Amazon Ads should not be trusted – that’s according to digital marketing expert, Bryan Porter.
The Co-Founder and Chief eCommerce Officer at Simple Modern claims his company has spent $14 million on Amazon ads over the years and describes the investment as a “waste”.
Explaining his comments, he says:
“Amazon ads take credit for sales that would’ve happened organically. Like 40%. Dramatically inflating performance.”
“Ads convert on relevant keywords. Good products organically rank on relevant keywords. Almost all ads are capturing some organic sales.”
“More Amazon ads shenanigans? They show your ads on your other product listings. You pay for customers to click between your listings while Amazon ads takes credit for the sale.”
Why we care. When Amazon ads cannibalize organic sales, it means less revenue for the same advertising cost. Efficient ad spend is essential for maximizing profitability and ensuring that the marketing budget is used effectively.
Testing. Sharing his experience on LinkedIn, Porter claims that his company decided to conduct some Amazon ad experiments last year by shutting off campaigns for three months. As expected, revenue did drop – but interestingly this figure was “not even close” to the loss in ad sales reported by Amazon.
New direction. Porter says that his ad testing has transformed his company’s ad strategy and so has decided to share some of his top tips:
Grouping ad keywords. Porter explains that you can’t gauge a campaign’s true performance when all keywords are mixed together. Some keywords make a big impact (over 90%), while others have a smaller effect (less than 20%). To get a clearer picture, he recommends organizing keywords into three categories:
Targeting a 3 ROAS. Porter suggests “running branded campaigns at a 20 ROAS because 80% of sales are capturing organic demand.”
View Ads as Investments.If investing in inventory or product development brings better returns, allocate your ad budget accordingly.
Embrace competition. Relying too much on Amazon ads is a weakness, according to Porter. If you find yourself overspending, focus on improving your product or listing for better organic rankings. Building a strong brand is the ultimate advantage.
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What Amazon is saying. Search Engine Land has reached out to Amazon for comment.
Deep dive. Read our Search Engine Land report on Amazon’s latest earnings to find out how much revenue ads generated for the company in the third quarter of 2023.