Hedging Advertising Expenses

Amazon allows you to define and limit your daily advertising expenses in two different and intelligent options. However, I assume that very few of you use this option for fear of losing sales.

In the past year, Amazon has significantly improved its advertising engine, and some of these improvements are reflected in this control mechanism.

Limiting all campaigns of the "Sponsored Products" type:

This option can be found under "Settings - Sponsored Products budget cap." With this option, Amazon will essentially pause all campaigns once they reach the budget you've set and restart them the next day.

After two days of activity with this type of control, Amazon will learn your activity and adjust the daily budget you've defined for campaigns that deliver better results.

In this case, you can create a situation where you maintain a consistent daily expenditure for campaigns, without exceeding it, thereby managing your profitability more intelligently.

Portfolio-Level Limitation:

A limitation at the portfolio level can be found under "Modify portfolio." Using this option, Amazon allows you to limit the spending amount on all campaigns under that portfolio for specific dates or on a monthly level.

If you use this feature at a monthly limitation level, Amazon will intelligently distribute the advertising budget to ensure there's enough money to "drag" the advertising throughout the month with the budget you've defined, similar to the model of Google advertising.

In summary, controlling advertising expenses is an excellent way to manage your expenditures, gain better financial control, and maintain a positive profitability.