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Saumitra Pandey: Top 8 Amazon Advertising Metrics Sellers Should Know

Feb 11, 2023

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We at SalesDuo have a thorough grasp of our clients' Amazon advertising effectiveness. Here are the critical metrics to monitor  to maximize ROI:

It can be challenging to manage them all, especially when time and money are limited, with so many Amazon performance standards to fulfill and policies to adhere to. Luckily, Amazon provides several indicators to assist sellers and brands in analyzing ad effectiveness. However, knowing what these metrics represent, how they are computed, and how to apply these statistics to find areas in need of improvement is difficult. Utilizing these metrics will  give you insight into your Amazon account health including everything from product pricing, marketing effectiveness, customer satisfaction and more. But which metrics should be monitored the most?

We lay out the top 8 critical Amazon advertising KPIs that marketers should be aware of to optimize the return on their ad spend.

  1. Impressions


Impressions are the number of times your ad is shown to shoppers, allowing them to view it. While this figure is significant, it is not a true indicator of performance because it does not tell how many buyers found the advertisement useful. If your impressions are high, it signifies that your ad is getting a lot of attention. You do not pay for impressions. Only clicks — unless you choose VcPM pricing for your ads, which is currently only available on SD ads and requires you to pay for every 1000 viewable impressions. So the more impressions, the better, and it will not affect your ad budget if you choose the CPC (cost per click) model.

  1. Clicks & CPC (Cost per click)


Clicks are exactly what they sound like: the number of times potential consumers have opted to click on your ad. Each click costs money since Amazon charges for advertising with each click.

The cost per click (CPC) is the amount you pay for each click generated by your ad. It is determined by dividing your total ad expenditure by the number of clicks. You will only pay a few cents more than the next-highest bid price for the same term, regardless of how high you bid. For example, if you bid $2 and the next highest bid was $1, your CPC would be  $1.1–$1.2  even though your bid was $2. Naturally, a lower CPC equates to a larger ROI.

  1. CTR (Click Through Rate)


CTR is an important indicator for determining the effectiveness of an advertisement. It varies according to the type of term, for example, branded vs. unbranded search terms. CTR is calculated by dividing the number of clicks by the number of impressions.

A high CTR indicates that your ad is capturing the attention of consumers and that it is highly engaging, whereas a low CTR indicates that not enough customers find your ad interesting enough to click on it, depending on what they are searching for. This may imply that your chosen keywords should be modified for greater relevance. or you need to add negative keywords - irrelevant keywords on which your ad is getting triggered.

  1. CR (Conversion Rate)


CR is one way to gauge a campaign's success. It shows how many buyers bought your product after visiting the product detail page. The conversion rate is calculated by dividing the number of conversions (orders) received by the total number of ad clicks. This number might reflect how relevant your advertisement or product detail page is. If this figure is low, it may indicate that your keyword targeting or product listing needs to be improved.

  1. AMS Sales


AMS sales, also known as ad revenue, is the amount of money earned by your ad based on total sales figures of purchases, also known as ad conversions. The gross income is determined by the amount of money received, including discounts, returns, and refunds. This figure indicates how much money Amazon buyers (presumably) paid for your AMS-advertised items. This is not the actual amount that advertisers will get; rather, it is the total sale of products sold as a result of advertisements.

  1. AMS Spend


The entire amount of money spent on advertising every day is referred to as "ad spend." It may also be split down and measured by account, campaign, ad group, and keyword. Ad budgets vary based on the advertising approach.

  1. ACOS (Advertising Cost of Sales)


ACOS is the statistic advertisers use to assess advertising effectiveness. It is determined by dividing ad spend by sales and multiplying the result by 100. ACoS is the ad spend-to-sales ratio that displays how well your ads perform in comparison to your ad expenditure. It is determined by a variety of criteria, including your company's goals, campaign structure, product life cycle, profit margins, and so on.

A lower ACOS indicates high returns on ad spend.

It is critical to identify the net profit margin you want to achieve with each product after ad expenditure  to calculate the goal ACOS for each product.

  1. TACOS (Total Advertising Cost of Sales)


TACOS calculates ad costs in relation to overall revenue. It provides insight into the entire effectiveness of your ad campaigns and enables you to examine how your advertising directly affects your company's development and, more particularly, organic sales. TACOS is calculated by dividing total ad spend by total sales and multiplying by 100.

TACOS varies from ACoS in that it provides a more comprehensive view of revenue growth from advertising. Based on your advertising ROI, it provides a genuine representation of how well your efforts are functioning.

Endnote

You may get a deep and broad understanding of a campaign's performance by knowing what each of these indicators means and how they are determined. You should constantly assess the performance of each campaign because they each have different elements, such as keywords, bids, and more.

In the end, you want to make sure that your advertising budget is being used effectively and yielding the expected outcomes, whether those outcomes be greater product visibility, improved conversion rates, or higher sales. Correctly analyzing these variables also enables you to pinpoint areas for improvement, enabling you to successfully and efficiently optimize your advertising.

With ex-Amazon experts as staff, Salesduo has the expertise that no other firm has to increase businesses’ visibility and revenues. The team has tirelessly researched the top trends and strategies to differentiate your brand from others in the new year to give your business a competitive edge and increase sales. For more information, visit salesduo.com.

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