Amazon advertising is no longer optional – it’s a core growth lever for sellers at every stage. But one question consistently trips up even experienced brands:
How much should you actually spend on Amazon advertising?
Spend too little, and you disappear from search results. Spend too much, and profit evaporates. This guide breaks down how to set an Amazon advertising budget based on data, product economics, and business goals – not guesswork.
Drawing from real-world seller benchmarks, campaign analysis, and platform mechanics, this article explains what to spend, why to spend it, and how that number should change over time.
Why “One-Size-Fits-All” Amazon Ad Budgets Don’t Work
If you’ve seen advice like “Spend 10% of revenue on ads“, you’ve already encountered the problem.
Amazon advertising budgets depend on:
- Product lifecycle stage
- Margin structure
- Competitive intensity
- Category CPC norms
- Growth vs. profitability goals
Two sellers with identical revenue can – and should – have very different ad budgets.
Instead of starting with a percentage, start with intent.
Step 1: Define the Goal Behind Your Amazon Ad Spend
Before calculating a budget, clarify what the ads are meant to do. On Amazon, ads usually serve one (or more) of these goals:
1. Launching a New Product
- No organic rank
- No keyword history
- No reviews (or very few)
Ad spend priority: Visibility and data
Efficiency: Secondary
Typical ACoS tolerance: High (often intentionally unprofitable)
2. Ranking & Market Penetration
- Product has traction
- Reviews are building
- Goal is keyword dominance
Ad spend priority: Aggressive keyword coverage
Efficiency: Medium
Typical ACoS tolerance: Medium–high
3. Profit Optimization
- Mature listings
- Stable organic rank
- Strong review velocity
Ad spend priority: Defending profitable keywords
Efficiency: High
Typical ACoS tolerance: Low and controlled
Your budget should change as your goal changes. Sellers who fail to adjust budgets over time often overspend without realizing it.
Step 2: Understand Your True Advertising Ceiling (Break-Even ACoS)
The most important number in Amazon advertising isn’t your budget – it’s your break-even ACoS.
Break-Even ACoS Formula
(Revenue – Cost of Goods – Amazon Fees – Other Variable Costs) ÷ Revenue
Example:
- Product price: $40
- COGS + shipping: $14
- Amazon fees: $10
Profit before ads: $16
Break-even ACoS: 40%
This means:
- At 40% ACoS → $0 profit
- Below 40% → profitable
- Above 40% → ads are a growth investment
Your ad budget should never be set without knowing this number.
Step 3: Budgeting by Product Lifecycle Stage (Realistic Benchmarks)
New Product Launch (First 30 – 90 Days)
Typical ad spend:
- 20 – 40% of projected revenue
- Sometimes higher in competitive niches
Why it makes sense:
- You’re buying data, not profit
- Ads accelerate reviews and keyword indexing
- Organic ranking compounds future returns
Expert insight:
Strong launches often overspend early on purpose, then taper spend once organic rank improves.
Growth Phase (Post-Launch, Scaling)
Typical ad spend:
- 10 – 20% of revenue
Focus areas:
- Exact match for proven keywords
- Defensive branded campaigns
- Product targeting against competitors
At this stage, ads should:
- Support organic rank
- Protect market share
- Expand keyword coverage incrementally
Mature Products (Profit Focused)
Typical ad spend:
- 5 – 12% of revenue
Characteristics:
- High organic sales share
- Stable conversion rates
- Predictable CPCs
Here, your budget is about maintenance, not experimentation. Every dollar should have a clear return expectation.
Step 4: Category & Competition Matter More Than Revenue
Two sellers earning $50,000/month can require wildly different budgets depending on category dynamics.
High-Competition Categories (US Market)
- Supplements
- Skincare
- Electronics
- Home & Kitchen
Reality:
- Higher CPCs
- More aggressive competitors
- Ads are essential just to maintain visibility
Expect higher baseline ad budgets in these categories.
Lower-Competition or Niche Categories
- Specialized B2B products
- Replacement parts
- Highly differentiated SKUs
Here, strong listings and organic rank can reduce ad dependency significantly.
Step 5: How Daily Budgets Actually Work on Amazon
Many sellers misunderstand daily budgets.
Important truths:
- Amazon can overspend daily budgets (up to ~25%)
- Budgets don’t control efficiency – bids and targeting do
- Low budgets throttle data collection
Practical rule:
- Budget should never be the limiting factor on winning keywords
- Use budgets to cap total exposure, not control performance
If a profitable keyword stops spending because of budget limits, you’re leaving money on the table.
Step 6: Budget Allocation Across Campaign Types
A healthy Amazon ad budget isn’t dumped into one campaign.
Typical Allocation Model
- Sponsored Products (60 – 70%)
- Core keyword capture
- Highest purchase intent
- Sponsored Brands (15 – 25%)
- Brand defense
- Category authority
- Top-of-search visibility
- Sponsored Display (5 – 15%)
- Remarketing
- Competitor ASIN targeting
The exact split should reflect your brand maturity and catalog size.
Step 7: When to Increase – or Cut – Your Amazon Ad Budget
Increase Budget When:
- ACoS is below target
- Budget caps are limiting impressions
- New profitable keywords are emerging
- Conversion rate improves after listing optimization
Reduce Budget When:
- Spend shifts to low-converting terms
- Organic rank stabilizes for core keywords
- Margins tighten due to fees or costs
- Seasonal demand declines
Smart sellers adjust budgets monthly, not yearly.
Common Amazon Advertising Budget Mistakes (and How to Avoid Them)
- Budgeting by Revenue Alone
→ Always tie spend to margins and goals. - Starving New Products
→ Launches require aggressive budgets to succeed. - Letting Budgets Cap Profitable Traffic
→ Budget limits should never block winning keywords. - Never Reallocating Spend
→ Mature products should not be funded like new ones.
Final Takeaway: Amazon Ad Budgets Are a Strategy, Not a Number
The right Amazon advertising budget is not a fixed percentage – it’s a dynamic system tied to:
- Profitability thresholds
- Lifecycle stage
- Competitive pressure
- Long-term brand goals
Sellers who treat ad budgets as an investment portfolio, rather than a cost center, consistently outperform those chasing arbitrary benchmarks.
At SwanseaAirport, we’ve seen that the most successful Amazon and Walmart sellers don’t ask “How much should I spend?“
They ask:
“What outcome am I buying with this spend – and how do I scale it responsibly?“
That mindset is what turns advertising from an expense into a growth engine.
Frequently Asked Questions
