Amazon making advertising unprofitable?

#1

I’ve been selling on Amazon for 5 years now and doing reasonably well. I’ve always had an auto-target campaign and in Sept 2019 was convinced by Amazon a manual campaign would be wise. Their people game me recommended keywords for my products, as well as recommended bids. Over time they send me more recommended keywords which make sense, as well as bid recommendations to go along with them.

I saw the option for dynamic bids for both up and down, when more likely to convert to a sale, it bids up, when less likely, it bids down. That sounds awesome! Anything that helps the business do more business and spend less on unneeded advertising expenses is a good thing for us all.

But here is the problem… Since using this tool, I’ve never lost more money than I have recently. I’m used to being charged $500 for my sponsored ads maybe once every two weeks. In the last two weeks I’ve been charged $1,664 and only captured $1,994 in sales. On the surface, I made $330, right? Well of course not… I’m FBA and MAYBE I capture 40% of a sale as profit, with about 40% being various Amazon fees (not counting PPC), and 20% being cost of product. Taking into account the $330, I spent $1,964 to cover all the fees and costs associated with those sales. I lost SO much money in these last two weeks it’s not funny and I don’t know where it went wrong. I’m wondering if a competitor is maliciously clicking on all of my ads to drive up my costs. Manual has never done as well as the auto ads, but it’s never been like this. I’ve been able to make a living and now I can not.

I turned the setting for dynamic bids to down only, on all the bids which recommended lower bids, I’ve lowered them, will NOT raise bids as they are recommending because bid over $1 and up to $2 are unreasonable to me for a $12 sale where it may not even convert. Today I just turned off the manual campaigns. I can’t afford them. I’m basically paying people to take my products at this point and I can’t do business like that.

I’m not a PPC guru and I try to follow recommended bids as well as the advice of the professionals who send me information and recommendations. I don’t feel any of the recommended keywords are bad, in fact they’re applicable, but my budget it suddenly being eaten up quickly and my money is flying out the window and I don’t know what to do about it. Help would be appreciated.

I have two manual campaigns and one auto. The ROAS for the manuals last week was .81 for 18 sales and 1.41 for 52 sales. The auto for the same period was 7.21 for 11 sales. In the last 7 days it was 1.33 for 25 and .63 for 26 respectively with the auto doing 5.66 for 9 sales. While the auto is grabbing fewer sales, I am completely happy with those numbers.

#2

I’m a newbie since I’ve only been selling seriously on Amazon since the beginning of this year, but I can relate to what you are saying. Earlier this year, my ads were really paying off and my ROAS was high. I only do automated campaigns. I was making lots of sales everyday and was finally excited about being able to make a living on Amazon. This month is a completely different story. My ad spend has been off the charts, but my sales are actually lower. There could be many reasons for this, but based on what other people have told me, they’re experiencing the same thing and they don’t think that it’s Amazon’s fault for this. Many people who have been selling for a long time said that things usually slow down a lot right before an election and that must be even more so this year with the way that the economy is going and many people not sure about their jobs and income. A lot of people might be at home browsing through amazon and clicking on product ads, which is leading to our high ad spend, but maybe they’re just browsing with no intention of actually buying right now or they might be waiting until it gets closer to the holidays and they’re ready to actually make their gift purchases.

#3

I’ve learned that ads just don’t make things sell. I sell decals, with listings that i create new each time i make a new product. advertising + coupons are useful when i need something to be at the top of a search when its brand new. It helps it organically rise. but i cant pay my way to be at the top of “truck sticker” however over a year or so ive worked my way into the first page of “tacoma sticker”

#4

I’ve noticed much higher ACOS the last 5 weeks. Key campaigns that we have used to be in the high 20’s / low 30’s. Now in the 60’s and that’s outside of Prime week. Interesting to hear others are seeing this.

#5

i don’t sell enough to get reliable numbers, and my items are usually around $5 anyway. the only reason advertising has worked in any way at all is i’ve now released some new stuff for 9.99 and 10.99. I’d like to see how the metrics look through christmas

#6

Have your organic sales (sales not directly linked to an ad) been increasing over this time period?

You could say that the goal of an auto campaign is “discovery”, you want to learn which keywords lead to sales. Once you know which words get results it makes sense to target them with manual campaigns because you want to be focusing your ad spending on words that get results at an acceptable cost. You said that your dynamic up bids are making your manual ad campaigns too expensive, how is your product ranking for those keywords? If you’re in the results window organically already, using a dynamic up bid could just be causing the customer to see your product twice high up in their search results, and they are buying from whatever link is most convenient to click on, which is typically the sponsored product. Who knows, you might have gotten that sale anyway… I’d say that dynamic bids are great if you are trying to rank for a keyword and want to be present when a likely buyer is searching. If you are present already, really reduce the dynamic bid.

#7

Amazon campaigns have not made sense to me. One lesson is don’t trust any of Amazon’s recommendations regarding ads. Don’t trust the suggested bid, don’t trust the recommendation to use up or down bid adjustment, don’t trust the recommendation for automatic vs manual campaigns, and don’t trust the recommended daily spend. All of this is Amazon trying to upsell.

I have an organic sales conversion about 1 in 20 sessions. When I advertise in social media this stays consistent. When I have launched large sponsored ad campaigns on Amazon I saw no noticeable change in sales while my clicks went off the charts. My views were increased about 100X but my conversions went to like 1 sale in 100 sessions. Also, the recommended bid was above the profit margin for the item.

The catch is that some low level campaign is needed without being “disappeared” from search results. Like paying the bot mafia.

With my lessons learned my advice is to adjust your Amazon advertising to what your profit margin can bare. This is anecdotal but it seems like the ad bots eventually adjust to your campaign levels .i.e., if you lower your bids or budget you’re campaign will appear dead for a few days but then the bots give in and start giving impressions again. I don’t have hard evidence for this but this is the feel I’ve gotten.

#8

Amazon Ad is a complicated thing. You will need to calculate very good the bid and adjust it overtime when your conversion rate change.
I set the bid as Selling price * Conversion rate 30d * Target ACoS

#9

Im pretty disappointed with Amazon advertising, why can I not choose my own placement? Not letting me optimize my campaign while Amazon wastes thousands just seems silly. If my ACOS is 1.46% on top of page placements why push 80% of my budget in Product pages where my ACOS is over 100%?

Not letting me optimize my campaigns is silly. Hell you can even reduce your bid by adding negative bid modifiers so it wont bid. It’s like Amazon is charging you an extra fee to advertise.

Amazon is intentionally charging you extra by not letting you control where your ads are shown, no other ad platform on earth that is this big is limited.