Whatever the size of your business, an effective Amazon Advertising strategy is crucial to success and increased sales on the Amazon platform. To ensure you’re getting the most out of your advertising budget, your campaigns need regular account management to maintain and enhance performance.
Amazon’s advertising platform provides you with many metrics to help you understand what is working and what could be improved. They’re designed to help ensure your campaigns are as efficient as they could be. Whether you are managing the campaigns internally or have outsourced to a reputable Amazon agency, having a good knowledge of what each metric means will help to drive the highest ROI.
Depending on the type of advertising you’re doing, ‘budget’ will mean something different. If you’re setting up sponsored product ads, your budget refers to how much you’re willing to spend each day on your campaign. If, however you have a sponsored brands campaign, your budget will refer to the total amount you’re willing to spend over the lifetime of the campaign.
Monitoring your budget regularly and making sure your account is set up correctly is essential as it will help ensure you don’t waste money. Over time, you’ll be able to adapt your campaign to conserve and make the most of your budget. For example, once you have data on how users interact with your ads, you’ll be able to tailor your campaign accordingly, scheduling what time of day and day of the week your ads are shown to maximise performance.
If your Amazon advertising campaign isn’t driving sales, then something’s wrong and needs to change. Don’t worry if you see peaks and troughs throughout the year, it’s normal that you’ll experience an ebb-and-flow as factors such as seasonal demand increase your product’s popularity. However, you should monitor your sales each month to identify which ads and products are delivering the most sales. That way, you can push more of your campaign budget into these to maximise ROI.
Clicks are how many individual users click on your ad. Clicks vary in cost based on competition and position on the page. The more people bidding on a keyword, the higher the cost will be to appear in the top positions for that term.
CPC (cost per click) is the price of a click on your Amazon ads. Whilst individual keyword costs will vary, your average CPC is calculated by dividing your total ad spend by the number of clicks. In order to achieve maximum visibility and gain the most clicks on competitive keyword searches, you have to outbid competitors.
CTR (click-through rate) is one of the most important Amazon advertising metrics to monitor. Click-through rate is calculated by the number of clicks on your ads divided by impressions (the number of times your ads were displayed in the search results). A high CTR shows that your ad is capturing the attention of potential customers and is fit for purpose, whilst a low CTR indicates your ad needs improving or is irrelevant to the keyword you are targeting.
Conversion rate gives you an indication of how many customers converted after landing on your product listing page. This percentage is calculated by dividing number of conversions by total ad clicks. This, paired with high CTRs, further indicates that your ads are being well received by potential customers and your ad copy is effective. High CTRs but low CVs show that your product listing page could need improvements.
ACoS (advertising cost of sales) is the calculation of how efficient your Amazon advertising is. Ad spend is divided by ad revenue then multiplied by 100 to get this ratio, giving you an insight into how well your ads are performing based on real figures and detailing how well your ads perform compared to your ad spend.
Amazon advertising metrics guide your account management team and help you fully optimise your campaigns based on real data. Your Amazon agency uses these metrics to tweak and enhance campaign settings and ad copy to get a high ROI for you.
Melody is a full-service Amazon agency providing set-up and management of Amazon advertising campaigns and brand stores. Contact one of our team to discuss your project!