campaign is compulsory and it is the maximum daily expenditure over the calendar month. If your daily budget doesn’t get used up in a day, the unused budget will be passed on to the following days.
Using the average daily budget for each campaign will help you to ensure a balanced ad spend across all campaigns and will allow you to select budget allocation depending on the profitability of each ad.
The formula to calculate the maximum expenditure per calendar month is:
Maximum ad spend per calendar month = daily budget x number of days left in the calendar month
This budget determines the total daily advertising spend for your advertising account. This is not an average daily budget, but a fixed value added for the entire day. This means that the total spending of your ad account won’t exceed the daily budget.
You can set it on Seller Central:
Campaign Manager > Advertising Settings > Daily Budget
If you have a profitable campaign, you shouldn’t set your budget at an account level. In fact, a fixed budget could result in a loss of potential sales if your ads suddenly stop running once the account reached the fixed budget.
If you have an unprofitable campaign, restricting the budget is going to leave your campaign inefficient and won’t improve its profitability. To optimize these campaigns, you first need to optimize the structure: keyword bid optimization, negative keywords, and leverage keyword match types. Only then you can add the right budget to your campaign.
For profitable campaigns, you should set your budget slightly higher than your daily budget spend.
For unprofitable campaigns, you should set your budget at the maximum value you’re willing to spend until the campaign becomes profitable.
