PPC: The 7 common PPC / Amazon Sponsored Ads Mistakes- #1 Budget

This post is part 1 in a series of 7 posts all about the, you guessed it, 7 most common mistakes people make with their sponsored ads/PPC strategy*.   Once you’ve read these posts you will be ahead of 99% of Amazon sellers.

*Strategy is a generous word, because a lot of people’s PPC “strategy” is the same strategy you might use when trying to get a spider off your back. A lot of screaming. A lot of flailing. A lot of panic. Auto Campaign.

(There might actually be 8 or 9 posts, Amazon recently released some updates)

In your defense, it’s okay.  PPC is mind numbingly boring, and I can’t promise to make it less boring, but so far we’ve talked about spiders and I feel like if you google “PPC” and “Spider off your back” this page is going to be the only hit, so that’s a start.

So the first thing people mess up with their PPC?


Budgets are so complicated that even though it’s #1 of the 7 things people screw up, there are actually three different kinds of mistakes people make.  So this numbering system is already sort of a mess, but it’ll be fine.  We’ll get through it together.

So here’s sub-mistake #1 of mistake #1. Catchy.

Budget Mistake #1 – No Overall Budget Caps

If you learn NOTHING else from this post, please, learn this. Set a daily budget cap for your entire campaign.

It’s this easy.

  1. Log into Seller Central
  2. Click Advertising
  3. Click Campaign Manager

This # is the most you can spend on your sponsored ads.   Please note this # is daily. So if it’s set to $125, your monthly spend will be ~30*125 ($3,750).

An interesting thing about Amazon is that it will almost always spend your money, and this number is an average.

A lot of sellers make the mistake of thinking if they set their daily cap to $125, then they will never ever pay more than $125 a day on advertising,

This is wrong.

The truth is, that with a daily cap of $125, Amazon makes sure that, over the course of a month, you never spend MORE than $125 on average per day,  over the entire month.

This means that if on days 1-29, you’ve spent *only* $20 on advertising (out of a possible $3,750), Amazon will try it’s best to spend $3,730 on the final day of the month.

That’s right. You could spend $3,730 in advertising in one day, which would make your -average- spend $125.

So, if on days 1-29 you have spent a grand total of $20, Amazon will try its best to spend $130 on day #30. Because, much like you, Amazon loves money.

Question: What does this button do?

If you are very sure of what you’re doing you can click the button on the left which turns off global limits.

If you turn this off, Amazon will *only* use your Campaign Budgets to manage your advertising spend.

A lot of sellers make the mistake of turning this setting off, and then having 40 campaigns, each with $20 budgets.   This is an easy way to get a $24,000 (40 campaigns x $20 budgets x 30 days) bill from Amazon at the end of the month.

This leads to the next budget problem, which is also a structural problem but I’ll include it here because money, right?

Budget Mistake #2 – Mixing Your VERY PROFITABLE and KINDA PROFITABLE keywords.

I was listening to a podcast from a leading, and boring, ‘guru’ in the PPC space and she or he started off by saying “You probably want a budget of $50-$200 on your converting campaign” and I had two thoughts back to back.

Thought #1.

Wow what an interesting choice to deliver this content with as little excitement or intonation as humanly possible, ensuring that I am both confused and bored and maybe a little sad inside, I wonder why she or he chose to do that? Did I fall asleep? I think I may have also fallen asleep. Wow.

Thought #2.

Wait why would you only have one converting campaign and give it a unified budget?”

The idea of having a “converting campaign” is like this.

Imagine there are three people in front of you.  Each of them says “Hey, if you give me money, I’ll give you even more money back until I run out.”

(This is actually how PPC works).

You give a dollar to person #1, and he gives you back $2. Cool. So you give them a bunch more.

You give a dollar to person #2 and she laughs and gives you back the shiniest nickle you’ve ever seen.

And then you give a dollar to person #3 and she gives you back $20.

If these 3 people were standing in front of you, how much money would you give to person #1? Person #2?

How much more money would you give to person #3?

Person #1 (+$1)/Person #3(+$19)  are both considered “Converting” because you made money on those deals.

Person #2(-$.95) is considered “Non Converting” because you lost money on that deal.б

Mr. PPC guru suggests that you should set up your campaigns so that you give $50+ a day to person #1 and person #3, and let them split it.

This  is fine if you don’t like money.

If you like money,  mixing these campaigns is безглуздя, which if you don’t speak Ukrainian will just look like nonsense, and if you do speak Ukrainian, it will still look like nonsense.  Either way, mixing these two “converting” keywords in the same campaign is nonsense, just absolutely senseless.  And yes, cents-less, you make less cents.)

The problem is that by lumping all of those keywords into the same campaign means that Amazon will *indiscriminately* give $50 to person #1 and person #3 until you’ve spent all $50, and maybe person #1 is just quick on the draw, and way faster at spending your money than person #3.

The best thing to do is to separate your “awesome keywords” and your “pretty good” keywords into two different campaigns with two different budgets.

Now, this is a rabbit hole, of course.  You could make an infinite # of campaigns for infinite numbers of profitability, but if you even just split it so that your top 20% of performers go in one “bucket” with its own specified budget and your other 80% go in another, this can have a massive effect on how much money you make, simply by leaving more room in your budget for your most profitable keywords.

Which brings us to


Here’s the thing. If you are spending 100% of your daily budget on PPC you’re probably making a mistake.  That means that Amazon _could_ have spent more money, but didn’t simply because you put a cap.

Which means, assuming you have profitable keywords in your campaigns (and under most circumstances you should almost *exclusively* have profitable keywords in your campaigns) that means you didn’t spend money on profitable keywords because you ran out of money.

Let me rephrase that more simply because it bears repeating:

Hitting your daily budget probably means you didn’t turn money into even more money.

Hitting your daily budget means you turned off the magical money making machine.

*Yes there are weirdo scenarios where you might not need to spend on PPC because you’re already ranked #1 for all of your keywords etc etc, so why spend to be #1 in paid search and organic, because maybe your PPC spend is cannibalizing your organic spend but this only applies to like 1 out of a million people and that guy’s name is probably like Richard or Steven or something and no one likes him anyway because who gets to be #1 for all 20,000 of their search terms? No one and I bet Richard/Steven didn’t think to A/B test to MAKE SURE that ALL of their terms were cannibalizing, nope, they didn’t unless Richard/Steven was showing off, and no one likes a show off, Richard/Steven, NO ONE.

So, check your Amazon PPC spending regularly, not necessarily every day, but definitely at least once a week, and more frequently after you make any changes.  If you are hitting your budget caps every day then you are doing something wrong.

It means you either are

1. Losing money on unprofitable keywords.
2. Not making as much money as you can on profitable keywords.

Maybe Both.

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