You first need to know your metrics to understand where you can improve your Amazon PPC sales. Then you know how to influence these KPIs.
Whether beginner or professional: Sellers and vendors who sell on Amazon should master their tools, this also includes understanding what exactly is behind the most important KPIs (Key Performance Indicators). KPIs provide valuable insights into your product sales. Here are the nine most important Amazon Ads metrics for beginners, advanced, and professionals.
Impressions
Visibility is everything at Amazon. This metric expresses how often an ad for a product was displayed on the search results page after entering the appropriate search term (keyword). Not only beginners should attach great importance to this metric. Because: If product ads are not visible, they do not achieve good values in terms of impressions or subsequent click numbers and indeed no conversions. Result: no turnover.
Visibility on Amazon results from a bidding competition. However, relying solely on a high bid is not enough for Amazon to place your ad in the search results at number one. Why? Because Amazon’s A9 algorithm also evaluates the quality of your ads in the SERP ranking. It is characterized, for example, by the total number of sales of an article, the number, quality of customer reviews, and relevant keywords, which should also be consistent in the product listing, ads, and product detail page.
So pay attention to appropriate product and description texts in which selected keywords are embedded, and sound, size-optimized photos are available as well as ideally on product videos and, if necessary, on short loading times of your landing page. Then you will soon achieve measurable improvements.
Clicks
This metric shows the number of clicks you’ve clicked on your ad. Invalid clicks, such as accidental or irrelevant, are filtered out by Amazon within three days to prevent click fraud. From a retailer’s point of view, these clicks have no costs. The number of clicks provides retailers with information about how attractive an ad is from the customer’s point of view.
What to do if the number of clicks is low? We assume you have already won the bid rally and achieved corresponding impressions. If users do not click on your ad in the desired number afterward, it is likely due to the ad itself. The following applies here: optimize. The most important question: Does the product image fit? We know that the main reason for low clicks is usually due to insufficient product photos with which ads “open.” And always keep in mind that your images should also be attractive on the go.
Click-Through Rate (CTR)
The click-through rate describes the ratio of impressions and actual clicks in percent. If an ad is displayed 100 times and a user clicks on it, the CTR is one percent. By comparison, retailers achieve an average CTR of 0.4 percent on Amazon. A high CTR is by no means to be equated with a high turnover. If your product ad gets a lot of clicks, but few prospects buy afterward (conversion rate), something on the product detail page will drive customers away. This means that the CTR only gains significance in other key figures, such as the conversion rate (CR). Because this makes it possible to identify where exactly problems occur: for example when displaying in the form of too few clicks, or only later on the product detail page?
Cost-per-click (CPC)
This metric shows how much you paid per click on one of your ads. The number results from the keyword- and ASIN-based bidder competition for ad spaces.
Put simply; you win with the highest bid. While there are more influencing factors, bid size affects your chances of winning this race. With competitive advertising spaces and keywords, a CPC can also be triple-digit.
The most challenging task with Amazon Ads is determining the optimal CPC. If you only have a handful of products and keywords, placing bids manually may still be possible. But as soon as it becomes more complex, it is advisable to add a tool. The best systems work based on 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 a maximum turnover at a given advertising cost. Usually, such tools offer free test phases and beginner packages.
Conversions
Probably the most important key figure in the Amazon universe because Amazon refers to a completed purchase of a product on the marketplace as a conversion. Customers can purchase by clicking on a product ad or in the organic area of Amazon. The quality of the product ad and the product detail page can increase the number of conversions. The better a product listing on Amazon is maintained, the more likely a sale is.
A good product detail page meets the users’ expectations with good emotional image material, many explanations, and an attractive and appealing title.
Conversion Rate (CR)
The CR refers to the ratio of the number of clicks to the purchases (conversions) in percent. A five percent conversion rate, for example, means that out of 100 clicks, five lead to a purchase. A CR of five to ten percent in the Amazon universe is considered quite good.
CR can vary significantly between product categories. In the health sector, a CR of ten percent is quite common, while a CR of five percent is already considered good in the fashion sector.
Likewise, the advertising format influences the CR. When prospects click on a Sponsored Product Ad, the purchase probability is higher than when clicking on a Sponsored Display ad.
Advertising Costs of Sale (ACoS)
The ACoS indicates the ratio of your ad spending to the revenue from advertising. It results from dividing your ad spend on Amazon PPC by your income from PPC. The ACoS shows how economical your advertising campaigns are via Amazon PPC. The lower the ACoS, the lower the use of advertising costs for sale. However, the ACoS should be used with caution because it does not yet say anything about profitability. The ACoS does not consider any charges for the production or shipping of the product.
What does the ideal ACoS look like? This is based on the margins for your products. Rule of thumb: If your margin per sale is about 20 percent, the ACoS should not be too far away.
TACoS (Total Advertising Costs of Sale)
This key figure is an extension of the ACoS. While the ACoS only looks at the revenue from advertising, the TACoS focuses on all sales on Amazon (organic sales plus PPC sales). That is, the TACoS considers all sales, regardless of whether they are directly attributable to an Amazon ad or not. TaCoS compares these total sales with advertising expenditures.
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. This is good. Because in this case, I tend to have a large share of sales, which does not have to be financed by advertising.
Costs of Goods Sold (CoGS)
Cost of Goods Sold: This figure indicates the actual manufacturing costs of your products. They usually include:
- Material costs through production or purchasing
- Shipping and storage costs
- Labor costs
- Customs duties and charges paid if any
- Freight charges
You use the CoGS to determine the gross profit of your assortment. It can give you some insight into how high your ACoS can be.
Result
Keeping an eye on these metrics and monitoring and managing them manually takes considerable time and is only a tiny part of the work in an increasingly low-margin e-commerce landscape. However, tools can support your career, help you present and analyze the KPIs, and make decisions according to your strategies.
