As of mid-November 2025, Doodla Farms is generating strong revenue growth (+14% MoM, projecting ~$132k for November vs. $114k in October) but gross margin is hovering around 36%, below the target of 40%. This article documents the strategy agreed upon in the [1] to close that gap through disciplined bid reduction across Amazon campaigns.
Advertising spend is scaling alongside revenue, but the margin benefit of organic growth is being offset by rising ad costs. The average ROAS across campaigns sits at approximately 3.37, which corresponds to a gross margin in the mid-30s. To reach 40% margin, ROAS needs to come down to approximately 3.0.
The math:
- Current average ROAS: ~3.37
- Target ROAS: ~3.0
- Required bid reduction to reach target in one step: ~10%
- Agreed reduction for first pass: 2.5%
Rather than a single large cut, the team agreed to reduce bids gradually and observe the effect before making further adjustments.
Rationale for caution:
- Amazon's ad algorithm can react unpredictably to large bid changes
- A 10% cut across the board would theoretically hit the ROAS target but risks disrupting campaign performance and impression share
- A 2.5% reduction allows for observation and course-correction within a week
Rationale for not going smaller:
- The margin gap (36% → 40%) is meaningful and time-sensitive
- Organic unit growth is healthy, so some reduction in paid volume is acceptable
- Delaying action extends the period of margin underperformance
Mark suggested 5% as a middle ground; Gilbert advocated for 2.5% citing Amazon-specific caution. The 2.5% figure was agreed as the starting point.
| Step | Owner | Timeline |
|---|---|---|
| Reduce all Amazon campaign bids by 2.5% | Gilbert | Immediately after 2025-11-19 call |
| Monitor ROAS across campaigns | Gilbert | Daily for 1 week |
| Reassess and decide on further reductions | Gilbert + Mark | ~2025-11-26 |
If ROAS does not move meaningfully after one week, a second 2.5% reduction (or a larger cut) should be considered.
Doodla Farms' top sellers — Yellow Cornmeal, White Popcorn, 5lb Black Beans, Yellow Popcorn, 25lb Black Beans — are high-volume, relatively low-ticket items. At this volume level, a 4-point margin improvement translates to several thousand dollars of additional monthly profit without requiring any revenue growth.
Pink Beans were noted as having very low gross margins and are intentionally excluded from aggressive ad scaling.
When Amazon gross margin lags a target, the lever is almost always ROAS, and the mechanism is bid reduction. The key tension is speed vs. stability: large cuts get there faster but risk algorithm disruption; small cuts are safer but extend the underperformance window. A 2.5–5% initial reduction with a one-week observation window is a reasonable default starting point for accounts with healthy organic growth, where some paid volume loss is acceptable.