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Economics, Logic, and Advertising Budgets

Kerin Foster
Economics, Logic, and Advertising Budgets

As can be expected, advertising budgets are consistently altered dependent on various factors that may have an effect on the market. In this case, we have used Amazon.com as an example of just that.

By searching for Amazon.com in SEMrush’s database, we can see that in both 2010 and 2011, Amazon AdWords budget drops significantly right before the Christmas shopping season. But why could this be?

The motivation behind Amazon’s budget decrease is a combination of simple logic and economics. Amazon consistently attempts to succeed as the most inexpensive in their market since customers characteristically compare prices. During the Holiday shopping season there is typically a colossal demand for particular items such as the latest toys and gadgets. However, if Amazon’s stock is low and manufacturers are potentially sold out of high demand items, Amazon doesn’t have the capacity or supply to sustain the increase in product demand.

Therefore, Amazon increases prices and decreases AdWords advertising which, in turn, decreases demand and creates an ease in order processing during the holiday season.

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