In order to understand performance and define advertising strategy, you need to first identify the goals of a product in relation to their lifecycle stage. Setting goals will allow you to make informed decisions about how you bid, structure your campaigns, allocate resources, and determine promotional/marketing tactics.
There are many factors that can influence a product’s progression through the different lifecycle stages, as well as how you may characterize each stage. These definitions do not encompass every scenario and should only be used as a guide.
What are Advertising Goals?
There are 4 main goals: Launch, Growth, Profit, and Liquate.
Used for brands, campaigns, and products that are new to advertising. The main goal is to increase exposure and awareness. Traditionally a time of high spend and initial marketing investment, you aim to place your ads in front of as many shoppers as possible to build awareness, generate reviews and drive traffic.
Time on Amazon: 0-6 months
Metrics to Watch: Increase in Impressions, Ad Spend, Clicks; Decline in ACoS, TACoS.
Opportunity Cost: High ACoS and Spend
Teika Terms: Aggressive Launch and Launch
Once you have driven sufficient traffic to your page and started to convert them to sales, your product has likely shifted from launch to growth. This means your focus will shift to generating sales volume and improving sales rank. Your ultimate goal will be to see a decline in TACoS, this along with increased spend on branded terms signifies you're ready to advance to the next stage.
Time on Amazon: 6-12 months
Metrics to Watch: Increase in Total Sales; Decline in TACoS; Increase spend on 'Branded Terms'
Opportunity Cost: Slim margins
Teika Terms: Increase sales
Once your campaigns and products mature and/or you have achieved desired sales volume/sales rank, you can focus on driving incremental revenue for your best-selling products at the most efficient spend. You can measure success by evaluating your ACoS and seeing whether it meets industry averages and is profitable. In this stage you typically have a high volume of sales data and brand recognition, thus your cost for acquiring a sale is much lower. Consider reducing your willingness to spend (MACS) to reflect a sustainable margin or profit.
Time on Amazon: 12+ months
Metrics to Watch: Decline in ACoS, Ad Spend; Total Sales
Opportunity Cost: Reduced visibility, decline in Ad Sales
If a product is underperforming on sales, oftentimes sellers will decide to increase their advertising spending on the product in order to reduce FBA costs and sell through inventory. This may mean you will take a loss on sales or sell at cost, but it will also open up capital to invest in more profitable opportunities.