How Much Should You Really Spend on Amazon Ads? A Budgeting Guide for 6- and 7-Figure Sellers

Figuring out how much to spend on Amazon ads can feel a lot like trying to navigate with Apple Maps in 2012 – you think you’re headed the right way, and suddenly you’re in a lake. 

If you’ve been selling on Amazon (explore more about Amazon advertising cost) for any length of time, you already know ads can be a total game-changer. The right campaigns can skyrocket your visibility, drive consistent sales, and build real brand momentum. But the wrong ones will torch your budget before you even notice what’s happening. 

Here’s the catch: most sellers fall into one of two traps. Either they overspend (and end up wondering where all the profit went), or they underinvest (and wonder why their growth has flatlined). Neither is a great time. 

Whether you’re already pulling six figures or you’re eyeing seven, this guide will help you budget smarter, not just harder. We’ll break down how to base your ad spend on real profit (because revenue alone doesn’t pay the bills), what numbers actually matter, where your money does the most work, and how to avoid the all-too-common trap of pouring cash into campaigns that just don’t deliver. 

By the time you’re done reading, you won’t be guessing anymore – you’ll have a solid, no-fluff budget game plan that helps you grow without gutting your margins. 

No recycled advice. Just seller-tested strategies you can actually use. 

Start With the Numbers That Matter: Profit, Not Just Revenue

The truth is that revenue sounds good, but it doesn’t pay the bills. It’s easy to get hyped about hitting @50K in monthly sales, but if you’ve got thin margins or bloated ad costs, your blank account might be telling a very different story. 

That’s why your ad budget should be based on profit, not revenue. Because what’s the point of “growing” if your margins are getting wiped out? 

Here’s a simple way to look at it: 

Let’s say you’re pulling in $50K in sales each month and your profit margin is around 30%. Cool, then you’ve got $15K left after all your costs. But here’s where people mess up: they start throwing money at ads without thinking about what they can afford to spend without slicing into that $15K like a hot knife through butter. 

A good rule of thumb: Pick an ACoS target that still leaves you profitable. For example, if you’re aiming for a 20% ACoS, you’d be setting aside around $10K for ads. That still leaves you with $5K in profit, which keeps the lights on and the business growing. 

But (and this is important) you can’t just pull that 30% margin out of thin air. You need to know exactly what’s eating into your revenue. We’re talking COGS, Amazon fees, packaging, shipping, returns, maybe even storage. Get all that down before you start locking in your budget. 

Know Your Metrics: ACoS, TACoS and ROAS

ACoS (Advertising Cost of Sales) 

• How much are you spending to make a sale through ads?
• Use this to spot which campaigns are wasting money and which ones are pulling their weight.

Formula: Ad Spend ÷ Ad Revenue 

TACoS (Total Advertising Cost of Sales) 

• How does your ad spend stack up against all your sales, including organic?
• This is your big-picture health check. If your TACoS is stable or dropping while sales go up, you’re in a good place.

Formula: Ad Spend ÷ Total Revenue 

Curious about benchmarks? Here’s a deeper look at what is a good TACoS on Amazon. 

ROAS (Return on Ad Spend) 

• How much money are you getting back for every dollar you spend?
• This helps you see how efficient your ad dollars really are.

Formula: Ad Revenue ÷  Ad Spend 

Here’s how to think about it in real life: 

If you’re rolling out a brand-new product, TACoS is your best friend. It tells you whether your ads are lifting overall sales, not just bringing in paid clicks. 

But if you’re simply updating your existing campaigns, shift your focus to ACoS. It zooms in on your ad performance specifically and helps you spot where money’s being wasted versus where it’s pulling its weight. 

Where Should Your Ad Budget Actually Go? 

Not every Amazon ad does the same job, so spreading your budget evenly across all types won’t do it. Some ads are built to drive fast sales. Others are more about building visibility and staying top of mind. 

• Sponsored Products (60–70%): 
  These are your day-to-day drivers. They appear exactly where shoppers are already looking and typically yield the highest return. If your budget is tighter or you need to concentrate on profitable conversions, this is the type to focus on. 

• Sponsored Brands (20–30%): 
  These help build recognition. You get your logo, headline, and a lineup of products shown right in search results. They’re ideal if you’ve got more than one product to show off or want to strengthen your brand presence. 

• Sponsored Display (10–15%): 
  This one’s for retargeting and reminding shoppers about your product after they’ve clicked away. It’s a longer game (not always cheap) but great for staying visible and pulling shoppers back in. 

