November 6, 2020

4 Things to Consider When Your Amazon Advertising Budget Is Limited

By Chandler Price / Advertising

On Amazon, over 70% of shoppers never view page 2 of the search results. With over 12 million items listed, utilizing Amazon advertising is essential to ensure your products appear in front of the most relevant shoppers.

In an ideal world, advertising budgets are limitless and are scalable as sales are driven. But what do you do when advertising budgets are limited?

Here are 4 things to consider when you have a limited Amazon advertising budget.

1. Establish goals with budgeting in mind

Often advertising budgets and goals go hand in hand. It’s essential to build an advertising strategy and goals around what budget is available, and you have to take costs into account, especially in new markets.

Ad budgets can be compared to buying a new car. Buyers consider multiple factors to ensure the car fits all their needs and wants. The two key things buyers often look for are the features and the price of the car. Although a moonroof and heated seats may be features on their wishlist, these are merely wants and not necessarily needs. The buyer must decide whether or not their budget supports these additional add ons.

Advertising works the same way. While winning top of search placements for general category terms like “Vitamin C” may be your goal, it’s important to consider the cost of the strategy.

As an example, one of our advertising partners has strategically advertised heavily on the category term “Theracurmin” at the top of the search results. Through this strategy, the partner has seen significant lift in market share by owning the space. However, it’s come at a high cost due to the competitiveness of the keyword. While owning the space on such a highly competitive term, the CPC has averaged upwards of $14.60.

While advertising heavily on broad category terms can drive substantial lift, it’s important to weigh the costs against goals. On the other end of the spectrum, utilizing a long-tail keyword like “high absorption curcumin” which has lower search volume can drive high performance at a lower CPC of $0.43. While long-tail keywords may not drive immediate and substantial lift in market share they serve as a great option when budget is limited.

Realistic advertising goals that factor in budgeting constraints drive successful advertising strategies. Starting with budgeting and goals is a crucial first step in determining a strategy.

2. Narrow product selection

When launching advertising with a limited budget, it’s important to narrow the product mix being advertised. Selecting a strategic list of products will mitigate against advertising turning off during the day due to budgeting restrictions. Advertising can often be spread thin across a wide range of products which will ultimately throttle success.

As an example of this, 100 products out of your catalog are chosen to be advertised with a budget of $600 a month. The daily advertising budget will only be $20 when averaged out across 30 days. If the average CPC is $0.50 advertising efforts can drive 40 clicks a day (daily budget / CPC). Spreading 40 clicks across a set of 100 products will leave at least 60 products without a single click every day.

However, if a limited set of 5 products is selected each product will receive an average of 8 clicks per day (40 clicks / 5 products) which will drive a more substantial impact.

Strategic product selection increases potential ad spend per product. By limiting the number of products advertised, more data will be gathered per product leading to more informed optimizations.

3. Be lean

Targeting selection is a key factor in maximizing budget. Often keyword lists can be too broad by focusing on top category terms that are highly competitive. Long-tail keywords serve as a great alternative when budget is limited. Despite these terms having lower search volume, they are typically less competitive which allows for advertising to drive higher performance.

To ensure targeting is optimized, utilize negative keywords to narrow in on top-performing search terms and limit inefficient advertising spend. Negative targeting will ensure that advertising will not serve on a list of terms or products that has been deemed irrelevant or drive poor results. These can be determined by analyzing search term reports and filtering for terms that have shown subpar performance.

Additionally, being mindful of bids and goals is crucial to success. Ensuring CPCs remain competitive without being too high is essential to keeping spend at a reasonable level. When bids are too low, traffic will be limited. But on the other hand, when bids are too high, the cost will outpace performance. Budget can be maximized by finding an equilibrium point for each bid. At Pattern, we use rules-based advertising to optimize ad spend and performance.

4. Utilize automatic campaigns

Automatic campaigns serve as a great starting point for an advertising strategy by driving learnings on what targeting, bids, and placements should be used. Automatic targeting is often used to gather new and long-tail keywords that can later be added in manual targeting campaigns. Long-tail keywords generated from automatic campaigns will often not be discovered in other keyword research methods.

If budget allows, long-tail terms can then be moved into a manual strategy where bids can be optimized strategically on a granular level. Allowing Amazon to select what targeting is used is a great tactic for experimentation on what advertising avenues drive the best results.

By thoughtfully allocating each dollar of a limited budget to an advertising strategy, products on Amazon can find relevant customers and drive noticeable results.

Unsure how to grow your brand on Amazon through advertising? Reach out to a Pattern representative below to see how a Pattern partnership could grow your sales, or download our Experts' Guide to Advertising below to learn more about our advertising technology and capabilities.

More Resources
The Experts' Guide to Amazon Advertising Strategy
The Great Debate: Is Revenue More Important Than Profit?