$
16
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%
Improvement in TACOS and ROAS
Top “TYR” Amazon Ad Budget Reallocation
InDUSTRY:
Sports & Outdoor
TOPICS:
Advertising
Data Analytics
TYR, a leading performance athleticwear and equipment brand, faced a common yet complex challenge in their Amazon advertising strategy: how to grow store revenue while simultaneously reducing or maintaining their ad spend.
With a diverse catalog ranging from low-priced accessories to premium shoes, swim and athleticwear, their existing approach wasn't maximizing return on ad spend (ROAS) or total revenue efficiency.
Challenges
1
Balancing ad spend across diverse product price points
2
Optimizing ROAS for low ASP items
3
Scaling revenue while maintaining or reducing ad spend
4
Improving efficiency across the entire product catalog
Solutions
Nectar's analysis revealed a critical imbalance in TYR's advertising budget allocation.
Many of TYR's top-selling items were Swim Caps and Goggles — low average selling price (ASP) products. The advertising budget was being distributed equally between these lower-priced items and higher-priced items such as Men's Jammers, Women's Swimwear, and Swim Bags.
This uniform distribution limited TYR's ability to scale their Amazon presence while maintaining profitable ROAS targets. The ad spend on low-ASP items was consuming a disproportionate share of the budget relative to their contribution to overall revenue and profit margins.
Nectar implemented a multi-faceted approach to optimize TYR's Amazon advertising strategy:
- Budget Reallocation Based on Price Point
- Strategically reallocated advertising budget from campaigns featuring Swim Caps and Goggles toward campaigns highlighting Women's Swimwear, Men's Jammers, and Swim Bags
- Created a tiered spending approach that aligned advertising investment with product price points and profit contribution
- Data-Driven Decision Making
- Calculated average order value by campaign within each portfolio to identify opportunities for budget optimization
- Established clear performance benchmarks to guide ongoing budget allocation decisions
- Bid Optimization
- Reduced bids across all targets in Swim Caps and Goggles campaigns to accommodate lower campaign budgets without sacrificing visibility
- Implemented targeted bid reductions of 25-50% for any specific target spending over $15 with less than 3x ROAS, with the exact reduction percentage determined by performance data
- Monitored daily spend of campaigns receiving budget increases and adjusted bids accordingly to maximize new budget utilization
- Performance-Based Ad Management
- Paused ads whose spend was greater than or equal to the product price with less than 2x ROAS to eliminate wasteful spending
- Established automated rules to continually identify and address underperforming ad placements
Key Takeaways
This case study demonstrates how strategic budget allocation based on product price points and profit margins can dramatically improve Amazon advertising performance. By realigning ad spend to prioritize higher-value items while optimizing campaigns for lower-priced products, TYR was able to achieve the seemingly contradictory goals of reducing costs while growing revenue.
Nectar's approach highlights the importance of:
- Catalog-Aware Advertising - Recognizing that different product categories require different advertising strategies based on price point, margin, and customer buying behavior
- Precision Bid Management - Using data-driven bid adjustments tailored to specific targets rather than applying broad changes across campaigns
- Continuous Performance Monitoring - Establishing systems to quickly identify and address inefficient ad spend
- Portfolio-Level Optimization - Looking beyond individual product performance to optimize for total catalog revenue and profitability
For brands with diverse product catalogs on Amazon, this strategic reallocation approach offers a proven methodology for improving advertising efficiency while driving sustainable revenue growth.
Results
After just 3.5 weeks of implementing this strategic approach, TYR experienced significant improvements across all key performance indicators:
- 8.2% reduction in overall ad spend
- 6% increase in media revenue
- 9.2% increase in total revenue
- ROAS improved by 16%
- TACOS (Total Advertising Cost of Sale) improved by 16%
Before
After
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