Measuring your ads performance is critical to the success of your paid advertising strategy. While measuring the performance of your Amazon ads campaigns, you must ensure that you don't limit your focus to one metric or a limited scope of metrics. Evaluating your paid performance in a vacuum will lead to inaccurate ROI assumptions. For instance, you cannot judge your campaigns solely based on impressions. That would tell you how many prospects are visiting you, but you'll still have no idea about conversions. Here's another interesting fact: If your initial paid ad engages the visitors but does not convert, it is still not a sign that the campaign is not working. It's always essential to understand the purpose of an ad campaign. For example, you might use paid advertisements to position blogs that educate and nudge prospects towards becoming paid customers. Therefore, solely looking at the first campaign or a single campaign for that matter is useless. Overall, you should be examining every aspect of your ads efforts and correlate them with your sales before judging their performance as good or bad. For instance, a keyword with extremely low impressions might close the most customers for your business — you just have to dig deeper to find out. To get into details, you must be looking at the sales & ads history.
With that in mind, let’s look at how to measure the performance of your paid ad campaigns.
DataHawk’s Sales & Ads History Report:
The report combines historical changes of account-level sales and advertising metrics with monthly, weekly, and daily views. By combining account-level sales and advertising metrics in a centralized view, this report builds a dashboard that provides a comprehensive overview of selling performance efficiency after advertising spend and before any other costs.
2. Why is it important to measure the selling performance efficiency?
How do you measure sales performance? Usually, this question is answered with traditional sales measurements goal achievement or quota attainment, but these aren't the only things that impact performance. While they give a very high-level picture of overall performance, they don't show how each part of a sales organization is performing. Leadership develops plans to guide the organization to reach its goals—but what are those decisions based on? More often than not, they're based on a gut instinct. Here's why this is bad.
This means every part of the sales plan, forecast, etc. is a best guess. Think of this in terms of your paycheck. What if the payroll department was in charge of paying you based on how much they expected you to work. Chances are you'd be pretty concerned that their decisions were based on their instinct rather than the actual amount of time you worked. The same applies to sales planning—you can't base the company strategy on gut instinct instead of data and expect performance to meet your expectations. It's unrealistic. You need to use your sales data effectively to make well-informed decisions and design accurate plans. So what information do you need to uncover from your metrics to measure sales performance fully and completely? We discuss below, the metrics to track to ensure you measure sales performance accurately.
3. Value in correlating your ads metrics
Cracking correlations between your Ad Spends and Ad Sales and indirectly, your ranking is significant. Increasing your price points to generate more revenue could work for you, but it is important that you keep testing. If this price increase results in decreasing your sales, you should always opt to strategize for ads to drive more sales until the product starts to really gain momentum. Thus, along with a competitive price point, you need to have insights into your advertising performance. It is imperative to have presumably collected data on your ads. This includes data on:
- Impressions and clicks
- CTR, CPC, Ad Spend, and Ad Sales
- Amazon ACoS, TACoS, Conversion Rate, and Total Sales
- Blended CPS and Ad Sales Weight
- Organic Sales, Organic Sales Weight, and Post-ads Margin
However, if your ACoS is not at a profitable level but is still contributing to an increase in organic sales, the overall purpose of the campaign is solved. Repetition impacts consumer behavior. Even though your product is ranking great, running ads to a keyword would still stimulate an increase in organic sales. There is a definite increase in organic traffic if customers are seeing your ads first. Advertising on Amazon is seen to be very effective. However, some shoppers may not want to consider the sponsored product results when conducting their search, but, seeing the same product flashing on the screen more than once tends to leave a sure impression. Using DataHawk, you can advantageously direct your advertising and ranking efforts to reach markets where you'll see the most benefit.
4. How to evaluate your ads performance?
Leverage DataHawk's Sales & Advertising History Report, to view historical advertising metrics on the top-spending ASINs with a monthly and weekly views.
Measure the period performance:
You have an overview of the total sales clocked during the given time, the number of units sold along with the number of unique ASINS. What is really interesting and important here is this chart, giving you a split between your organic and paid sales.