Remember, these are only ballpark estimates. If you’re introducing something new, you may do more of Sponsored Products. If you’ve already done well and want to build your brand, you may do more Sponsored Brands or Display. The important thing is tweaking based on where you are and what your product really requires.

Matching Your Ad Strategy to Your Stage: Smart Budgeting by Scenario

Your Amazon ad budget shouldn’t look the same in every situation. Here’s how to adjust based on where you are: 

New Sellers 
Goal: Visibility and first sales 
Focus: Heavy on Sponsored Products. Start with high-intent keywords.
Why: You need traction, not brand awareness (yet).

Established Brands 
Goal: Protect position and grow share 
Focus: Balanced split across all ad types. 
Why: You’re optimizing and expanding now, not just converting. 

Competitive Niches 
Goal: Stay visible in a crowded space 
Focus: Lean hard on Sponsored Products with aggressive bids. 
Why: High CPCs demand a tighter, performance-driven strategy. 

Low-Competition Categories 
Goal: Build presence and brand equity 
Focus: More flexibility for Sponsored Brands and Display. 
Why: Lower CPCs mean you can grow brand awareness early.

When (and How) to Increase Your Budget: 

Once your campaigns are running smoothly and getting decent returns, it’s time to scale. But here’s the thing: more spending doesn’t always mean more sales; at least not right away. 

It’s best to increase your budget slowly. About 10-20% at a time, then watch what happens. If your sales increase along with your spending, great —you’re on the right path. If they don’t, you may need to change your strategy before spending more. 

Here are a few signs it might be time to bump things up: 

• You’re launching a new product and want to build early traction
• Your ROAS has been strong and stable for a few weeks
• Your competitors are getting more aggressive and starting to outrank you
• You’re gearing up for a big event like Prime Day, Black Friday, or the holiday season 

But if your numbers are slipping (like TACoSc creeping up or sales flatlining), it’s time to pause, not push. 

Signs You Might Be Overspending (Without Even Realizing It) 

Overspending isn’t just a rookie mistake. Believe it or not, even seasoned sellers do it, especially when they haven’t checked in on their campaign in a while. 

Here are some red flags to watch for: 

• Your ACoS is higher than your actual profit margin
• Click-through rates look great, but sales aren’t following
• Your ad sales are going up, but your total sales are flat
• You haven’t reviewed or adjusted your campaigns in over a month

If that sounds familiar, don’t panic. A few small changes can actually fix things fast: 

• Review keywords, cut anything that’s burning cash without converting
• Dial back auto campaigns that are spending too freely
• Shift your budget to campaigns that are actually delivering returns
• Tighten up your product listings, and make sure your pages are doing their part to convert traffic

Amazon PPC Tools like Amazon Brand Analytics or Helium10 can help you spot weak spots quickly. A quick audit every couple of weeks goes a long way. 

Planning for Sales Events: Prime Day, Q4, and Beyond 

Prime Day, Q4, and the rest of the major shopping events are goldmines, but also budget traps if you’re not ready. CPCs go up, competition gets wild, and it’s easy to overspend fast. 

Here’s how to prep without the panic: 

• Check last year’s numbers: What worked? What didn’t? Use that data to guide your strategy.
• Bump your daily budget: Plan to 2-3x it during peak days so you don’t miss out when traffic spikes.
• Start early: Scale up your ads 1-2 weeks ahead so you’re not scrambling at the last minute.
• Retarget smart: Use Sponsored Display after the event to follow up with browsers who didn’t buy.
• Stick with what works: Focus on top keywords and bestsellers. And clean up your listings – because traffic means nothing if your page doesn’t convert.

So… How Much Are Top Sellers Really Spending? 

If you’re wondering what the “big guys” are putting into ads, here’s a quick peek: 

• 6-figure sellers usually spend 10-20% of their monthly revenue on ads. So if you’re making $100K/month, that’s $10K-$20K going to Amazon PPC. 

• 7-figure sellers tend to be more efficient, often spending 8-12% of revenue. That could look like $90K-$120K per year on a $1M business. 

But here’s the thing: it’s not just about spending more. It’s about spending smarter. The sellers who scale the best aren’t always the ones with the biggest budgets – they’re the ones who know where every dollar is going and why. 

