Optimizing Amazon Advertising for Beauty Brand Profitability
Client: Emerging Beauty Brand
Industry: Beauty and Personal Care
Challenge: High Advertising Costs and Unprofitable Amazon Channel
Solution Partner: Virtuous Commerce
Background:
An emerging beauty brand faced significant profitability challenges on Amazon, driven by rising advertising expenses. Despite recognizing Amazon as a critical sales channel, ongoing ad inefficiencies led to continued financial losses. The brand had previously partnered with a large, well-known agency leveraging proprietary technology and extensive resources. However, after investing tens of thousands in agency fees, the brand saw little impact on profitability and remained uncertain about the agency’s contribution to their bottom line.
Engagement Overview:
Initially, Virtuous Commerce was engaged in an advisory role to optimize partner management and improve the agency relationship. However, after multiple attempts to course-correct and frequent personnel turnover within the agency, Amazon continued to operate as a loss leader in the beauty brand’s retail portfolio. Ultimately, the brand entrusted Virtuous Commerce with full media agency services, overseeing Amazon Sponsored Ads.
Strategic Approach:
Virtuous Commerce implemented a full relaunch of all Amazon campaigns, introducing a proprietary campaign structure designed to enhance clarity, budget control, and performance. Our approach prioritized strategic automation that complemented—rather than replaced—human oversight. This hybrid model allowed for smarter decision-making and more efficient ad spend allocation.
Phase 1: Campaign Relaunch and Structure Overhaul
Objective: Improve Return on Ad Spend (ROAS) and Channel Profitability
Challenge: Ineffective ad spend with limited performance insights
Solution: New Campaign Architecture and Strategic Automation
Virtuous Commerce restructured all Sponsored Ads campaigns to provide clearer reporting and improved cost controls. The campaign overhaul delivered:
60% increase in ROAS (YoY) within three months
600 basis point increase in New-to-Brand % of Sales (incrementality)
Phase 2: SKU-Level Profitability Analysis
Objective: Ensure Profitability Across All Ad-Attributed Sales
Challenge: Lack of insight into SKU-level margins
Solution: Ad Attribution Tied to SKU Economics
As part of Virtuous Commerce’s intake process, the team conducted an in-depth SKU profitability analysis, ensuring ad-attributed sales contributed positively to the overall margin. This approach allowed for greater confidence in ad investment and minimized loss-leader products.
Results:
After nearly 12 months of engagement, Virtuous Commerce turned Amazon into a profitable channel for the beauty brand, achieving a 12% channel margin—a significant improvement after two consecutive years of negative performance.
Results Summary:
ROAS Increase: 60% YoY
Incrementality Growth: 600 bps increase in New-to-Brand Sales
Profitability: 12% channel margin after 12 months
Conclusion:
Virtuous Commerce’s strategic intervention transformed the beauty brand’s Amazon performance, shifting the channel from a financial drain to a profitable growth engine. By combining intelligent automation with hands-on management and SKU-level insights, Virtuous Commerce drove measurable, long-term results for the client.