It’s definitely important to monitor if you are hitting that 70-80% organic mark, given that, ofcourse you are still running ads. You also have an overview of the ad spend and the split of each ad type and blended ROAS.
The annualized Run-Rate:
The Annualized Run Rate of Sales, Units & Ad Spend will help you project future revenue for the year, based on the last week & last three days’ average performance. The segmentation of this analysis abates the need to assume that nothing changes in the year ahead (no churn, no new customers, and no expansion, etc.)which is the case when you are looking at the Annual Run Rate considering only the Monthly Recurring Revenue.
Cohort Analysis with historical data
The historical performance section gives you details on how each month within the selected time period has performed for each of the metrics below.
What is super useful is the spikes in column 2, which allows you to quickly analyze the metrics without even looking at the numbers.
The average selling price is a very interesting metric to look at, as it gives you an idea of the range of most sold products, given that you have a large catalog with a big price range.
Clicks, Ad Spend & CPC: Advertising helps you analyze the metrics of your top ads and start drawing correlations. For instance, looking at how high your clicks go and correlating it with your ad spend, and understanding how your CPC increase or decrease is playing a role in this equation.
Paid Sales: You can dig deeper by looking at the dollar value of your attributed sales by looking at your paid sales.
ROAS & ACOS: The most important figures are the Roas and ACOS. With this data, you are able to analyze how much you are getting for each dollar you spent on running your ads and vice versa that is given by ACOS.
Sometimes by focusing on the bigger picture, you tend to neglect the granular opportunities for optimization — the ones standing behind those major results. For example, a combo of paid mobile ads, banner campaigns, and content marketing can drive a positive ad ROI. Yet, over 99.99% of banner ad budgets could be wasted. Normally, you can’t tell for sure unless you create a setup for measuring ad campaign effectiveness. Advertising campaigns have three goals: inform, persuade, and remind consumers about your product. The best way to determine whether your ads are achieving these objectives is to tie them to relevant metrics.
- Impressions (ad views) - the number of times your ad is shown to the viewer.
- Click-through-rate (CTR) - the percentage of times your ad gets clicked, when on display.
- Cost per click (CPC) - a dollar value you are paying for each click or another type of action (conversion, sale, etc).
- Conversion rate — the percentage of times your ads leads to a desired action (e.g. a sale or a subscription)
- Return on ad spend (ROAS) - the amount of revenue you earn for each dollar spent on ads.
The efficiency section has the ultimate numbers you want to look at. It's an overview of your overall ads performances where you are able to compare and correlate the blended ROAS figures with TACOS & blended CPC figures. You also have a weekly split for all the metrics above and also a daily view for the trailing 14 days.
5. Ads Metrics Correlation Charts
The charts based on all the KPIs & tables above will help you understand and correlate the most important ads metrics better.
- Monthly Sales & Units Sold
- Monthly Organic vs Paid Sales%
- Monthly Ad Spend & Paid Conversion Rates
- Monthly TACoS
6. Sales history of Top-selling products
While looking at the best seller rank for all your products is useful to predict their sales efficiency, it won’t give you the exact data, nor let you know what their sales were like a few months or a year ago. Remember, sales fluctuate all year, so analyzing an item’s current ranking won’t help. However, analyzing the Sales History of your top selling products will help you analyze & approach the Products that need immediate attention. With a period overview like this, you are able to compare the sales of the most performing and worst performing ASINs, using a single chart.
7. Campaigns Analysis
The campaign analysis is a snapshot of how your campaigns are performing in terms of impressions Clicks, CTR, ad spend, and all other important engagement & ads metrics.
Avoiding tunnel vision is why it’s so critical to occasionally step back and audit your campaign. Taking the time to audit your efforts, even if your account is performing well, is a necessity. A thorough audit will typically always reveal something helpful to improve performance. The above analysis will help you look at your Top 10 campaigns & analyze their performance on a single table.
Ultimately, you want to ensure that your advertising dollars are being spent wisely and producing the desired results, whether that is expanded product visibility, higher conversions, or increased sales. Analyzing these metrics correctly & correlating them helps you identify where improvements can be made so that you can optimize your ads & sales efficiency.
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