Why your Amazon ads are not working

A common pain point I hear is some version of ‘our ads are not working’ on Amazon. So I want to share thoughts on how you as a founder, owner, CxO can get advertsing perform better without running ads yourself.

But, ’ll tell you this upfront: it’s rarely about a single fix. It’s about identifying where the bottleneck really is. And often, it ties back to broader business and strategic issues.

In this piece, I’ll walk you through a diagnostic framework that helps you understand why your ads aren’t delivering the results you expect — and, crucially, how to hold your advertising resources accountable.

I’ll also share scenarios where brands think their ads are working fine, but in reality they are not performing.

If you’re a founder, owner, or C-level executive who wants to lead Amazon advertising conversations with clarity without a need to learn it yourself, and also guide your team or agency to better results — I hope you’ll find this perspective valuable.

Traffic vs. Conversion: Is It a Traffic Problem or a Conversion Problem?

One of the first steps is distinguishing whether you have a traffic issue (not enough people clicking your ads) or a conversion issue (plenty of clicks, but not enough sales). Amazon Pay-Per-Click (PPC) ads are great at driving traffic to your product pages, but they cannot guarantee sales – that depends on what shoppers see after the click.

For example, a high click-through rate coupled with a low purchase rate means your ads are attracting interest, but the product page is failing to convert that interest into sales.

Here are typical Amazon benchmarks for isolated metric of traffic performance:

• CTR: ~0.3-0.4%

• CR (Conversion Rate): ~9-10%

It’s always important to compare against yourself, i.e. improving on your current results. But I also get a need to have a sense of category and platform comparables., especially when you don’t have a lot of your own data. So, use both to judge your progress.

If your CTR is less than .3%, it signals a traffic problem – customers aren’t clicking your ads, possibly due to weak ad content or irrelevant targeting.

If your conversion is well below 10%, let’s say 3%, or 5%, that’s a red flag that points to a conversion problem – something about your product page or offer is causing interested visitors to walk away. (Expensive products often see below-average conversion – customers take longer to decide on $100+ items – but for most mid-priced CPG products, ~10% is a useful benchmark.).

So it doesn’t make sense to try to fix a conversion problem with a traffic solution. If you have both, then start with fixing conversion first.

Relevance of Traffic & Keyword Strategy: Are You Attracting the Right Audience?

Now, it’s not just about how much traffic you get – the quality and relevance of that traffic is equally important. A common culprit behind non-working Amazon ads is misaligned targeting: your ads might be reaching lots of eyes, but the wrong audience.

Some common causes of low relevance (and thus low conversion) include:

• Poor keyword targeting: Using keywords that are too broad, or not reflective of your product, means your ads appear for searches that don’t match your product’s niche. This “reach mismatch” results in clicks from people who ultimately aren’t interested in your item

• Lack of negative targeting: Failing to exclude irrelevant search terms can make your ads show up where they shouldn’t. For example, a brand selling gourmet almond butter may want to negative-match “peanut butter” if those clicks don’t convert.

A decision-maker’s question to the team really is: “Are our ads reaching the right customers for our product?”. Advertising and Brand Analytics reports have enough data to answer that question.

Ultimately the goal is to align paid traffic with true purchase intent – traffic quality over quantity.

Unit Economics and ROI Math: Do the Numbers Add Up?

If you are getting enough advertising clicks, and have good conversion, you may still feel your ads not working. If you feel that your ACOS is too high, or your ROAS is too low, this root cause could be your culprit.

It’s cost per clicks vs. your unit margins.

Amazon’s advertising costs have risen over time (the average cost-per-click across Amazon hovers around $1 in 2025). In many popular categories, CPCs exceeds $1–2 for competitive keywords. Now, consider your product’s price and profit margin. If you make $5 profit on a item and you pay $1 per click, you must convert at least 1 in 5 clicks (20% CVR) just to break even on that sale. That’s double Amazon’s average ~10% conversion rate – an unlikely feat.

if market CPCs are high relative to your product’s price or margin, your ads will struggle to be profitable. You may need to adjust your strategy – either target more niche, lower-cost keywords, improve conversion (so each click yields more sales), or temporarily accept thinner margins for the sake of growth.

Another economic lens to consider is how ads contribute to organic growth.

TACOS (Total Advertising Cost of Sales) tracks this dynamic: it’s your ad spend as a percentage of total revenue (including organic). If your TACOS trends downward over time, it signals that organic sales are growing relative to spend — a healthy sign of traction.

For example, if ad spend stays flat but total sales double due to rising organic, your TACOS drops by half. That’s what you want as a brand gains footing.

In summary, scrutinize the economics behind your ad spend. Ask your team for a clear breakdown of CPCs, conversion rates, ACOS vs. target ACOS, and TACOS. If the unit economics don’t pencil out (e.g. “we’re paying $2.00 per click to sell a $15 product with a $5 margin”), no amount of campaign tweaking will magically fix it – you either need to adjust strategy or focus on ads giving incremental organic growth.

Misaligned Expectations and Perception Gaps

Now we go from a math root cause to a bit more sensitive, and a qualitative one.

