A budget can be set at the campaign level only i.e. you cannot set a budget for an ad group or an ad. Please refer to
this guide for getting started with setting budgets via AdWords API. Regarding ad creation, I would recommend
this guide, which has details regarding types of the ads and the list of extensions available. I'm suggesting that because if you are planning to target a certain type of customer, some of the ad extensions might be helpful. Unfortunately, I do not have additional suggestions regarding optimizing/simplifying the current product hierarchy but you can go through our
Best Practices guide for general API optimizations.