Is Amazon PPC worth it? $50m seller shares his experience

If you were in a room with an Amazon seller doing $50m+/year, would you want his opinion on Amazon Ads?

I would!

Let’s check out a Twitter thread from March 2022 from a guy named Bryan Porter.

It starts like this:

“We are Amazon’s #1 drinkware supplier. In 2022 we will sell over 4 million tumblers and water bottles.”

“OK,” I say reading that, “fair enough”…

Bryan highlights 3 main problems that their company has with Amazon Ads. And they’re brutal!

In Bryan’s own words:

Problem #1:

“Product Page Ads. Amazon shows ads on product pages from other relevant listings. We spent a lot for customers to click between our different listings. Organic customers would browse our catalog via similar product advertisements and Amazon Ads would attribute it.”

Problem #2:

“Paying for Organic Purchases. If our ad is #1 and we have #5 organic placement, many organic customers are now buying through that ad. These sales make the campaign look overly profitable. In reality, they are inflating ACoS and justifying more spend.”

Problem #3:

“Harm to Organic Placement. We observed organic placement tends to fall when top ad placement is paid for. It makes sense that Amazon doesn’t want duplicate listings at the top of a keyword. If this is true, this is a major disincentive to paying for placement.“

My analysis:

It’s important to remember that Amazon is a business. Like any business, they want to make money. Amazon Advertising has become a profit center for them. It’s high-margin and high-growth.

But:

You’re also a business. And you need to make real money from Amazon PPC, or else it doesn’t make sense to run it. It’s easy to make revenue on Amazon, but profit is a whole different story!

Lessons from the $50m man:

– just because ads are producing more revenue, doesn’t mean they produce more PROFIT dollars!

– if you’re ranked #1 for a keyword, ads may be cannibalizing organic sales. Turn some off as a test

– on branded terms, it’s OK to pull back ads. Test if it’s more profitable NOT to run certain types of ads

Like most marketing, it’s going to be trial and error.

I just want to make you aware that not all ad revenue is created equal!

It makes more sense to run ads for terms where you’re NOT organically ranked very high.

If you want to make sure this happens, we have a team standing by to help you with this. Just in time for Q4. If you’d like, book a time to chat with us this week and we’ll tell you how to turn your ads into a profit center for good, that delivers profit (not just revenue):