Most sellers think Amazon ads are too expensive when really they're just uncontrolled. Here are the five places the budget actually leaks — and how to plug each one.
“Amazon ads are too expensive” usually isn’t about Amazon’s rate card. CPMs and CPCs aren’t dramatically higher than they were three years ago in most categories. What’s expensive is uncontrolled spend — budget bleeding on placements that don’t convert, on bids that drift above break-even, on campaigns that compete with each other.
Five places the money leaks, in roughly the order we see them.
Leak 1 — Search terms that never convert
The single largest leak in most accounts. Auto and broad-match campaigns expand by default — that’s how Amazon discovers new keywords for you, but it’s also how budget ends up on terms that have nothing to do with your product. We routinely audit accounts where 25-40% of spend is on search terms that have never converted, sometimes after hundreds of clicks.
Plug the leak: pull a 60-day search term report, sort by spend, negate the obvious junk. Or run the report through the free PPC Waste Calculator for a 2-minute audit.
Leak 2 — Bid creep from “dynamic up and down”
Amazon’s “dynamic up and down” bidding strategy raises your bid up to 100% on placements it predicts will convert. Sounds great. The problem: the algorithm doesn’t know your margin. It optimizes for clicks-likely-to-convert, not profit-per-click. On low-margin SKUs, “dynamic up” routinely pushes effective CPC past break-even.
Plug the leak: switch low-margin campaigns to “down only” or “fixed” bidding. Reserve “dynamic up” for high-margin SKUs where there’s real headroom for the algorithm to work with.
Leak 3 — Branded keyword defense at full CPC
Bidding on your own brand name to “block” competitors is sometimes the right move — especially in crowded categories where competitors are bidding on you. But often it’s buying clicks from customers who were going to buy anyway. At $1.50 CPC for a 60% conversion rate, you’re paying $2.50 per branded sale that organic search would have delivered for free.
Plug the leak: pause branded ads for two weeks and watch organic sales for those terms. If they hold steady, you were just buying your own traffic. If they drop, competitors are eating your lunch and the spend is justified.
Leak 4 — Portfolio overlap (campaigns competing with themselves)
The same keyword appearing in Sponsored Products + Sponsored Brands + Sponsored Display campaigns — or across multiple SP campaigns — means your campaigns are bidding against each other. Amazon’s auction is second-price, but the inflation effect is real, and you’re paying twice for some of the same impressions.
Plug the leak: audit campaign structure for keyword duplication. Either consolidate into one campaign with a clear bid hierarchy, or use negative keywords to enforce separation between campaigns that should target different intents.
Leak 5 — Low-margin SKUs subsidized at the portfolio level
Portfolio ACoS averages individual product performance. A 22% portfolio ACoS might contain a 12% ACoS winner and a 60% ACoS bleeder. The dashboard says the account is healthy. The bottom line says it isn’t. One under-margined SKU at high spend can drag down three winners.
Plug the leak: pull P&L per SKU. Find the worst three by net profit and either fix the unit economics or stop advertising them. Hard to do without per-product profit tracking, easy with it.
What to do this week
- Run a 60-day search term report through the PPC Waste Calculator. Negate the top 20-30 wasted terms.
- Switch any low-margin campaign on “dynamic up and down” to “down only.”
- Audit your top 10 keywords for duplication across campaigns. Consolidate or separate with negatives.
Cost isn’t the problem — control is. RedHen Labs surfaces every leak by SKU, by keyword, by campaign — so you stop guessing where the money goes.