There are several factors that can contribute to the rising advertising cost of sales (ACoS) on Amazon:
● Increased competition: As more sellers and advertisers join the Amazon marketplace, competition for visibility and sales intensifies. Higher competition leads to higher bid prices for keywords and ad placements, which can drive up the ACoS.
● Ad inventory saturation: As the number of advertisers and products on Amazon increases, the available ad inventory can become saturated. When the inventory supply doesn't keep up with the demand, it can result in higher ACoS as advertisers compete for limited ad placements.
● Ad rank and relevancy: Amazon's advertising algorithm takes into account various factors when determining the ad rank and placement, including relevancy, keyword optimization, and historical performance. If an ad fails to meet these criteria effectively, its visibility may decrease, requiring higher bids to achieve desirable ad placements and maintain competitive ACoS.
● Seasonal fluctuations: Seasonal changes in consumer behavior can impact ACoS. During peak seasons or holidays, when consumer demand surges, advertisers often increase their ad spend to capture the attention of shoppers. This intensified competition can drive up ACoS.
● Product price and margin: The price and margin of the advertised products directly impact ACoS. If the product's selling price is relatively low or the profit margin is narrow, it may require higher advertising spend to achieve a profitable ACoS.
● Ad campaign optimization: The effectiveness of campaign targeting, ad creatives, bidding strategies, and other optimization techniques can significantly influence ACoS. Inefficient or ineffective campaign management and optimization may lead to higher ACoS.
● Algorithm and platform changes: Amazon frequently updates its advertising algorithms and platform features, which can impact ad performance and ACoS. Changes in how ads are ranked, displayed, or targeted may require adjustments in advertising strategies and budgets.
