Amazon’s ad revenue worldwide is predicted to be a whopping $26 billion in 2022. And it’s growing at a rapid pace. In fact, the amount spent on advertising in the US alone is projected to be at the $30 billion mark in 2023.
With more advertisers spending money on the platform, its average CPC is growing rapidly. In 2021, it grew by more than 50 percent. As the competition increases it’s easy to lose your advertising budget and to bid too much.
There’s a straightforward measure that will help companies determine exactly what they’re spending and making with Amazon advertising. Here’s our guide for Amazon ACoS.
What is Amazon ACoS?
Amazon ACoS is a crucial measure that is used by marketers to evaluate the effectiveness of their Amazon ads. ACoS is an acronym for the term “Advertising Cost of Sale and is used to define ad expenditure as a percentage of sales revenues.
Amazon ACoS helps brands understand how much of their earnings is used for advertising. For example, if you have an Amazon ACoS is 30% that means 30 cents of each dollar you earn goes to Amazon advertising.
Amazon ACoS measures the efficiency of your marketing campaigns. It can also be used to analyze specific words.
Although you are able to calculate the ACoS of every one of your PPC campaigns ACoS is especially important in the case of Amazon advertisers. It’s because they have access to precise sales and ad information which can be used to determine it accurately. This isn’t always the case on other platforms for advertising.
How do you estimate ACoS from Amazon?
The ACoS can be calculated for your campaigns by dividing the amount you pay for Amazon ads by the number of Amazon sales the ads generated. You then multiply this by 100, so that the measurement can be expressed in percentage.
Amazon ACoS = the total amount of Amazon Ad spend / Total Amazon Ad Sales x 100
Let’s take an example. For instance, suppose that your Amazon advertising for products sponsored by Amazon produced $4,000 worth of product sales in the last 30 days. But these ads cost $1000. These figures can be plugged in an ACoS market analysis formula.
Amazon ACoS = 1,000 / 4,000 x 100 = 25%
You can also use Amazon ACoS Calculator to Analyze product profitability in an instant. The ACoS calculator takes into account all the major Amazon selling fees before giving you the numbers.
It will cost you 25 cents to make one dollar worth of sales. For instance, $25 for the equivalent of $100 in sales.
Fortunately, you don’t need to figure out the ACoS for each ad you display. You’ll see the ACoS line in your Amazon marketing metrics.
Factors that decide if a target is reached Amazon ACoS
It’s essential to recognize that there’s no thing as a “good” or “bad” ACoS. Every brand’s ACoS advertising strategy will be different according to their margins of profit, goals and other aspects.
It is therefore extremely difficult to compare the performance of your Amazon ACoS against other sellers. According to Ad Badger, the average Amazon ACoS currently stands at 27 percent. Therefore, this could be a great goal for newbies.
5 ways to reduce the number of your ACoS marketing metrics
After you have your ads and product listings set up It is important to reduce the cost of your Amazon ACoS. Here are five ways to boost your earnings.
1. Check your stock levels
If a product goes out of stocks on Amazon advertisements that promote it will automatically be ineligible.
But, this change will not be highlighted on your dashboard for advertising. There will be no alerts at the campaign or ad group levels. Instead, you’ll have to look at individual ads for the product.
This is a major issue, as when an ad is unqualified, your sales as well as your best Seller Rank along with organic search terms will all begin to decrease. It’s therefore a good idea to utilize an online shelf software to create alerts on stock levels and avoid the possibility of stock outs.
2. Enhance your ratings and reviews
When deciding on which ads to show in the results for searches, Amazon considers ad bids. It also prioritizes quality results that are likely to delight its customers.
If you are able to increase the number of positive ratings for a product and reviews, your ads will be displayed to many more customers. This is a great method to increase visibility, without increasing the amount you spend on ads.
Reviews and ratings can boost trust and increase conversions, which can lower your ACoS as well.
3. Optimize your product pages
Good quality product pages boost higher conversion rates. The more sales your advertisements generate and the more successful your ACOS will be.
Make sure you create clear, precise and precise descriptions of each item. Additionally, you can utilize Amazon Brand Analytics to identify any errors. Amazon Brand Analytics to find listings that aren’t complete. Quality videos and images will also increase conversions.
4. Improve your bidding strategy
Although lower bids can cause a decrease in Amazon ACoS, it will generally result in less impressions, clicks, and sales, too. It’s therefore important to find a compromise.
Brands should consult Amazon’s suggested bids to guide their business. In order to maximize the value of your Amazon ACoS, you can boost your keyword bids to highly-converting listings. You could also lower the CPC for listings that have low conversions , while you optimize their pages for products.
5. Conduct thorough keyword research
Implementing ‘exact match’ as well as negative keywords will help to prevent your advertisements from appearing in irrelevant results in search results. This will decrease the amount of clicks that don’t result in conversions, and decrease the cost of your Amazon ACoS.
It is also possible to also use the search terms report within Seller Central to determine the effectiveness of your keywords. You can also sort the results according to ACoS. Increase bids when you have low impressions and a high CTR. It is also recommended to stop any keywords that are not profitable Amazon ACoS.
Amazon ACoS is a useful measure that will assist you in understanding the efficiency of PPC campaigns. But, when taken in isolation it could be inaccurate. Therefore, be sure to track your ACoS in conjunction with other KPIs for eCommerce. This will enable you to be able to accurately evaluate your marketing campaigns and make informed decisions for your company.
Read More : 6 Steps To Getting Started Selling On Amazon