Emily Ostrander is a PPC Manager at Bobsled.
Year after year, Bobsled’s PPC expertise helps brands struggling to keep up with the most optimal spending strategies on Amazon. It’s what has landed us on the new Inc. 5000 list as well as helped our two cents land on the Amazon Advertising page itself. This is because we give all of our clients one very concrete answer about how much they should spend on Amazon PPC in 2022:
There is no concrete answer!
Every brand is different, and so is every omnichannel marketing strategy. That is why I don’t usually prescribe a one-size-fits-all solution to describe exactly how much ad spend a given brand should be looking to have for a PPC campaign. However, there are a few important recommendations about this kind of ad spending that everyone should stay apprised of.
Throughout my years of working with over 60 clients, I have found the following best practices to work successfully when looking to achieve a wide range of goals. Keep these guidelines in mind as you finalize your PPC budget for the rest of 2022.
We have published several guides on this very topic in the past and they always remain as some of our most visited blog posts of all time:
Now I’m back on deck to answer more of your questions on this topic! Let’s dive back into the essentials of PPC spending and see what’s changed in 2022.
How to Determine Budget and Ad Spend Allocation
The two biggest questions we continue to get from clients looking to increase ad spend effectiveness are:
- “How big should our budget be?”
- “How should we allocate our budget across the different types of ads?”
The way that PPC Managers like myself answer this question is different for each client. It largely depends on the overall goals a brand is looking to achieve with its marketing efforts. If there’s one important outline I personally always rely on when breaking down average ad spend, it’s this:
- Spend 75% on Sponsored Products, 20% on Sponsored Brands, and 5% on Sponsored Displays
- Focus on the top 20% of your product catalog to advertise
- Determine the breakeven ACoS on each ASIN to get a better understanding of ad spend and the limitations on it
- Reserve 10% of PPC budget for experimentation on new campaigns and strategies
Of course, these percentages should be adjusted based on the client’s individual goals. For example, if a client wants to focus solely on gaining visibility and raising brand awareness, I would recommend putting more budget towards Sponsored Displays.
Another useful tip is to run a share of voice analysis on top-identified keywords to see how much of the pie is available to grab. Typically, I present this analysis to the client so we can have a joint conversation about the most important strategies to invest in.
Example of Share of Voice Analysis
Bobsled Beauty Brand Uses This Allocation for Optimal Success
I recently had a conversation on the topic of PPC budget allocation with a beauty brand. This client allocated around $300k in advertising for the year, and they ended up going with our outlined recommendation of 75% on Sponsored Products, 20% Sponsored Brands, and just 5% on Sponsored Displays. Breaking down this spend allocation, the client was able to reach their financial goals.
Then, this client wanted to focus on the goal of increasing visibility and brand awareness during Q2. The best solution to achieve this would be to allocate more of the budget towards Sponsored Displays and less on Sponsored Brand campaigns. They also pulled back on their Sponsored Products spending. This allocation was decided on since the client was already using their Sponsored Products successfully. The next most important facet to prioritize would be Sponsored Brands, which specifically works to increase exposure on Amazon.
I use this typical allocation style with most of my clients; but as you can see, it is not always the solution. Some clients rely a lot more heavily on top-funnel vs. low-funnel efforts, which would shift the allocation numbers to be more in line with their goals.
Amazon PPC Spend - What’s Changed in 2022?
These guidelines are more or less the same as they’ve always been, with most information from our 2021 post, How much to spend on Amazon PPC remaining relevant in 2022. Probably the most obvious change that is noticeable right off the bat is the fact that we are starting to see a trend of budget allocation away from Sponsored Products and towards Sponsored Brands and Sponsored Displays. Sellers want more recognition on Amazon now than ever before, which is why there is such a big shift in spend allocation this year. Sellers are starting to prioritize custom creatives, headlines, logos, and other content that can ultimately drive a customer to the brand store for direct engagement.
This falls in line with some of the other small but critical changes that we are seeing already in 2022. Let’s go over them now:
The increase in competition has caused the cost of ad placements to rise. CPCs are more expensive overall, which is why many brands are reconsidering budget spend allocation before Q2.
CPC Increase in 2021
Additional Advertising Features
There are more features to use and levers to pull than ever before, which is another factor leading to increased PPC budget allocation. These added features and methods include:
- Custom headlines and logos added to the Sponsored Display ad type
- Amazon Attribution, which allows brands a clearer view into how their external traffic converts to sales on Amazon
- Amazon recently announced Twitch audiences as a part of their DSP audience targeting options, along with some changes to Sponsored Brands and Sponsored Products
- Audience detail pages are now updated with more information
- Sponsored Brands have videos and creative assets that are unique to their own branding and vision
- Sponsored Products have leveled up with a new search term impression report available to sellers
How to Prioritize PPC Ad Spend Moving Forward
I believe that brands are going to need to allocate a larger portion of their ad budget to Amazon PPC as the year goes on. The space is increasingly competitive and CPC costs are higher than ever; at the same time, there are many more features and additional advertising levers that can be pulled to help brands achieve their goals, such as new DSP initiatives.
Many of our clients are already aware of the direction that Amazon PPC spend is heading since it’s been going in that same direction for a while. Inventory levels and supply chain issues have definitely put a wrench in their PPC spending plans. And CPCs will only keep rising. At Bobsled we offer 7 years of experience working with brands on their Amazon marketing strategy, but ultimately, it’s up to the client to decide how much they should spend on PPC while using our recommendations. What you should spend varies greatly, especially depending on the overall outcome the client is looking to achieve. On that note, my Bobsled colleagues are working on a major research project that investigates best practices for retail media allocation in general. If your brand sells and advertises on multiple retail channels, sign up for our Retail Media Allocation research which launches in May 2022.
That said, throughout my years of working with over 60 clients, I have found these best practices to work successfully when looking to achieve a wide range of goals. Keep these guidelines in mind as you finalize your PPC budget for the rest of 2022.