Amazon advertising business continues to grow at a rapid pace offering many opportunities for businesses to put their products in front of interested leads. When you invest in running sponsored ads to reach leads, you must monitor your Advertising Cost of Sales (ACoS).
When you advertise a product on Amazon, you are charged on CPC (cost per click) basis. If 10 people clicked on your ad and only one of them bought your product, then the total CPC you pay to Amazon for these 10 clicks is your cost of advertising to earn a sale. Amazon reports this cost as a percentage of the total sale value and terms it as Advertising Cost of Sale which is ACoS.
ACoS should be high or low?
- The lower your ACoS, the better your Ad is performing: a theoretical ACoS of zero would mean you spend nothing, yet make a sale.
- A high ACoS signifies an underperforming Ad. You are spending more to reach your target audience and are in danger of losing money on your Ad.
DataHawk Advertising is an Amazon PPC Software that will help you, monitor, analyze, and increase the performance of your Amazon Sponsored Ads and reduce your Amazon ACoS.
Here's what you can do,
- Monitor your Amazon Sponsored Products Ads performance for any given period and marketplace, and analyze data in daily, weekly, or monthly historical views.
- More comfortable and faster access to your Amazon Advertising metrics can help you increase sales, reduce ACoS, and understand the impact your ads have on your overall performance.
- DataHawk Amazon PPC Software Tool stores historical data and enables you to access months or years of data as opposed to Seller Central. It's time to switch.
- Robust Daily Analytics on your Amazon Sponsored Products Ads.
ACoS (Advertising Cost of Sales) is one of the most important metrics for evaluating and potentially improving your Amazon campaigns. It's the key performance indicator (KPI) for Amazon Pay Per Click (PPC) advertising and can tell you how your campaigns are doing over a given time, optimize your ad spend and help reduce your cost of sale.
It is a common notion among sellers that a low ACoS is what they should aim for.
While this does align with keeping your costs low for maximum results (and is an outcome we will help you achieve here), it does depend on what your strategy is for selling that given product.
Although a higher ACoS does have negative connotations, it can mean higher long-term profits, if it fits your strategy.
Value in leveraging ads data to monitor and analyze its impact on Sales
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 over your advertising performance. It is imperative to have a 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.
Here's a Use Case to leverage DataHawk's Advertising PPC Software, to monitor how your ads are performing with respect to your Ad Spend, and what other factors are influencing your ACoS.
Steps to use DataHawk SEA:
- Once you are logged in to the platform, you need to create projects and add the desired products and keywords to it.
- You can connect your ads Account to DataHawk by simply clicking on the ads Dashboard on the home page.
- Clicking on ADVERTISING from the navigation bar on the left will take you to the ads Dashboard, where you have all the important KPIs and tools.
- You could also directly access the dashboard from the home page.
Once you are inside the dashboard, you see all the KPIs for advertising on both, project as well as on the ASIN level.
1. Monitor and analyze your AdSpend graph v/s Ad Sales
The chart gives you a quick view of Ad Spend v/s your Ad Sales. This allows you to monitor your Amazon Sponsored Products Ads performance for any given period and marketplace, and analyze data in daily, weekly, or monthly historical views.
DataHawk Ads dashboard gives you a daily overview report of your ROAS. You can also compare your performance on a monthly or weekly view that will allow you to access, what kind of Ad strategy is working for you. For instance, here, you can see that for a $103 ad spend there was a profit of $204.92
On June 17, the ad spend was higher than the following day, but, the Ad Sales generated were higher on June 18. This could be a probable impact of Ad Spend of the previous day.
The best way to track the results is by having an instant view of ads Profit generated and the resultant ACoS from it. With DataHawk dashboard you can do it in just one click.
You could also choose to have a weekly or monthly reporting view with DataHawk. You need to simply select it from the menu on the Top and shoot your analysis.
You can compare the months or weeks for which your ads have performed the best and map your strategy accordingly. So, when you are planning on your sponsored ads, you know what worked best for you.
2. Determine the quality of your imagery, positioning, and keywords with CTR
Clickthrough rate reveals how often people who view your ad end up actually clicking it. CTR can be used to help you determine the quality of your imagery, positioning, and keywords.
The more relevant your keywords are to your business or offer, the more likely users will be to clickthrough. DataHawk gives you the average CTR, based on the number of impressions you get for the products you have spent on.
For example, here’s a chart that gives you a monthly view of the CTR. At DataHawk, we give you a CTR resulting on the basis of clicks divided by impressions that you have received.
You can see the percentage change in the KPI, with respect to, previous period. (top right corner)
Here’s an interesting fact about CTR
If your CTR changes, while your conversion rate stays the same, your ACoS will not change. This is because the change in CTR impacts both ad spend and revenue (via clicks) at the same rate. Increasing CTR is a good thing if your current ACoS on Amazon is below your break-even ACoS as it will increase your overall volume in terms of sales and profit.
