Third parties lose out when three conditions apply.
First, when they are running beyond their means. This usually means that they run an egotistical presidential candidate first, without having any lower seats to back them up. If they stick to local politics first, they get legs.
Second, they insist on their rigidly holding onto their entire platform, instead of running on the most popular parts of their platform, where they and the public agree. Ironically, this is not “selling out”, as they are not dropping what they believe in, just emphasizing what both they and the voters like.
An axiom to this second rule is to keep it simple. The Contract With America was simple, clear, and popular. Voters love clarity, core values, and straight talk, even if they are not wholly behind the ideas.
Third, is that in many States and at the federal level, laws have been passed to exclude or minimize third party success. So third parties have to get in and litigate long before the election, just to have a fair playing field.
Most 3rd party candidates are single-issue candidates and their ‘party’ has base of a few like-minded, single-issue supporters.