Budget Allocation Scenarios: What to Adjust Based on Your Business Context

How you spend your Amazon ad budget should depend on where your business is right now, not just what everyone else is doing. A new seller launching their product has very different priorities than a brand that’s already pulling in steady sales. The same goes for your category and how cutthroat the competition is. 

So instead of a copy-paste approach, here are a few common seller situations and how you might want to split your budget based on what makes sense: 

New Sellers 

• You need visibility first. Focus on Sponsored Products that get you in front of shoppers already searching.

Suggested split:

• 70-80% Sponsored Products
• 10-15% Sponsored Brands
• 5-10% Sponsored Display

Launching a New Product 

• The first 90 days matter. Push hard with manual campaigns and retargeting.

Suggested split:

• 75% Sponsored Products
• 15% Sponsored Brands
• 10% Sponsored Display 

Promoting an Established Product 

• Now it’s about efficiency. Mix in cross-sells and brand-building.

Suggested split:

• 60% Sponsored Products
• 25% Sponsored Brands
• 15% Sponsored Display

Small Budget 

• Stick to what works. Focus on proven keywords and high-intent campaigns.

Suggested split:

• 80% Sponsored Products
• 15% Sponsored Brands
• 5% Sponsored Display

Large Budget 

• You can test more and scale faster. Explore broader keywords and branding.

Suggested split:

• 50% Sponsored Products
• 30% Sponsored Brands
• 20% Sponsored Display

Competitive Category 

• Expect higher CPCs. Spend more on Sponsored Products to stay visible.

Suggested split:

• 65-70% Sponsored Products
• 20% Sponsored Brands
• 10-15% Sponsored Display 

Low-Competition Category 

• More room for branding early. Build awareness while costs are lower.

Suggested split:

• 55-60% Sponsored Products
• 25-30% Sponsored Brands
• 10-15% Sponsored Display

Competitors Are Active 

• Defend your keywords, stay visible, and use retargeting.

Suggested split:

• 60% Sponsored Products
• 25% Sponsored Brands
• 15% Sponsored Display

Minimal Competition 

• Use this as an opportunity to claim space and grow brand presence.

Suggested split:

• 50% Sponsored Products
• 30% Sponsored Brands
• 20% Sponsored Display

Common Budgeting Mistakes (and How to Avoid Them) 

You don’t need to be new to Amazon to fall into these traps. Even experienced sellers make these mistakes.” 

Mistake #1: Budgeting Based on Revenue Alone 

Don’t follow the “just spend 10-15% of revenue” rule blindly. Margins vary. A slim-margin product can’t support that kind of spend. 

Fix: Budget based on net profit and target ACoS, not top-line sales. 

Mistake #2: Set-It-and-Forget-It Campaigns 

Campaigns change fast. What worked last month might be burning a budget today. 

Fix: Audit every 1-2 weeks. Adjust bids. Check placements. Pause underperforming keywords.

Mistake #3: Obsessing Over ACoS Alone 

A campaign with a high ACoS could still be profitable if it’s helping drive organic sales. And one with low ACoS could be cannibalizing your rank. 

Fix: Track TACoS to understand the full impact. 

Mistake #4: Scaling Before Optimizing 

Don’t scale what’s not working. That just amplifies waste. 

Fix: Clean up your listings. Improve targeting. Get your current campaigns performing before adding more budget. 

Let’s Take a Look at Your Ad Account 

Avoiding common ad budget mistakes is a great first step, but keeping your Amazon campaigns truly optimized day in and day out is a whole different challenge. 

That’s where we come in. At SellerMetrics, we dig into your ad account, find what’s working (and what’s not), and help you stop wasting money on campaigns that are not even working. Our goal is simple: make your ad spend work harder and bring in better results. 

If you want a second pair of expert eyes on your account.. 

Book a free audit today or reach out to our team – we’re here to help! 

Final Thoughts: 

At the end of the day, there’s no magic number – but your ad budget should make sense for your margins, goals, and where you are in the business. It’s not about spending more, it’s about spending smart. 

Top Amazon sellers don’t just set a budget and forget about it. They track ACoS, TACoS, and profit per product. They adjust. They test. They spend where it counts, and pull back where it doesn’t. 

If you want to scale without burning cash, the answer isn’t “bigger budget.” It’s a better strategy. 

Not sure what your ideal ad budget should be? We can help. Let’s review your campaigns and get your spend working harder (not just harder to track). Reach out and let’s make your ads smarter. 

FAQ: How Much Should Sellers Invest in Amazon Ads?