How to Improve Your Amazon ACoS
A lot of times we may be spending so much money but not actually converting. There are a lot of moving parts and components when it comes to Amazon ACoS. We’ll talk about the top 4 ways to improve Amazon ACoS using your Ads data.
Pooja Kothari: The Amazon advertising business is continuing 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 the leads, you must
monitor and optimize your advertising cost of sales. And that is precisely why we
are here today.
To start with, when you advertise a product on Amazon, you are
charged on a CPC basis. For instance, 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 total sale value and turns it into advertising cost of sale,
which is your ACoS.
Lower your ACoS, the better your ad is performing. And a
theoretical ACoS of zero will mean you spend nothing, yet make a sale. And a
high ACoS normally signifies an underperforming ad, you’re spending more to
reach your target audience and are in danger of losing money on ads.
Well, it is generally believed that having a low ACoS is what one should aim for.
However, it is dependent mainly on your, on your strategy for selling a product.
A 15 to 20% ACoS could be considered as a low ACOs and a decent milestone to
start with. And strategizing your ad spending could be tricky. I agree, but it is
majorly driven by what your needs are. So you need to take care of that. I will
touch a little bit here about low and high ACoS.
For instance, setting a low ACoS
could be a great strategy for selling a product that you feel does not need high
visibility or does not need bidding for visibility.
Secondly, selling a low converting
product is what you get. Setting your bids low, however, does not always
guarantee profits. It might end up being a loss. This is because you have a low
budget for ads, which is compromising your products visibility. For example,
spending low on a competitive keyword runs the risk of losing the auction for it.
While having a low ACoS is great for your profitability. Here’s what a high ACoS
can give you.
It can give you dominance in a niche, increase your products’ wisibility, help you
get rid of low selling products and increase your brand awareness. Now, the next
question that comes in is how to determine the right ACoS for your brands ad
campaigns. Well, there are mainly two parameters that will help you break even
and target ACoS are your two parameters that drive you towards the right ACoS
for your ad campaigns. Target ACoS is when all the profit is spent on advertising.
And the goal is to increase sales. And break even ACoS is only a percentage of
profit, which is spent on advertising. And the goal is to keep the sales
momentum going. So here’s what you need to make a note of. If your ACoS is
higher than target ACoS, it tends to increase your profit margins. Any ACoS
higher than your target ACoS, but lower than your break even ACoS is profitable,
but it takes a part of your profits. And any ACoS higher than your break even
ACoS is making a loss. How can you improve your ACoS is the question? Here’s
what you can do.
So to start with the first thing is keyword analysis. If you’re looking to find leads
that will convert, choosing the right keyword is the first thing that you wanna do.
When you choose the right keywords, you attract more leads that are interested
in your products without spending more money on advertising. It’s important to
review your keyword selection, make sure you include the most relevant
keywords in every ad group that matches the intent of your target customers for
the given product.
With the most relevant keywords, your ads may attract the
most relevant traffic and therefore higher conversion rates. And as a result,
lower ACoS. You can do it very easily using DataHawks’ keyword tracker tool. Let
me take you to the platform home in order to make it more clear and so that
you can view it. Here’s how you do it. So you need to select the product from
the given products list. As you can see here, this will take you to the products
page. So let’s select a product.
For instance, let’s take the product from Zinus. I’ve already opened it on another
page. Well, so here, once you reach the product detail page, you need to select
the keyword rank tracker tab here.
Once you do that, you have a view on how a
product has been ranking for keywords that have been tracked within the
project for the single for the selected period of time. For instance, for this 10
inch green team memory foam mattress by Zinus, you have the list of keywords
for which this product is organically ranking. The tool allows you to analyze the
product rankings across the first 10 pages. You could actually monitor the overall
position of the products with the page on which it is appearing. So for instance,
you can see here on 12th of August for the keyword memory foam mattress that
you see here. The product is basically a variation of the search product, which is
represented by the diagonal lines.
The actual product, if you see it here , is represented by a plain background. So it
is ranking with an overall position of seven on page one. So this gives you a clear
view across the first 10 search page results, and also the monthly search
volumes of the keywords as you see here, this allows you to select which
keyword to bid and prioritize your ad spendings. So now you know where you
are lacking or where you have a drop in your rankings and you can accordingly
mold your ads efforts. And here’s what you can potentially do, so the first thing
is reduce bids on keywords that you’re already ranking well on, or stop bidding
altogether on them, or redirect your ad spend on other relevant search queries
for which you are not ranking well. Now clicking on these keywords will take you
to their product detail page. So for instance, let’s go for a full mattress. Here’s
another page that I opened for you.
