Amazon Budget Rules for Merch: set Q4 budgets ahead, safely

Amazon budget rules raise a campaign's daily budget automatically, either for dates you choose (schedule-based) or when the campaign's performance passes a threshold you set (performance-based). For Merch sellers they are the easiest way to put the Q4 budget changes in place now, so they happen on time without you logging in every morning.

The catch is the royalty. A budget rule only lets a campaign spend more. It doesn't check whether the extra clicks pay for themselves, so on a $3-5 royalty each rule needs a limit you set from your own numbers.

This guide covers both rule types, how to set them for seasonal designs, and the ROAS threshold that actually means "profitable" at each price.

What Amazon budget rules are

According to Amazon's budget rules guide, there are two kinds:

• Schedule-based rules set a budget increase in advance for a special event, such as Prime Day or Halloween, or for a date range you choose. Amazon's own example is a 50% budget increase during Black Friday.
• Performance-based rules increase a campaign's budget when its performance reaches a threshold. The guide names return on ad spend (ROAS), click-through rate and conversion rate as the metrics, with the example of a 20% increase when ROAS reaches 5.

You set them up in the campaign manager. In both cases the increase is described as a percentage of the campaign's normal budget.

Notice what the guide describes: increases. A rule makes room for more spend at the right moment. Bringing a budget down when a design stops selling is still your job.

A budget rule changes spend, not what a click is worth

Before setting any rule, separate two things that are easy to mix up.

Your bid decides how much you pay per click and where your ad can appear. Your budget decides how many clicks you can buy in a day before the campaign stops.

A budget rule only touches the second. That has two consequences for a royalty seller:

If a campaign rarely spends its full budget, a rule changes nothing. The budget isn't what limits it; the bid or the keyword's traffic is. Raising the budget on it only creates a risk for the day traffic does spike.

If a campaign loses money per order, a rule makes it lose faster. More budget buys more of the same clicks at the same price. A design that doesn't pay at $2 a day doesn't pay at $3.

So a budget rule belongs on a campaign that sells at a bid below break-even and runs out of budget. That is a short list for most Merch accounts, and that's fine.

If you haven't worked out the break-even bid for your price points yet, start with the break-even ACoS table by price or the free Merch max bid calculator.

Schedule-based rules for seasonal designs

Schedule rules suit the Merch calendar well, because seasonal designs sell in short, predictable windows. Here is a way to set them for the rest of Q4.

Pick the campaigns. Only designs that already got ad orders at a bid under break-even. New Christmas designs stay on their normal learning budget until they sell.

Pick the dates. Use the windows when buyers actually order: Black Friday week, and the December run-up to Christmas. The Christmas ad timeline splits the season into learn, sort, push and taper phases; a rule fits the push phase, roughly 1 to 18 December.

Pick the increase. Start modest, 25-50%. You can always add more for a design that keeps running out of budget.

Write it down. Note each rule, its campaigns and its dates in one place, so in January you can tell which results came from the extra budget.

End before delivery stops. Set the end date for when the delivery date on your product page moves past Christmas, not on 24 December.

Halloween is effectively over for ad changes this year: orders that need to arrive by 31 October are already placed. If you had Halloween designs on a rule, check that it ends with the event, and note which designs sold for next September.

A worked example: what a 50% rule costs

Take a $19.99 Christmas design that sold in November. Say it pays about $5 royalty; with the 9.1% return rate measured on this site (60-day returns data), it keeps about $4.55 per order on average.

Its normal budget is $2.00 a day. A schedule rule adds 50% from 1 to 18 December.

That is the whole test for the rule: in those 18 days, does the extra dollar a day bring about 4 more orders than you would have had anyway?

For a design that converts at 8% with clicks around $0.30, $18 buys about 60 clicks, which at 8% is about 5 orders. That clears the bar, just. At 5% conversion, the same clicks bring about 3 orders, and the rule loses money even in December.

