Campaign performance is influenced by many factors, let's look at some situations that may result in a high ACoS on campaigns.
Newly Launched Product:
Typically you will see a high ACoS on a campaign that is newly launched or your products were recently out of stock. These campaigns typically have low data, so we need to spend more on discovery, over time the ACoS will level out. You can speed up the discovery process using a bid floor, allowing higher bids for better placement sooner. Consider doing this if we’re bidding too low for the category.
It is common to see a high ACoS at the onset of bid automation, as the bidder works to collect data and test bids on keywords and ad groups. Once the attribution window closes, ACoS should level out.
Anytime you are selling in a competitive category, you should expect to run at a higher ACoS, despite where you are in the campaign lifecycle or having perfect campaign structure. Competitive categories have a high number of sellers, giving consumers many product options to choose from. Consumers begin weeding down choices based on price, number of reviews and relevancy, this process often results in clicks that do not result in conversions. This also means there's a high number of sellers bidding on similar keywords, driving up the cost of a click. Consider using TACOS to measure performance.
If this is an auto campaign, you may see high ACoS because your casting too wide of a net in searches or your ad is showing up on other ASINs and they’re not converting.
If this is a manual campaign, this is likely a result of bidding on poor performing keywords or keywords running at a high ACoS. Make sure you’re only adding keywords to your campaigns that have data to back them.
Using the wrong settings in Amazon, such as the ‘adjust bids by placement’ (booster) feature or ‘dynamic bids - up and down’ setting, will cause you to overspend. These settings interfere with our bidder, if you were to use a 50% booster in Amazon, this would automatically increase our suggested bid by 50%.
PAT Campaigns often run at higher ACoS because you’re targeting competitors, naturally you will need to spend more money to obtain visibility. If you’re goal is awareness, expect higher ACoS.