The Monthly Budget Algorithm is designed to balance exploration (testing new opportunities) and optimization (improving performance) while making sure to hit your defined budget.
This algorithm offers a simple way to manage Amazon advertising campaigns by allowing you to set a fixed monthly budget. Once activated, it ensures your budget is spent effectively while working to maximize sales and minimize ACOS (Advertising Cost of Sale).
How It Works
The algorithm’s primary constraint is your set budget. Only after the budget target is met does it shift focus toward optimizing ACOS and driving sales.
For example, if you set a $1,500 monthly budget (averaging to $50/day), the algorithm prioritizes making sure it's on track to hit $50/day before optimizing for ACOS and sales volume.
Main use cases
✅ Low historical data
If you’re launching new products or working with limited historical data, strategies using the ACOS Target Algorithm may not make accurate adjustments. In such cases, the Monthly Budget Algorithm is the best solution.
It collects data while maintaining strict spending control.
The algorithm’s mandatory spending rule ensures ad spend is distributed effectively even with minimal historical performance data.
✅ Budget constraint
When you have a fixed marketing budget that needs to be spent consistently, this algorithm has been designed to ensure that the budget is spent evenly throughout the month while maximizing your sales volume. This can help increase your spend quickly to your desired level, and prevents over or underspending later, maintaining a steady flow of traffic and conversions.
When to Switch to the Monthly Budget Algorithm
Switch to the Monthly Budget Algorithm after achieving at least 5 ad sales per week across products running on a Constant Bid strategy. This ensures that the algorithm has enough initial data to set effective bids, and balance budget distribution with performance optimization effectively.
How to Use Monthly Budget Target?
When you create a strategy :
Select the "Monthly Budget Target" algorithm.
Assign a budget for the ongoing month.
Important Considerations:
The assigned budget applies to the ongoing calendar month, not a trailing 30-day period.
On the 1st day of each month, the budget will reset. If you start a Monthly Budget in the middle of a month, make sure to adjust the budget for the next month accordingly.
How to Adjust the Budget:
Hover over "Monthly Budget" until the edit icon appears, then click on it.
Adjust the budget for the next month as needed.
Watch this Quick Video on the Different Algorithm Types