Typical challenges when using Amazon Advertising are:
- Achieved ACoS is above target ACoS
- Budget cannot be spent
- Campaigns do not start after initial setup
These three challenges are explained in further detail below and actions on how to deal with them are recommended.
ACHIEVED ACOS IS ABOVE TARGET ACOS (TACOS)
What happens in case the ACoS of a campaign is higher than its Target ACoS (TACoS)? Two cases need to be distinguished:
Case 1: Recently set-up campaigns (up to 4 weeks after onboarding)
First of all, please keep in mind that the ACoS of new campaigns is usually higher than the TACoS value set.
- One reason is that Amazon attributes conversions up to 14 days after the click. This means that, while the costs are allocated to the campaign immediately, the conversions and thus the revenue are allocated to the campaign with a delay. This means that the data for the last 14 days is not really reliable. Our experience shows that this is a normal condition and does not require any further adjustment at first.
- Another reason for the ACoS being higher than the TACoS initally is that our algorithm needs to learn which products and keywords perform well and which ones don't. It takes some time to gather reliable data on campaign performance and optimize accordingly. Let's say a consumer clicks on a highly relevant keyword, but only purchases 8 days after that click. Until that, it looks like this very relevant keyword achieves disastrous performance. If the Ad Optimizer would stop bidding on this keyword right away, we would potentially lose a lot of highly relevant search terms.
According to our best practice we recommend letting campaigns run for at least 6 weeks without any adjustments regarding the TACoS. During this time, the algorithm will have time to develop the campaigns and a first meaningful campaign review can be made on the basis of the reliable data for a period of 4 weeks.
Case 2: Running campaigns (onboarded more than 4 weeks ago)
What the algorithm does:
The Ad Optimizer tries to reach overall targets for the entire entity. It optimizes each campaign with focus to its efficiency targets, meaning that whenever the algorithm recognizes a bad performance (defined as ACoS > TACoS), the bids on the respective keywords will be reduced continuously until we might reach the desired ACoS.
The Ad Optimizer will reduce bids (on low performing keywords or for the campaign in total).
Keep in mind: it might not be possible to reach the TACoS values you have set for some campaigns. The algorithm will reduce bids to a minimum amount, until the campaign will not cause costs anymore. The algorithm will allocate more budget to well-performing campaigns and reduce spends on bad-performing campaigns within one portfolio.
While the algorithm will take care of the optimization, it makes sense to have a deeper look into the products and determine the cause for the bad performance. Here are some recommendations on how to improve:
|Realistic TACoS||Depending on the product it may be worth increasing the TACoS setting. This is especially true for novelties and in markets with intense competition. As always be aware of your overall product margin when changing the TACoS in Ad Optimizer.|
Higher TACoS leads to higher bids, and therefore increased visibility, clicks and costs.
|Content (title, description, bullet points, A+)||Revise your product content (title, description, bullet points, A+) and optimize pictures/videos in order to increase your conversion rates.|
|Availability issues (OOS/LBB)||Check the availability and take care that "out of stock" (OOS)/ "lost buybox" (LBB) is not an issue. In case you are not the buy box owner, Amazon will stop displaying ads for those products automatically. It might happen that your campaign is displayed when you still own the buybox (--> campaign generates costs) but the consumer only purchases the product a couple of days later, when the buybox was already lost to another party (--> no revenue will be attributed to your campaign). |
Long delivery times might also negatively affect your conversion rate.
|Product/market fit (product features, price)||Compare the product price and ratings with the bestsellers in the corresponding category - customers also compare products online and might decide for a better-value-for-money product.|
|Reviews/ratings (rating of at least 3.5 stars)||To perform well a product should have a rating of at least 3.5 stars and more than 20 reviews.|
Of course, new products might not yet have these. Consider using the VINE program to generate reviews faster or simply expect higher than usual ACoS and reflect this in your target ACoS settings.
BUDGET CANNOT BE SPENT
One of the most relevant challenges with Amazon Advertising is that the defined budget cannot be spent. This mainly happens due to low TACoS values, a small number of campaigns (compared to budget) or due to low traffic volumes.
Here are some recommendations on how to solve this challenge:
|Add further ASINs||The most efficient remedy to a low Sponsored Ads spend is activating new ASINs in Ad Optimiser. As a rule of thumb, an average product spends 5-10 (€/$/￡...) per day, but deviations exist. There might be extremely well performing ASINs spending a lot more per day, but also low performing products spending almost nothing per day.|
|Use all campaign and targeting types||Amazon offers different campaign types - SPs (automatic, keyword and product targeting), SBs (also consider store spotlight, video) and SDs (product and audience targeting). To boost impressions and clicks it can make sense to use all available campaign types, so that you can win as many placements as possible on the search results page. |
|Increase TACoS||Depending on the campaign, it may be worth increasing the TACoS setting. This is especially true for novelties and in markets with intense competition. The bids calculated by Ad Optimizer which would still meet your TACoS might be too low to win auctions, leading to spends close to zero. As always be aware of your overall product margin when changing the TACoS in Ad Optimizer.|
|Check keywords||Ad Optimizer identifies the most relevant keywords for a product automatically. However, it may occur that not all relevant keywords can be found e.g. due to a low organic visibility of an ASIN or an inaccurate product categorisation. Adding keywords manually to a campaign can help here to increase traffic and spend more budget. They can be uploaded in Ad Optimizer campaign manager.|
|Shift budget between portfolios||Shift budget to another portfolio that performs better. Most of the times, a certain portfolio performs better than another. In case you have the flexibility to move budgets between portfolios, consider decreasing the budget on low-performing portfolios and increasing budget on high-performing portfolios.|
CAMPAIGNS DO NOT START AFTER INITIAL SETUP
When campaigns do not start as planned, please check the following potential issues:
|Start & End dates of campaigns||Check if start date and end date is correct for the campaigns.|
|Budget periods||Check if an active budget period for the given portfolio exists. Without budget, campaigns cannot run.|
|ASINs & SKUs do not match||In case you have onboarded ASINs and SKUs that do not match, no campaigns will be generated. Always take care of onboarding correct ASINs and SKUs.|
|Availability & buybox ownership||You need to own the buybox so that your Sponsored Products can be displayed: products for which Amazon (for vendors) or you as a seller do not own the buybox, Amazon will not display any ads. Buybox is usually lost due to a stock or a pricing issue. |
For Sponsored Brands, products need to be available (buybox owner is irrelevant).
|Deactivation of existing campaigns||Avoid having own and metoda managed campaigns on the same products live at the same time. Otherwise, the ads will bid against each other and older campaigns tend to be preferred by Amazon as they outperform newer ones in terms of historical performance.|
|TACoS||Depending on the product it may be worth increasing the TACoS setting. This is especially true for novelties and in markets with intense competition. According to our best practice, it is better to start with slightly higher TACoS values and decrease them afterwards in order to give the algorithm room for development of campaigns. As always be aware of your overall product margin when changing the TACoS in Ad Optimizer.|
|Eligibility for advertising||Check if your product is eligible for advertising in general. According to Amazon's guidelines, not all products listed on Amazon can also be advertised. Sometimes, products are ineligible due to content on the product detail pages. |