Amazon Advertising Launches Performance-Based Budget Rules to Help Increase Campaign Sales

This blog was updated on March 13, 2024.

Amazon Advertising is important for driving traffic and conversions on Amazon’s competitive platform. Ad campaigns such as Sponsored Products need monitoring and adjusting to ensure they reach the right customers at the right time. To help make this easier, Amazon offers performance-based budget rules via the Amazon Advertising API and User Interface. Available for registered sellers and vendors, budget rules help reduce the time and effort spent on manually adjusting budgets. You can set budget rules for specific dates or based on performance goals. Amazon’s new budget rules provide the following benefits:

• Improved Sales Opportunity: You can use budget rules to help ensure that high-performing campaigns do not run out of budget. This helps reduce missed opportunities and improves the chance of receiving sales.
• Budget Recommendations: During shopping events, Amazon will provide recommended budgets based on historical shopping activities. Event recommendations can help make sure your campaigns have enough budget when customer traffic and purchase intent are higher than normal.
• Plan Budgets in Advance: Setting budget rules helps you plan and set campaign budgets in advance for high-traffic events like Prime Day and the holidays.
• Reduce Manual Effort: You can save time by setting budget rules that automatically increase campaign budgets for strategic events instead of manually adjusting campaigns.

Amazon offers two types of rules to increase the daily budget for your campaigns:

1. Schedule-based budget rules allow you to set budgets in advance for special events such as Prime Day or based on a custom period. The rule will increase the campaign budget by the percentage you specify during the date range you set in the rule or during the special event selected. Note: Amazon will recommend events based on the products in your campaign when they anticipate more demand and a need for an increased budget. If you remove or update products from a campaign, Amazon will not remove the rule, but the recommendations might change.
2. Performance-based budget rules allow you to set rules to increase your  campaign budgets only when they meet a certain performance threshold using metrics such as advertising cost of sales (ACOS), click-through rate (CTR) and conversion rate (CVR). Amazon calculates these metrics using data from the previous seven days. Campaigns must have a minimum daily budget of $10 to use performance-based rules.

Amazon Budget Rules Evaluation

Amazon evaluates budget rules on your campaigns at the start of the day to calculate the campaign budget for the day. If the rule meets the conditions set, the budget increases for the day in the percentage configured in the rule. If the rule doesn’t meet the conditions set, Amazon applies the daily budget amount for the campaign.

Each time you create or update a new budget rule, Amazon evaluates it to update the budget for that day. Amazon also evaluates budget rules every time you change the daily campaign budget.

Amazon computes daily budgets for campaigns that have a set budget rule. If the budget rule meets its criteria, the campaign budget increases by the specified percent. Campaigns will not go out of budget if the campaign spend is less than the increased budget. Amazon applies the daily budget if any rule criteria are not satisfied.

You can specify up to 250 budget rules for each campaign. If more than one rule satisfies the specified conditions, the rule with the highest budget increase is applied. Amazon applies an increase for only one rule at a time. For example, consider a campaign “Running Shoes for Q4” that has two rules:

1. Increase budget by 20% from November 1 to November 30.
2. Increase budget by 100% on November 27 (Black Friday).

When Amazon evaluates the rules on November 26, they will increase the budget by 100% for November 27.

The Status of Your Amazon Budget Rules

Budget rules include a status based on conditions specified, including the date range and performance goal. The following are the six budget rule statuses:

• Active
  The rule is active and budget for the day is increased based on the rule configuration.
• On Hold
  The budget rule can be “on hold” for any of the following reasons: 1) performance criteria has not yet been met, 2) another active rule supersedes the current rule, or 3) a recurrence condition has not yet been met.
• Paused
  The rule is paused and not eligible for evaluation.
• Budget Threshold Not Met
  The rule is not applicable because the minimum required daily budget threshold is not met. This is applicable for performance rules only.
• Pending Start
  The start date of the rule is in the future. On the start date, the rule will be evaluated and will become active if the condition is satisfied.
• Expired
  The rule has reached the end date specified in the rule configuration.

Available Metrics for Performance-Based Rules

• ACOS: the percent of attributed sales spent on advertising within the specified time period for a type of campaign due to clicks on your ads. Calculated by dividing total spend by attributed sales. Available for Sponsored Products and Sponsored Display.
• CTR: The click-through rate for the campaign. Calculated by dividing the number of clicks by the number of impressions in the time period. Available for Sponsored Products and Sponsored Display.
• CVR: the conversion rate. Calculated by dividing the number of conversions attributed to clicks in the time period by the clicks that occurred in the time period. Available for Sponsored Products and Sponsored Display.
• IS: Top-of-search impression share for a campaign. Calculated as the percentage of top-of-search impressions a campaign received out of the total top-of-search impressions it was eligible to serve on. Note: IS is not available as a metric for any campaign that contains a video creative. Available for Sponsored Brands.
• NTB: Percent of sales in local currency derived from new-to-brand customers. Available for Sponsored Brands.
• ROAS: Return on ad spend. Amazon RoAS is calculated by dividing ad revenue by ad spend and tells you how much money you earn for every dollar you invest in advertising. Sponsored Brands, Sponsored Products, and Sponsored Display. Note: for sellers, the time period used for metric calculation is within 7 days of an ad click. For vendors, metrics are calculated within 14 days of an ad click.

Channel Key Overview:

Performance-based and schedule-based rules for Amazon Ads offer several benefits:

1. Optimization of Ad Performance: Performance-based rules allow advertisers to automatically adjust their ad campaigns based on predefined performance metrics such as CTR, CVR, or ROAS. This optimization ensures that ad spend is directed towards campaigns that deliver the best results, maximizing ROI.
2. Efficient Budget Allocation: By setting performance-based rules, advertisers can ensure that their budget is allocated efficiently across different campaigns and ad groups. For example, if a campaign’s performance falls below a certain threshold, the rule can automatically reduce its budget or pause it altogether, allowing resources to be reallocated to higher-performing campaigns.
3. Time-saving Automation: Both performance-based and schedule-based rules automate the process of campaign management, saving advertisers time and effort. Instead of manually monitoring and adjusting campaigns, rules can be set up to automatically make changes based on predefined conditions, freeing up time for strategic planning and optimization.
4. Adaptation to Market Dynamics: Performance-based rules allow advertisers to quickly adapt to changes in market dynamics or consumer behavior. For instance, if a competitor launches a new product or a seasonal event influences purchasing patterns, rules can be adjusted to capitalize on opportunities or mitigate risks.
5. Control over Ad Delivery: Schedule-based rules enable advertisers to control when their ads are delivered based on factors such as time of day, day of the week, or specific dates. This ensures that ads are shown to the most relevant audience at the most opportune times, increasing the likelihood of engagement and conversions.

Overall, performance-based and schedule-based rules empower brands to optimize their Amazon Ads campaigns, improve ROI, and achieve their advertising objectives more efficiently and effectively.