Amazon apologizes after its AI ad system makes costly error

by | Mar 15, 2024 | Amazon, Digital Marketing, Paid social, PPC

In a recent development, Amazon has issued an apology to advertisers for a flaw in its automated advertising system that resulted in charging them for promoting products that were not available for sale. Sellers, like Rob Robinson, came forward with concerns after noticing significant charges for advertising products in California, despite not selling in that region. This error led to a loss of profit for Robinson from November 2023 to January 2024, as customers were unable to purchase the promoted merchandise.

Robinson pointed out that the misplaced ads affected his conversion rate, a crucial metric used by Amazon’s algorithm to determine a product’s popularity and search result placement. Consequently, he noticed a decline in sales during the same period when the advertising issue occurred.

Initially denying the allegations, Amazon later acknowledged the error and offered Robinson a partial refund of £15,000, despite the actual cost of the mistake amounting to approximately £300,000. The retail giant assured that the problem only impacted a small percentage of sellers and pledged to contact affected advertisers to issue refunds promptly.

An Amazon spokesperson stated to Bloomberg that they are committed to contacting and reimbursing any affected sellers while updating their processes to prevent similar incidents in the future.

For individuals impacted by this issue, it is advisable to communicate with Amazon to inquire about potential refunds. However, it is important to note that full financial compensation for the losses incurred by affected advertisers from this automated advertising error may not be entirely covered by Amazon. This incident serves as a cautionary reminder for advertisers to monitor their advertising campaigns closely and verify their effectiveness to prevent potential financial setbacks.

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