Ancelotti replaced Jose Mourinho at the helm of the Spanish giants this summer and his team has yet to adapt to his tactics.
Real have won six of their eight opening games but have looked less than convincing, much to the disappointment of the club fans.
"I am trying to change things," Ancelotti told Corriere della Sera. "I want the team to hold more possession and changes need time.
"The fact is that up to now we have played all our games badly and our problems have been worse by the fact that Barcelona and Atletico Madrid have always won.
"We have to play better and the criticisms that we have received are right.
"The fans here demand better and they are right.
"As a coach, I can only say that in our next few games, against Malaga and Juventus at home and at Barcelona, we will play better.
"Also because you cannot play any worse than we did against Levante and Elche."
Ancelotti has reason to be optimistic as Gareth Bale is fit having recovered from a thigh injury.
Much is expected from the Wales international, whose record-breaking 100million euros move
to Real from Tottenham this summer made world headlines.
"We have taken advantage of the international break and Gareth has returned to form and will
return to play," Ancelotti said.
"Is it scandalous to spend 100million (euros on a player)? This is the market and we cannot forget that Real earned a lot of money from the sale of (Sergio) Higuain (to Napoli), (Mesut) Ozil (to Arsenal) and (Jose) Callejon (to Napoli).
Real did not win a trophy last year and are desperate to get some silverware this season.
They are third in the Primera Liga, six points adrift of league leaders Barcelona.
Ancelotti has again defended his controversial decision to play Diego Lopez in goal for the Primera Liga and use Spain captain Iker Casillas in the Champions League.
"Rotating goalkeepers is uncommon but the situation here is unusual Ancelotti said. "I have two great goalkeepers.
"One with less experience and another one who is an icon of Real Madrid and Spanish football.
"Diego Lopez started pre-season earlier than Casillas and I decided to start him.
"I then chose to give Casillas the opportunity to play in the Champions League because he is still reliable."