The rule doesn't know which of those two designs it is running on. You do, from November's data.

Performance-based rules: set the ROAS threshold from your royalty

Performance rules sound safer: raise the budget only when the campaign is doing well. But "doing well" is a number you choose, and Amazon's example of ROAS 5 is not a safe default on a royalty.

ROAS is ad sales divided by ad spend, and ad sales count the full list price. Your royalty is only part of that price. So the ROAS at which a design breaks even is:

break-even ROAS = list price ÷ royalty kept per order

Using the same example royalties as the break-even ACoS table, after 9.1% returns:

At $15.99 and $17.99, a campaign at ROAS 5 is losing money on every order, and a rule with that threshold would give it more budget to lose with.

A practical way to set the threshold:

Work out break-even ROAS for the design's price, after returns.

Add a margin of about 20%, so the rule fires on profit and not on noise. For a $19.99 shirt that is about 5.3; for $17.99, about 6.8.

Use separate rules for campaigns at different prices, since one threshold can't fit them all.

Keep the increase small (10-20%), because ROAS over a few days on a few orders swings a lot.

If ROAS feels unfamiliar, what is a good ROAS on Amazon explains it from the royalty side, and the free ACoS and ROAS calculator converts between the two.

Common mistakes with budget rules on Merch accounts

These are the ways budget rules most often cost royalty sellers money:

• Putting a rule on every campaign. A rule on hundreds of untested designs multiplies spend where nothing has sold yet. Rules are for proven campaigns.
• Using the default ROAS example. ROAS 5 is below break-even for many Merch price points, as the table shows.
• Stacking a rule on top of a bid raise. If you raise bids and budgets in the same week, you can't tell which change caused the result. Change one per campaign at a time.
• Forgetting the end date. A custom range should end when buyers stop ordering for the event, not when you remember it.
• Treating ACoS in the console as profit. The console counts list price and ignores returns. Judge the season on royalty kept minus spend.

If your account has many small campaigns that never spend their budget, the bigger lever is usually bids and structure, not budgets. How to lower Amazon PPC costs covers that side.

How PPC Optimizer Pro handles this

PPC Optimizer Pro doesn't create Amazon's budget rules; you set those in the campaign manager. What its Lab does is the part a rule can't: it decides which targets are worth more money.

You upload your 60-, 30- and 14-day bulk files plus your sales report. The Lab works out a break-even bid for each target from its royalty and real conversion rate, with returns subtracted, and shows every suggested change with the reason behind it. You review them and download one Amazon-ready bulk file.

That gives you a short, evidence-based list of proven campaigns to put on a rule. There is a 7-day free trial.

FAQ

What are Amazon budget rules?

They are a campaign manager feature that raises a campaign's budget automatically. Schedule-based rules apply for an event or date range you choose; performance-based rules apply when a metric such as ROAS, click-through rate or conversion rate reaches a threshold you set.

Do budget rules lower my bids or budgets?

Amazon's guide describes them as budget increases. They don't change your bids, and lowering a budget when a design stops selling is still a manual change, so set end dates and check your campaigns after each event.

What ROAS threshold should a Merch seller use?

Start from break-even ROAS: list price divided by the royalty you keep after returns. In the example above that is about 4.4 for a $19.99 shirt and 5.7 for a $17.99 one. Set the threshold about 20% above it, separately for each price.

Should I use budget rules on new designs?

Usually not. A new design has no conversion rate yet, so a rule would only buy more unproven clicks. Let new designs learn on a small budget, and add a rule once they have sold at a bid under break-even.

Are budget rules worth it for small accounts?

They are worth it when a few proven campaigns run out of budget during an event. If your campaigns rarely spend their full budget, a rule changes nothing, and your time is better spent on bids.

Keep reading

• Amazon PPC for Christmas: when Merch sellers should start, spend and stop
• Amazon PPC for Black Friday: a Merch seller's Q4 plan
• Amazon PPC strategy for royalty products