The Average daily budget sets a soft limit not to reach. On a daily basis, the algorithm might spend up to 2 times your Average daily budget.
The algorithm will find the most optimal trade-off between the ACOS target and the Average Daily Budget you are willing to spend.
It's not a daily hard cap!
We think a hard cap is too risky for your campaigns because cutting off advertising in the middle of the day might cut your sales, free up a place for your competitors and restrict algorithm learning.
Set a Average Daily Budget on top of your ACOS target
If you have a monthly budget constraint, you can set a Average Daily Budget on top of your ACOS Target. If you are not budget constrained, we highly recommend you stick to the performance optimization logic, based on your ACOS Target.
Few things to know about the Average Daily Budget
The daily limit the algorithm does not outreach is 2 times the average daily budget
The monthly limit the algorithm does not outreach is 1.1 times the average daily budget
Based on traffic and potential sales to grab, your daily spend may exceed your Average Daily Budget up to 2 times the daily target value. However, throughout the calendar month, the algorithm will not spend more than 10% of what we call your Target Monthly Budget = your Average Daily Budget * Nb of days within the calendar month.
If you pause your campaign or change the Average Daily Budget during the course of the calendar month, the algorithm sets a Monthly Target again, taking into account the remaining days of the calendar month.
If your ACOS target is conservative, you may end up spending less than your Average Daily Budget.
The algorithm does not reallocate the unspent budget from one month to the other.
In the end, the algorithm uses portfolio & campaign budget caps and updates them daily.
Please do not update the budget directly in the Amazon Advertising Console!
The algorithm overwrites what you do in the Amazon Advertising console. If you change the budget yourself in the Amazon Advertising console, it may negatively impact the algorithm's budget optimization.
I changed my Average Daily Budget from $100 to $150 on the 26th of August. For the 5 remaining days of August, the algorithm optimizes based on a Monthly Target of $750 ($750 = $150*5 days). It starts September with a Target Monthly Budget of $150*30 = $4500.