Amazon Advertising Strategy: Managing Bids, Budgets, and Catalogue Control at Scale

For numerous brands, the initial stages of Amazon growth appear straightforward. An increase in advertising spend typically leads to greater visibility, which then drives higher revenue. However, this simple relationship does not endure indefinitely.

Eventually, additional investment fundamentally alters the mechanics of ranking, auction pressure, attribution, and catalogue balance. If we fail to manage these changes actively, we risk revenue growth while underlying efficiency, stability, and profit margins quietly decline.

When this situation arises, the core problem is no longer about reach. Instead, the challenge lies in managing elasticity.

Bid Elasticity & Rank Compression

Increasing bids often yields promising initial placement gains. A brand’s top-of-search presence improves, impressions rise, and sessions follow. However, the curve then begins to flatten. Although the Cost Per Click (CPC) continues to inflate, rank movement slows and eventually stalls. Consequently, brands end up paying more each week just to hold the same ground.

Without position monitoring and elasticity modelling, this result is often misunderstood. Brands frequently conclude that “more budgets are needed” instead of recognising that the auction has already reached the maximum effective visibility for that term or ASIN in its current state.

At this stage, efficiency cannot be restored simply by spending more. Instead, it must be restored through improved campaign structure, stronger conversion rates, and strategic reallocation of the existing budget.

Catalogue Cannibalisation & Portfolio Conflict

When teams attempt to scale many products simultaneously, similar Stock Keeping Units (SKUs) often start to compete for the same high-intent traffic. This happens because keywords, audiences, and placements overlap. Instead of achieving incremental market share, the product catalogue begins to fragment its demand.

The effects of this internal competition become visible in several ways. For instance, there are declining conversion rates on products that previously performed strongly. Furthermore, there is reduced clarity in how products are organically indexed. As a result, blended acquisition costs increase because listings battle each other for the same shopper.

Scaling the product offering without a clear hierarchy and defining hero, support, and long-tail products creates internal competition. This competition is usually invisible when looking at a single campaign. However, the internal competition proves extremely costly when assessed at the portfolio level.

Attribution Drift at Scale

As investment grows, the range of customer touchpoints increases. Consequently, exposure in the upper and mid-funnel expands. However, final-touch attribution often fails to reflect where the true influence occurred.

This process frequently leads to a common error. Specifically, budgets are increased for campaigns that appear profitable on their own. In reality, these campaigns are driving demand for other ASINs, variations, or even organic placements within the overall range. Therefore, without a unified view of performance across the catalogue, spending is reinforced in the wrong areas and reduced in the right ones.

For this reason, when scaling, campaign-level metrics become less reliable. The contribution at the portfolio level ultimately becomes the only truly meaningful metric.

Stock & Velocity Imbalance

Increased advertising spend has effects beyond just the advertising metrics. It also changes stock flow, inbound planning, and cash conversion cycles.

Such change happens because some products see faster acceleration than was forecast. Conversely, others fall behind as demand shifts. Consequently, this complicates replenishment patterns. The situation also increases the risk of stock-outs on key products and creates excess stock on lines that are less strategic. Furthermore, the introduction of limitations in market capacity, lead times, and fulfilment constraints intensifies these imbalances.

Therefore, what initially appeared to be healthy growth can rapidly turn into a risk of overstock in one area and a lost opportunity in another.

The Solution Is Structural, Not Budgetary

To scale effectively at this level, a different mindset is required:

First, it is important to clearly define hero, support, and peripheral products. Furthermore, bid and placement control should be elasticity-aware. Another key step is to reduce keyword and ASIN overlap across the catalogue. Budget allocation should be intent-based, tied to contribution, rather than surface-level Return on Advertising Spend (ROAS).

Before expanding traffic, conversion needs to be improved. Finally, stock planning must be based on scaled velocity, not historic averages.

Aligning spend, content, pricing, product roles, and inventory planning achieves true scalability. All these factors must work towards the same outcome: controlled growth that strengthens the business instead of destabilising it.

This approach is the difference between simply scaling revenue and actually building sustainable commercial infrastructure on Amazon. Want to see your Amazon performance skyrocket?  Book a call with our team or email us at amazon@marketrocket.co.uk to take your brand to the next level.