So this keyword has a monthly search volume of 74,000 and a keyword
competition score that we give you at DataHawk of 41%, which is a super strong
competition. This type of approach allows you to know and decide which
keywords you can bid, considering the competition and price to bid on them.
And how can you get that CPC data? Well, it’s super simple. So when you’re
inside a product detail page, let’s see here. So you’re inside a product detail
page. You need to click on the keyword, look up the tab here. This gives you
access to a list of keyword suggestions for which the product has ranked
organically, at some point. It gives you the ranking, the search volume, and most
importantly, the CPC data, right? You can also track the keywords that you find
relevant, and you are not already tracking, which will allow you to monitor
which products are ranking for this keyword.
This will let you monitor where your competitors are ranking, and if you have a
chance to rank higher. And now the next step will be the most interesting way of
playing with ACoS, which is identifying the right ASINs to bid on. Amazon allows
you to bid on your editors products also, this means that you can target your
competitor’s products on Amazon to upload on their product pages. Let’s take
an example, for instance, this one, you see the Zinus product and you see how
Classic Brands and Vibe are bidding on this, on this particular product, right? So,
the DataHawk keyword tracker tool will allow you to do this analysis in a very
simple way, from the list of track keywords, you can select the relevant keyword
that you see and see which products are ranking on it. So simply you need to go
on the track keywords page, which is this one and click on a relevant keyword.
For example, let’s take a twin mattress. All right. So this will give you a list of all
the products ranking for this particular keyword.
Now bidding on a competitor’s trademark and brand names are powerful tools,
right? Appearing alongside a competitor’s product will provide another option
for the shoppers and an opportunity to win over an otherwise loyal customer for
the competition. Right? Here’s a quick tip. What you could also do is bid for your
own products on your own product pages, so as to increase the visibility of your
products. You can use this method to protect your brands from competitors who
are playing offense on Amazon. You wanna see an example. Well, here’s an
example. You see this NYX concealer, and if you go down you see, so basically
these are all the product products and the sponsor products related to this item
where they have targeted their own products to ensure more and more
products of their brands appeal on their product page. This basically allows you
to box out the competition on your product pages and prevent shoppers from
second guessing prior to adding to the cart, right?
Even if other products appear and appeal to them, they will still keep the
customer. And with these optimization tips, you will surely be able to run
successful marketing campaigns on Amazon. Now that we have initiated our
ACoS optimization efforts, it is very important to monitor the impact of it. So let
me take you back to the presentation where we have the success overview.
Now, the most important thing that you need to take care of is correlating your
ad spend and your ad sales. You must know how it is impacting. You need to
determine the quality of your keywords and imagery through CTR, which is your
clickthrough rate. You need to monitor your CVR, leverage product level
information on ads and identify the best and worst performing products. And
you can do all this by the ads dashboard that we have on our platform. So I’m
taking you back to the platform right here. All right. So the chart that you see
here gives you a quick view of ad spend versus your ad sales.
This allows you to monitor your Amazon sponsored product ad performance for
any given period and marketplace and analyze data in daily, weekly, or monthly
historical views. DataHawks ads dashboard gives you a daily overview report of
With this, you basically compare your performance on a monthly
or a weekly view that will allow you to access. What kind of ad strategy is
working for you? For instance, if you see here you can see that for an ad spend
of $6,980, there was a profit of 14,930. If we scroll a bit more, you see on August
19th, the ad spend was higher than the following day, which is 20th of August.
But the ad sales generated were higher on the next day. This could be a problem
impacting ad spends of the previous day. Right now, the best way to track the
results is by having an instant view of ads, profit generated, and result in ACoS
With DataHawk’s ads dashboard, you can do it in just one click.
