The Truth About Amazon Ads Agencies: What You’re Not Being Told
Most Amazon sellers don’t realise that the way their Amazon ads agency is incentivised can have a direct impact on their results. And more often than not, agencies won’t be upfront about it either. If your ad partner is chasing the wrong targets, like revenue or ad spend commissions, you could be burning through budget without ever seeing a decent return. Here’s what to look out for.
How Agencies Set Their Goals
If you’re working with an agency that takes a percentage of revenue or media spend as their fee, it’s worth asking who that really benefits. If they’re getting paid more when you spend more, the incentive becomes volume, not profitability. We’ve seen this setup many times before, and we’ve witnessed first hand the damage it can cause. Revenue by itself means nothing if it’s not profitable, and unless your agency is tied to your actual returns, their priorities may be completely misaligned with yours.
That doesn’t mean all agencies using this model are bad, it just means you need to be a little more cautious. The smarter option on the other hand is to agree on a fixed price or use profitability as the key success metric. That way, everyone is working towards the same outcome.
Beware of Amazon’s Own Ad Services
What’s particularly worth noting is that Amazon now offers its own direct ad management for sellers. However, Amazon’s job is to grow their own revenue, not yours. Their ads team is focused on getting more spend through the platform and isn’t necessarily interested in helping you get better returns. In many cases, you’ll still need to do the heavy lifting around content, optimisation, and conversion yourself.
Your product listing plays a huge part in ad success. Sponsored product ads are only as good as the product page they lead to, so if your listing doesn’t already convert, the money you’re putting behind it will be wasted. Strong imagery, clear features, good reviews, and competitive pricing are all essential.
Hire for Experience, Not Just Software Access
If you’re working with someone in-house, or even thinking about it, make sure they know more than just the basics. Good experience and understanding across the full range of ad formats from sponsored products and brands through to display, DSP and Amazon Marketing Cloud are essential. Your goal shouldn’t be just about lowering cost per click. It’s should focus on understanding how ad performance links directly to your organic rankings.
That’s where TACoS comes in. Total ad spend versus total sales. It’s the most important metric we monitor since up to 60% of your organic performance can be influenced by advertising. If your agency or in-house manager isn’t focusing on that, then you’re likely missing the bigger picture.
Protecting Your Margins Starts Here
Advertising needs to be led by the right data and measured with the right goals. Avoid working with agencies who charge commissions on revenue or ad spend, and don’t let your team focus solely on vanity metrics like ACoS. Look at real returns. Look at total performance. And make sure everyone is working to protect your margins, not just burn through your budget.
