The Amazon advertising business maintains its growth at a rapid pace providing various opportunities for businesses to place their products in front of responsive leads. Monitoring your Advertising Cost of Sales (ACoS) is a must when you aim to reach leads by running sponsored ads.
When advertising a product on Amazon, you are charged on a cost per click basis or CPC. If five people clicked on your ad and merely one of them purchased your products, then the total CPC Amazon charges you for these five clicks is your cost of advertising to earn a sale. Amazon discloses this cost as a percentage of the total sale value and terms it as ACoS.
ACoS should be high or low?
- A high ACoS shows that your Ad is underperforming. You are employing more to attain your target audience and are risking to lose money on your Ad.
- The lower your ACoS, the better Ad performance you get: a theoretical ACoS of zero would indicate you’re making a sale without spending anything.
The Advertising Cost of Sale is a crucial metric for assessing and potentially enhancing your Amazon campaigns. It is the key performance indicator (KPI) for Amazon PPC advertising and gives you an overall picture of how your campaigns are performing.
Even though a higher ACos does contain negative connotations, it might mean greater long-term profits if it suits your strategy.
Leveraging ad data to analyze and monitor its influence on Sales
Along with a competitive price point, you must have insights over your advertising performance. It is important to have reasonably collected data on your ads. This involves 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
Yet, if your ACoS is not at a profitable level but is still contributing to an increase in organic sales, the campaign’s overall objective is achieved.
Repetition impacts consumer behavior. Although your product is ranking great, running ads to a keyword would still inspire organic sales growth. There is a definite increase in organic traffic if customers are seeing your ads first.
Advertising on Amazon is, in general, very effective. However, some consumers may not click sponsored results or may disregard them when conducting their search. Even so, seeing the same product flashing on the screen more than once tends to leave a confident impression. Using DataHawk Analytics Software, you can advantageously direct your advertising and ranking efforts to reach markets where you’ll see the most benefit.
About The Guest Author:
DataHawk Amazon Advertising is an Amazon Analytics Software that will help you monitor, analyze, and increase the performance of your Amazon Sponsored Ads and reduce your Amazon ACoS. DataHawk 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.
Michael Zagare is a serial entrepreneur, a recovering physical therapist, and the founder of PPC Entourage.
Mike has an unquenchable thirst for knowledge in all things Amazon, and loves sharing that knowledge with other sellers to help them take steps towards personal and financial freedom.
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