Sometimes it’s asking yourself a question: where do my expectations of performance come from? If you are wise enough, and I know majority of you are, because I hear often enough ‘we don’t quite know what to expect’. It’s the awareness of the unknown.

Here are some common perception traps to avoid:

• Treating Amazon as broad vs. performance advertising. In traditional retail, marketing spend often aims for brand awareness and goodwill, with hard-to-measure sales impact. But Amazon ads are fundamentally performance-based: you pay for clicks and track sales in near real time. If your goal is pure exposure—like a product launch—it’s valid, but you need to set clear metrics, such as impressions or share of voice, and accept a higher ACoS as part of brand building. The trap is trying to have it both ways: you can’t pursue brand awareness while demanding a rock-bottom ACoS. Align objectives with how you’ll measure success

• Other platforms knowledge bias. Each advertising channel has its quirks. Or you may be used to the idea of an “ad budget” that you spend fully each quarter in retail co-op programs. the mindset needs to shift to continuous optimization. Instant success is rare: new brands often need months of iteration, data gathering, and optimization (plus improvements to

  product listings) before Amazon ads yield strong returns. With established brands the risk is getting too comfortable, and sliding into a plateau

• Overestimating scale and underestimating competition. Amazon has huge traffic, but that doesn’t mean unlimited scale for every product at a profitable cost. There is often diminishing returns. Your first $50/day in ad spend might be very efficient, but pushing to $500/day will send you into far broader audiences or more expensive placements. CxOs should be wary of the “we’ll just spend more to get more sales” mentality without analyzing efficiency. Expect aggressive competition, high initial ACoS, and uneven scaling. Hence, a need for ongoing optimization to balance scale and profitability

• Not recognizing Amazon-specific operational factors. Sometimes, “ads not working” points to deeper issues in the Amazon channel. For instance, ongoing in and out-of-stock inventory pauses and restarts ads, which makes them less efficient. Sometimes the solution is improving the product’s value proposition or customer experience, not just the ads.

In summary, it’s about sanity checks on your own expectations. Checks against your own data (comparing your own progress), industry benchmarks, and unit economics math checks.

When ads seem to be working, but they actually aren’t

Amazon’s advertising platform can produce deceptively positive metrics that mask underlying problems. As a CPG brand leader expanding or growing on Amazon, you might see impressive figures – high ROAS, low ACoS, steady CTRs – and assume your Amazon PPC is thriving. Here are some scenarios I’ve seen when some metrics hide lack of performance:

• Over-reliance on branded keywords. Over-relying on branded keywords—search terms with your brand or product name—can give the illusion your Amazon ads are thriving. Branded ads naturally have high click-through and conversion rates, often producing stellar ROAS and ACOS. But if 70–90% of sales come from shoppers already searching for you, it’s more like preaching to the choir. You’re paying Amazon for sales you might have gotten organically. While branded traffic is important for defending your turf, it doesn’t drive incremental growth. Blended performance metrics can mask this issue, showing an efficient ACOS or high conversion rate while non-branded campaigns struggle. To assess this, ask your team to separate branded vs. non-branded performance: What’s the spend and sales split? How do conversion rates compare? Are you attracting new-to-brand customers or mostly repeat buyers?

• High ROAS but flat total sales (efficiency vs. growth). Another stealthy failure mode is focusing solely on ROAS or ACoS—running highly efficient campaigns that look great on paper but don’t actually grow your business. A sky-high ROAS (say 5× or 10×) might mean you’re only targeting the lowest-hanging fruit or limiting spend so much that you’re not scaling. The illusion is that for every $1 spent, you’re getting many dollars back, but if your total Amazon sales (ads plus organic) aren’t increasing, your ads may just be reallocating existing sales rather than adding new ones. For instance, cutting your ad spend in half while maintaining the same sales signals that ads weren’t generating incremental revenue—they were simply taking credit. This “ROAS trap” is common when brands focus on the metric instead of the outcome. To diagnose, shift from measuring ad-attributed sales to incremental sales—those that wouldn’t happen without the ads. Emerging metrics like incremental ROAS (iROAS) aim to estimate this true lift.

• The false sense of scale. It’s common to assume that an Amazon advertising approach that works at a small scale—say, a specific campaign setup yielding a 4:1 ROAS on $1,000/month—will keep delivering as you increase your ad budget. But many CPG brands learn the hard way that performance often tanks when scaling. This is the classic diminishing returns problem. So it’s important to be wary of extrapolating linearly from small campaign results.

Closing Thought

Amazon advertising is often looked at as a necessary evil. But while it is not magic, it is a pretty amazing lever for growth. But even for a seasoned CPG professional understanding Amazon ads enough to make business decisions on budgets, assessing performance can be daunting. I hope this guide can serve you as a tool in conversations with your Amazon ads team/person tough questions:

“Are we just buying revenue, or building a brand?” “What happens if we double our spend – do we know?” “How much of our ad sales are cannibalizing organic?” “Are we benchmarking correctly?” Such questions not only keep your team on their toes, but eliminate danger of vanity metrics and focus on actual business value.

Saludos,

Irina