How to strategize against Amazon’s recent eligibility changes

Flywheel recently noticed an increase in ASINs becoming ineligible for Sponsored Products ads.

We discovered that Amazon adjusted its advertising eligibility equation, causing ASINs that were previously safe-listed to flip ineligible. For context, “safe-listed" ASINs are those that Amazon deems to be unprofitable, but the advertiser entered an agreement with Amazon to serve anyway.

A large number of ASINs becoming ineligible for SP placements out of the blue can cause a significant disruption for an advertiser. Our goal is to help provide context to around the change and provide recommendations on how advertisers can remedy and adapt going forward.

Why did Amazon change the calculation?

While Amazon continues to outperform many other large retailers, it’s still striving to find the balance between sales and margins while emphasizing profitability. For their retail team, unit-level profitability is a sustainable way to drive overall profits. Revenue from Amazon Ads can often offset profitability issues that are faced on their retail business, but it comes down to Amazon’s overarching goals and thresholds.

This balancing act is always in flux, and it appears that the Amazon retail team has determined a need to be stricter when it comes to the balance between retail loss and ad revenue. This has led to a re-evaluation of the profitability issues of previously safe-listed ASINs and a push for greater profitability at the retail level independent of ad revenue.

What can advertisers do in response to this change?

Push for newly ineligible ASINs to be added back to the safelist

We’ve seen success in reaching out to Amazon reps to relist or add newly ineligible ASINs back to a safe-listed status to continue to serve on SP placements. Coming to an agreement with Amazon on safe-listing ASINs with profitability issues is an ideal solution, which allows advertisers to quickly return to business as usual. The Flywheel team can actively manage these communications or provide strategic communications guidance on how to approach the subject.

Conduct a profitability analysis of your portfolio

If safe-listing is not an option for your products, performing a profitability analysis of your Amazon portfolio is a worthwhile exercise. This analysis will help you understand where advertising dollars can be shifted to more profitable products. Determining which products have the strongest profit margins and investing there can also open the door to evaluating how to increase margins on underperforming ASINs in the meantime to potentially elevate them to an eligible for advertising. If undergoing an entire catalog profitability assessment with a quick turnaround is a stretch of internal resources, Flywheel’s Retail and Consulting teams are eager to dig in and help action quickly on these changes.

Re-evaluate ad type mix

Because the ineligibility changes only affect an advertiser’s ability to serve on SP placements, this creates an opportunity to evaluate ad unit allocation. Re-evaluating your mix of ad types used across the portfolio is a worthwhile exercise to perform at a regular cadence, but when SP advertising is no longer accessible for key ASINs, this evaluation can be critical to keeping ASINs viewable for Amazon shoppers. But where to start?

We recommend looking at your pre-ineligibility funnel breakdown and opportunities – Where was conversion the strongest? Where was consideration the strongest? With an understanding of the strengths of the portfolio, we then recommend funding from the bottom up, using Sponsored Brands and Sponsored Brand Video as replacements for conversion-focused goals and using Sponsored Display and ADSP as awareness/consideration replacements. Using both mid-funnel and upper funnel tactics will provide a stronger opportunity for an ASIN to thrive on Amazon.

Conclusion

Amazon changing the calculation for eligibility may have been a surprise– but it’s a great opportunity to re–evaluate profitability across your assortment and dig deeper into your current ad type mix. Of course, getting ASINs back on the safe-list should be the first action, but there are alternative options to pursue if you leverage the right data and resources to your advantage.

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