How to Allocate Your Amazon Advertising Budget Across Campaign Types

Amazon gives sellers four major advertising campaign types: Sponsored Products, Sponsored Brands, Sponsored Display, and DSP. Most sellers dump 90%+ of their budget into Sponsored Products and leave the rest untouched. That is the right move early on. It is the wrong move once you are past $1M in annual revenue.

Budget allocation is not a formula you set once. It shifts as your brand grows, as competitive dynamics change, and as your goals evolve from "get found" to "defend and expand." Here is how we think about allocation at each stage, based on managing ad spend across 100+ brands.

The Four Campaign Types, Explained Simply

Sponsored Products

Your product shows up in search results and on product detail pages. These ads target shoppers with high purchase intent. They are the workhorse of Amazon advertising and deliver the most direct, measurable ROAS for most brands.

Sponsored Brands

Banner ads at the top of search results featuring your brand logo, a headline, and multiple products. These build brand awareness within Amazon and capture shoppers at the top of the search results page. Sponsored Brands Video is a subcategory that places video ads inline with search results.

Sponsored Display

Retargeting and audience-based ads that appear on product detail pages, customer review pages, and some off-Amazon placements. These reach shoppers based on behavior (viewed your product, viewed competitor products, searched related terms) rather than active search queries.

Amazon DSP

Programmatic display and video ads across Amazon properties and thousands of third-party websites. DSP uses Amazon's first-party purchase data for targeting and reaches shoppers throughout their online experience, not just when they are on Amazon.

Budget Allocation by Growth Stage

Launch Stage ($0 to $500K Annual Revenue)

Sponsored Products: 85-90%
At this stage, your only job is getting found. Sponsored Products drive the highest-intent traffic at the most measurable cost. Focus budget on your top 5-10 ASINs. Run auto campaigns to discover keywords, then graduate winners to manual campaigns with exact and phrase match.

Sponsored Brands: 10-15%
Even at launch, a small Sponsored Brands presence is worth it. A brand banner at the top of your most important keyword search results builds legitimacy. If you have video content, Sponsored Brands Video delivers some of the best ROAS of any format because click costs are still relatively low and the format commands attention.

Sponsored Display: 0%
You do not have enough traffic or purchase data for retargeting to be effective yet. Wait until you are generating consistent daily sales.

DSP: 0%
Minimums are too high and your brand awareness is too low for DSP to justify the spend. Build the foundation first.

Growth Stage ($500K to $5M)

Sponsored Products: 65-75%
Still the core of your advertising. But now you should have enough data to optimize aggressively. Segment campaigns by objective: branded defense, category conquest, and long-tail discovery. Each gets its own ACOS target and budget.

Sponsored Brands: 15-20%
Increase investment in Sponsored Brands, especially video. At this stage, you are competing for the top of search results against established brands. Sponsored Brands video is your best tool for stealing attention from the big players. We consistently see Sponsored Brands Video deliver 20-40% better ROAS than standard Sponsored Products for brands in this growth phase.

Sponsored Display: 10-15%
You now have enough traffic to make retargeting work. Start with product targeting (showing your ads on competitor product pages) and views remarketing (re-engaging shoppers who viewed your listing but did not buy). These campaigns are not high-volume, but they capture sales you would otherwise lose.

DSP: 0-5%
If your margins support it and you are hitting diminishing returns on Sponsored campaigns, a test DSP budget of $5K-$15K/month can start building upper-funnel awareness. Focus on retargeting audiences first since that is the most directly measurable use case.

Scale Stage ($5M+)

Sponsored Products: 45-55%
Sponsored Products remains the largest single allocation, but its share of total spend drops as you diversify. At this scale, you have likely captured most of the high-intent keywords. Diminishing returns set in. Additional Sponsored Products spend pushes you into more expensive, competitive terms with lower ROAS.

Sponsored Brands: 15-20%
Maintain a strong branded search presence and expand into category-level Sponsored Brands targeting. Test different creative formats. The brands that refresh their Sponsored Brands creative quarterly see 10-15% higher click-through rates than those running the same banner all year.

Sponsored Display: 10-15%
Expand beyond retargeting into audience-based targeting: in-market audiences, lifestyle audiences, and competitor audience conquesting. Sponsored Display becomes a mid-funnel tool at this stage, not just a retargeting mechanism.

DSP: 15-25%
At $5M+ in revenue, DSP becomes a core channel, not an experiment. Use it for new-to-brand customer acquisition, full-funnel retargeting sequences, and Connected TV ads. The brands in our portfolio that allocate 15-25% of budget to DSP see 15-30% higher total sales growth than those running Sponsored campaigns only.

Three Allocation Mistakes We See Constantly

Over-indexing on Sponsored Products at scale. If 90% of your $50K monthly budget goes to Sponsored Products, you are fighting for increasingly expensive clicks while leaving cheaper, high-impact placements untouched. Diversification is not optional past $5M.

Ignoring Sponsored Brands Video. This format is still underpriced relative to its performance. Brands that test video consistently find it delivers comparable or better ROAS than standard Sponsored Products, with the added benefit of building brand recall. If you are not running video, you are leaving one of the best-value ad formats on the platform unused.

Running DSP too early. DSP requires a minimum spend to generate enough data for the algorithm to optimize. Brands that start DSP with $3K/month wondering why it is not working are just burning money. Wait until you can commit $15K+/month consistently before testing DSP, or work with an agency that manages the spend across multiple brands and can get you on at lower minimums.

Review Your Allocation Quarterly

Budget allocation should not be static. Your competitive environment changes. Amazon rolls out new ad formats. Your product catalog evolves. We re-evaluate allocation for every client at the start of each quarter, adjusting based on the previous quarter's performance data and the upcoming quarter's goals.

If your budget split has not changed in 6 months, it is probably wrong.