You must first know your metrics to understand where you can improve your Amazon PPC sales. Then you know how you can influence those key performance indicators of amazon. This article will help you do that.
Whether you’re a beginner or a professional, sellers and vendors who sell on Amazon should know their trade. This includes understanding what exactly lies behind the most important KPIs (Key Performance Indicators). Because they provide valuable insights into the performance of your product sales. Here are the nine most important Amazon Ads metrics for beginners, advanced users and professionals.
1. Impressions
Visibility is everything on Amazon. This metric expresses how often an ad for a product was displayed on the search results page after entering the appropriate search term. It’s not just beginners who should attach particular importance to this metric.
Because: If product ads are not visible, they do not achieve good impressions or, as a result, click numbers and certainly no conversions. The end result: no sales.
Visibility on Amazon is the result of a bidding war. However, relying solely on a high bid is not enough for Amazon to place your ad in first place in the search results. Why? Because the Amazon A9 algorithm also evaluates the quality of your ads in the SERP ranking.
For example, it is characterized by the total number of sales of an item, the number and quality of customer reviews, and relevant keywords, which should also be consistent in the product listing, ad, and on the product detail page.
So pay attention to appropriate product and description texts in which selected keywords are embedded, good, size-optimized photos are available, and ideally, product videos and, if necessary, short loading times on your landing page. Then, you will soon achieve measurable improvements.
2. Clicks
This metric shows the number of clicks on your ad. Amazon filters out invalid clicks, such as accidental or irrelevant clicks, within three days. This is how Amazon prevents click fraud. From a retailer’s perspective, there are no costs for these clicks. The number of clicks provides retailers with information about how attractive an ad is from a customer’s perspective.
What to do if click numbers are low? We assume you have already won the bid rally and are achieving the corresponding impressions. If users are not clicking on your ad in the desired number, it is most likely due to the ad itself. The key here is to optimize. The most important question is: is the product image suitable? We know that the main reason for low click numbers is usually inadequate product photos with which ads “open”. And always keep in mind that your images should also be attractive on mobile.
3. Click-Through-Rate (CTR)
The click-through rate describes the ratio of impressions to actual clicks in percent. The CTR is one percent if an ad is displayed 100 times and a user clicks on it. For comparison, retailers achieve an average CTR of 0.4 percent on Amazon. A high CTR is by no means the same as high sales. If your product ad is clicked on a lot, but few interested parties subsequently make a purchase ( conversion rate), something on the product detail page drives customers away. This means that the CTR only becomes meaningful in the context of other key figures such as the conversion rate (CR). This makes it possible to identify exactly where problems occur: for example, with the ad in the form of too few clicks, or only later on the product detail page?
4. Costs-per-Click (CPC)
This metric shows how much you paid per click on one of your ads. The number is derived from keyword and ASIN-based bidding competition for ad space.
Put simply, you win with the highest bid. There are more influencing factors, but the bid amount definitely affects your chances of emerging as the winner in this race. For competitive advertising spaces and keywords, a CPC can easily be three-digit.
The most difficult task with Amazon Ads is determining the optimal CPC. If you only have a handful of products and keywords, setting bids manually may still be possible. However, as things get more complex, it is advisable to use a tool. The best systems work using artificial intelligence (AI).
They analyze the costs and sales per keyword and product and determine the optimal CPC based on your strategy. Your strategy could be to achieve a certain ACoS (advertising costs of sale) or maximum sales at a given advertising cost. Such tools usually offer free trial periods and starter packages.
5. Conversions
Probably the most important metric in the Amazon universe because Amazon defines a conversion as a fully completed purchase of a product on the marketplace.
Purchases can be made by clicking on a product ad or in the organic area of Amazon. The quality of the product ad and the quality of the product detail page can increase conversions. The better a product’s listing is maintained on Amazon, the more likely a sale is.
A good product detail page meets the users’ expectations with good emotional images, lots of explanations and, of course, an attractive and appealing title.
6. Conversion Rate (CR)
The CR describes the ratio of the number of clicks to purchases (conversion) in percent. For example, a five percent conversion rate means that five out of 100 clicks lead to a purchase.
A CR of five to ten percent in the Amazon universe is considered quite good. The CR can vary greatly between product categories. A CR of ten percent is quite common in the health sector, while a CR of five percent is considered good in the fashion sector.
The advertising format also impacts the CR. If interested parties click on a sponsored product ad, the purchase probability is higher than if they click on a sponsored display ad.
7. Advertising Costs of Sale (ACoS)
The ACoS indicates the relationship between your advertising expenditure and the revenue generated through advertising. It is calculated by dividing your total advertising expenditure for Amazon PPC by your revenue from PPC.
The ACoS shows how economical your advertising campaigns are through Amazon PPC. The lower the ACoS, the lower the advertising costs for a sale. However, the ACoS should be used with caution, as it does not say anything about profitability. The ACoS does not consider the costs of manufacturing or shipping the product.
So, what does the ideal ACoS look like? This is based on your products’ margins. As a rule of thumb, if your margin per sale is around 20 percent, the ACoS should not be too far from that.
8. TACoS (Total Advertising Costs of Sale)
This metric is an extension of the ACoS. While the ACoS only looks at revenue from advertising, the TACoS focuses on all Amazon sales (organic sales plus PPC sales). This means that the TACoS takes into account all sales, regardless of whether they are directly attributable to an Amazon ad or not. The TACoS puts these total sales in relation to the advertising expenditure.
ATTENTION! Amazon does not provide this key figure via the Ads interface! It can still be calculated once a month. The lower the TACoS compared to the ACoS, the more organic sales occur. That’s good because, in this case, I tend to have a large share of sales that does not have to be financed through advertising.
9. Costs of Goods Sold (CoGS)
Cost of Goods Sold: This figure describes the actual manufacturing costs of your products. They usually include:
- Material costs through production or purchase
- shipping and storage costs
- labor costs
- Customs duties and taxes paid, if applicable
- freight costs
You use the CoGS to determine the gross profit of your product range. It can give you an indication of how high your ACoS can be.
Conclusion
Keeping an eye on these metrics, monitoring them manually, and managing them takes an enormous amount of time and is actually only a small part of the work in an increasingly low-margin e-commerce landscape. However, tools can support you in your work and not only help you display and analyze KPIs but also make decisions based on your strategies.
Schedule a free consulting call with us.
To know more about our Amazon PPC services at WorkDesk, you can schedule a meeting with us to discuss how we work, how we make sure you hire only professional, competitive, and skilled Amazon SEO Experts, Consultants, and Companies in the Philippines.