As the dust settles from the Black Friday and Cyber Monday shopping frenzy, Amazon sellers face a perplexing phenomenon: advertising budgets being depleted at unprecedented rates while order volumes remain stagnant. This puzzling scenario has left many questioning whether platform algorithms are to blame or if there's a deeper underlying cause.
A Tale of Two Outcomes
This year's holiday shopping event revealed stark contrasts in advertising performance:
- Diminishing Returns: Some merchants reported tripling their ad spend with virtually no corresponding increase in orders, watching their marketing dollars disappear without tangible results.
- Unexpected Windfalls: Conversely, other sellers maintained their usual budgets yet achieved remarkable conversion rates, including instances where 10 clicks generated 15 orders—likely due to delayed order reporting.
This extreme divergence in outcomes has created widespread uncertainty about the reliability of advertising metrics.
The Conversion Conundrum
The mystery extends beyond seasonal peaks. Many sellers routinely observe that when they increase budgets for high-performing ad groups (those with strong conversion rates and low Advertising Cost of Sale), the anticipated sales surge fails to materialize. Instead, they often encounter plummeting conversion rates or complete dry spells.
While some attribute this to platform manipulation designed to inflate ad revenue, others speculate that increased click volumes create reporting delays that temporarily obscure results.
Controlled Experiments Reveal Insights
To investigate this phenomenon, we conducted comparative tests on identical products using two different listings:
- New Listing (No Reviews): Tripling the ad budget initially showed zero order growth despite complete budget depletion. However, five orders appeared in reports a week later, confirming reporting delays.
- Established Listing (2,000 Reviews): The same budget increase yielded only 1.5 times more orders while doubling the ACOS (Advertising Cost of Sale).
Repeated testing demonstrated that budget increases prompt the system to prioritize ad placements, causing more buyers to purchase through ads rather than organic searches. Additionally, expanded budgets often attract less targeted traffic, explaining why increased ad spending frequently correlates with poorer conversion rates.
Strategic Optimization Approaches
Sellers facing conversion declines after budget increases can implement these two strategies:
- Precision Refinement: Maintain current budgets while enhancing targeting through negative keywords and ad placement adjustments to improve traffic quality.
- Gradual Scaling: Reduce budgets to optimal levels, then incrementally increase them to maintain control over traffic relevance.
Well-established listings with numerous reviews demonstrate greater resilience against less targeted traffic, underscoring the critical importance of review volume in conversion performance.
Fundamentals of Effective Advertising
Optimal cost-per-click (CPC) strategies vary by product lifecycle stage:
- Launch Phase: Prioritize visibility and clicks with higher CPC bids, accepting lower short-term profitability.
- Maturity Phase: Focus on profit preservation by controlling CPC to prevent excessive bid costs from eroding margins.
Ultimately, product and listing competitiveness form the foundation of all advertising performance. No amount of advertising sophistication can compensate for weak product offerings or poorly optimized listings. Superior products can overcome modest advertising shortcomings, while inferior products will struggle regardless of ad spend.
The Path Forward
The holiday season's advertising volatility serves as a reminder that sellers should approach marketing investments with measured expectations. Rather than chasing maximum exposure, the emphasis should be on attracting qualified buyers and strengthening product value propositions. Continuous product improvement and customer experience enhancement remain the most reliable paths to sustainable success in competitive marketplaces.
Vigilant monitoring of advertising metrics and timely strategy adjustments can help prevent wasteful spending. As the marketplace evolves, one principle remains constant: Advertising amplifies strengths but cannot create them—product excellence must always come first.