However, a change in CTR can impact your ACoS if it causes a change in CVR. If you increase your CTR by attracting more clicks that are less likely to convert, your overall CVR will decrease. As a result, your ad spend will increase at a higher rate than your revenue, and thus your ACoS will also increase.
3. Understanding more traffic but less conversion Average Conversion Rate (CVR)
The average conversion rate tracks the amount of conversions you get from a certain ad. If you're seeing a lot of traffic from your ads, but not a ton of conversions, this could be a red flag. If CVR goes up, ACoS goes down.
If you're looking to improve your CVR, try leveraging negative keywords. Negative keywords are used to prevent your ad from being shown to anyone searching for a specific word or phrase. For example, if you don't want to attract people looking for oats biscuits, you may want to use "oats" as a negative keyword. Want more tips? Check out this resource.
Here’s a monthly view of the Conversion rate achieved.
There could also be cases where a shopper clicks the ad when searching for a product, “mobile cover”, for instance.
It is now the Product details Page, that will convince the shopper to purchase the product. If the shopper does not purchase after clicking the ad, the CVR would be negatively impacted for that keyword, driving up Amazon ACoS. You can identify this by monitoring your CVR, by product, on DataHawk.
You are able to easily compare clicks and impressions with Ad Sales as well as the units sold by those clicks.
(Keep reading to see how you can do it...)
DataHawk also allows you to monitor the other important KPI’s in a graphical manner on a daily, weekly, or monthly view:
A weekly view of the profits generated by sales spend.
4. Leverage product level information on advertising
DataHawk SEA product section allows you to have a detailed view of all the advertising KPIs on the product level. For example, here you can see that this product had a month to date spend of $4,362 for which the total sales have been worth $3,212. For this product, there has been a 78% change in the cost as compared to the previous period.
You could also apply filters to view the KPIs selectively.
Knowing which products are the least profitable ones, with the highest ACoS, can potentially help you reduce your overall ACoS. This allows you to group your products with a similar range of profit margins, which will help you identify your break-even ACoS. Like this, you can always know if your ads campaign is yielding profits or not, without having to use only one product per ad group, or to only group products with similar margins.
DataHawk automatically calculates your ACoS on the project(overview of ACoS for all the products you have sponsored ads for) as well as product level and pinpoints all the unprofitable products where you are losing money.
In many cases, with a lower bid and cost per click (CPC) your Amazon ACoS and profit per sold unit tends to be lower because your cost per sold unit is lower. However, a low bid also leads to fewer impressions and therefore fewer clicks and sales. Overall, when optimizing ACoS of your Amazon ads, you should think about both efficiency/profitability and sales/impressions volume.
Identify the best and the worst Performing products with DataHawk
DataHawk gives you a list of products that are the best and worst-performing products in terms of ACoS. With DataHawk’s Amazon seller dashboard you have quick access to the product level ACoS from where you can quickly identify which products have the highest and lowest ACoS. You also have the ability to view the list on a daily, weekly and monthly basis, for the desired range of time.
At the end of the day, PPC campaign metrics are a series of math equations. As you investigate what caused your Amazon ACoS to increase, approach each PPC metric one by one, and look for disproportionate changes. By conducting root-cause analysis on your PPC campaigns, you can focus on what’s driving your trends and determine your best course of action to achieve your ACoS goals.
Export Account data
When you click on “Export Account Data” on the top right corner, it allows you to export ads data as an Excel file and make your own analysis with your favorite data visualization tool of your choice on your computer.
Connecting multiple Ads Account
With DataHawk you have the ability to connect multiple accounts to DataHawk. When you click on “Connect a new Advertising Account” on the top right corner of the Integrations Page, “Connect your Amazon Ads Account” pop-up would appear for you to choose the region corresponding to your Amazon account.
You could reach the Integrations page to connect your ads Account through the following ways also:
- Through the workspace section on the Home-Page.
2. Through the settings icon on the bottom of the left navigation bar.
Enable/ Disable credentials :
You can also choose to enable or disable credentials whenever you want. Simply click on “Enable/ Disable credentials” under the “Actions” column.
DataHawk SEA enables you to connect one or multiple Amazon Advertising accounts to the platform to get an advanced and intuitive reporting of your daily advertising performance.
Monitor, analyze, and increase the performance of your Amazon Sponsored Ads and reduce your ACoS.
Here are some DataHawk’s Tips that will help you optimize your ACoS :
- Optimize your product detail page.
- Increase bids on high CVR keywords to continue to drive CVR for the total campaign
- Reduce bids on low CVR keywords to direct funds away from low-performance keywords
- Use Dynamic Bids to allow bids to increase or decrease in real-time based on the likelihood of conversion
- Use Placement Adjustments to allow bids to increase in real-time based on securing a high CVR placement in search
- Move zero CVR keywords to negative
At DataHawk, we have been constantly monitoring and trying to make updates so as to deliver methods to boost your sales and ad performance. Knowing that Amazon is becoming a more saturated market place every day, it is crucial to find ways to retain your competence in order to stay in the game, rather, rank well in the game.
If you want to sell on Amazon, you'll need Amazon selling tools.