Using this, you can compare the months or weeks for which your ads have
performed and map your strategy accordingly. So when you’re planning on your
sponsor ads you know what works best for you, right? You have below the
expansions and graphs of each of the KPIs mentioned above. For instance, here’s
a chart of CTR 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. So you can see the percentage of change in the KPI here, with respect
to the previous period. This is a very interesting fact about CT that I’d like to
share. So if CTR changes while your conversion rate stays the same, your ACoS
will not change. This is because the change in CT impacts both ad spend and
revenue. At the same rate. Increasing CTR is a good thing if your current ACoS on
Amazon is below your break even ACoS, as it’ll increase your overall volume in
terms of sales, profit. However, a change in CTR can impact your ACoS if it
causes a change in your conversion rate.
So if you increase your CTR attracting more clicks that are less likely to convert
your overall CVR, that is your conversion rate will decrease as a result, your ad
spend will increase at a higher rate than your revenue. And thus your ACoS will
also increase. Now DataHawks SE product, SE dashboard also has a product
section, which allows you to have a detailed view of all the advertising KPIs on
For instance you can see here, the product by Beat has a cost of
$6,751 in the past one month which gave a sale of 5,846. And you can also see
the percentage change in all the KPIs that are here on a product level. Also you
could apply filters to view the KPIs selectively, so you could choose whatever KPI
you wish to monitor and do your analysis on it. There’s another very interesting
feature that we have on this particular dashboard. And that is it here. If you go
back on the dashboard, you see the best performing products and the worst
performing products. So basically this provides you the list of all the best and
worst performing products in terms of ACoS.
So with this dashboard, you have quick access to the product level ACoS from
where you can quickly identify which products have the highest and lowest
ACoS. And you have the ability to view them on a daily, weekly, and monthly
basis and offer a desired range of time. So you can see the percentage ACoS
here, and the products here, right? Well, at the end of the day PBC campaign
metrics are a series of math equations. As you investigate what caused your
Amazon ACoS to increase, approach each PBC matrix one by one, and look for
disproportionate changes, right?
By conducting root cause analysis on PBC
campaigns, you can focus on what’s driving your trends and [inaudible] your
best course of action, to achieve your right. All right. So this was it for me. And
now we have Prateek with some amazing action types that will help you
optimize your ACoS further. Right. Go ahead. Go ahead.
Prateek: All right. Cool. So let’s look at the first one, optimize your product detail pages.
Well, this is a no brainer, right? Because if your product detail pages are
optimized, your ACoS is normally down because your organic rankings go up,
right. Which means your product just starts showing up better organically. And
for that you know, we recently did, this subject is actually pretty close to me,
very dear to me because I recently also did a podcast on this, where basically,
you know, it comes down to the signs and the art. And I call it the signs because,
you know, you have to optimize the keyword, which is a little bit like signs. And
then the art is creative stuff, you know, your images, your product titles and stuff
like that. And if you have all the right content there, then you naturally just start
to rank better organically. And your ACoS goes down, right? Number two,
increase bids and high converting keywords to continue to drive CV for the total
Again, this is a no brainer because if a certain keyword is leading to lots of
conversions, then you want to increase the bids on those keywords because who
knows, I mean, that might just lead to more impressions, more clicks and more
traffic, and more sales. So, yeah. Number three, use dynamic bids to allow bids
to increase or decrease in real time based on the likelihood of conversion. Yes.
So when you choose to go with automatic ads, you have multiple options. My
favorite option when you’re starting out is to use dynamic bids, because then
that gives the right to Amazon, you know, to change the bids and increase or
decrease them depending on the likelihood of conversions. If they think that you
know your product is likely to convert, then they will, you know, bid higher in
real time. And I think they can bid up to 100% higher. So, yeah, that’s that.
Number four, if a single SKU accounts for a majority of spending a specific
campaign, move it to its own campaign.
Well, yeah, again, you know, that’s because this particular product just requires
more attention. You know, so you may want to move it to a separate project or
together or a portfolio, as Amazon calls it. Number five, remember that if you
see a product’s name as a search term, it potentially means that your ad was
displayed on a competitor’s product page, which means that you know yeah,
this is self explanatory. Your product showed up on a competitor’s product page.
And as a result, Amazon just shows you know, that product on the report page
on Amazon. So yeah, those are the five actionable tips from me. I hope you
enjoyed this webinar. Now is the time for Q and A. If you have any questions
Pooja Kothari: Feel free to write to us on our LinkedIn page or email us if you have any
questions regarding this webinar or any questions on Amazon. Thank you so
much guys for attending the webinar. We’ll see you in the next one.
Prateek: Bye, bye. Thank you so much