8 Crucial Amazon PPC Metrics You Can’t Ignore in 2024
If you are running ads on Amazon, you’ll come across a sea of data in your advertising console.
But does this mean you need to keep track of all that data?
Not really.
In this blog post, we will delve into a handful of the most important Amazon PPC performance metrics, explaining what they tell you and offering actionable tips to optimize and control them for maximum ad campaign impact.
1. Impressions
Impressions represent the number of times your ad is displayed on Amazon’s search results or product detail pages. It’s crucial to monitor impressions to gauge the visibility of your products among potential customers. A higher number of impressions indicates that your ads are being shown to a broader audience, potentially increasing brand exposure and driving traffic to your product listings.
Tips to Increase Impressions:
Utilize different match types: Use a mix of broad, phrase, and exact match types in your advertising campaign. Broad match types can get you more impressions, while phrase and exact will ensure your ads are shown for the most relevant searches.
Run different ad types: Utilize Sponsored Products, Sponsored Brands, and Sponsored Display campaigns to reach a wider audience across different placements of Amazon.
High-volume keywords: Focus on high-volume keywords that people searching for your product would use. Utilize Amazon Seller Central tools like Product Opportunity Explorer and Brand Analytics to identify high-volume, relevant keywords.
2. Clicks
Clicks refer to the number of times users click on your ads when they see your ads on search results or product detail pages. This metric measures the effectiveness of your ad copy, product image, and targeting in enticing potential customers to visit your product pages. Higher click volumes suggest that your ads are compelling and relevant to shoppers, driving them to engage further with your listings.
3. Click-Through Rate (CTR)
CTR is calculated by dividing the number of clicks by the number of impressions (Clicks / Impressions). It indicates the effectiveness of your ads in generating clicks relative to the number of times they are shown. A high CTR signifies that your ads are resonating with users and prompting them to take action, while a low CTR may indicate that adjustments are needed to improve ad relevance and appeal.
Tips to Increase CTR:
Target relevant keywords: The more relevant keywords are to your product, the higher the chance it has for people to click on your product.
High-quality images: Use professional product images that showcase your product clearly and enticingly.
A/B testing: Test different ad variations with different headlines and images to see which ones get the most clicks.
Promotions and offers: Consider incorporating promotions like coupons or special offers for your products to grab attention and increase clicks.
Aim for Top of Search: You should expect at least 1-2 times higher CTR on top of search results than other ad placements on Amazon, as these are some of the most prominent ad placements and are visible to everyone searching for the targeted keyword.
4. Conversion Rate
Conversion rate measures the percentage of users who click on your ad and subsequently make a purchase. It indicates the effectiveness of your product listings and offering in converting ad clicks into sales. A higher conversion rate signifies that your products are meeting the needs and expectations of shoppers, leading to a greater likelihood of purchase.
Tips to Increase Conversion Rate:
Optimized Product Listings: Ensure your product listings have high-quality images, detailed descriptions, and positive customer reviews. This builds trust and encourages clicks to convert into sales.
Competitive Pricing: Be mindful of your pricing strategy. While you don’t necessarily need to be the cheapest, aim to be competitively priced within your niche.
Fast Fulfillment: Fast and reliable fulfillment, like utilizing Fulfillment by Amazon (FBA), can significantly improve conversion rates.
Learn more about product listing optimization:
5. Cost-Per-Click (CPC)
CPC represents the average amount you pay each time a user clicks on your ad. It directly influences your advertising costs and ROI, making it essential to manage effectively. Lower CPC values allow you to acquire traffic and conversions at a more cost-efficient rate, maximizing your advertising budget’s effectiveness
Tips to Reduce Cost-Per-Click:
Refine bids: Regularly monitor and adjust your bids for different keywords. Increase bids for high-performing keywords and decrease bids for those with low conversion rates or high CPCs.
Focus on long-tail keywords: Generally, keywords like “light roast organic coffee beans” will have a lower cost-per-click (CPC) compared to shorter, broader terms like “coffee beans.” This is because long-tail keywords have less competition. Fewer advertisers are bidding on them, which can lead to lower CPCs for you.
Opt for Down-only bidding strategy: There are three main bidding strategies Amazon offers for Amazon PPC campaigns that influence your Cost-Per-Click (CPC):
Up and Down Bidding: This strategy automatically adjusts your bids up for clicks with a higher chance of conversion and down for clicks with a lower chance of conversion.
Down Only Bidding: As the name suggests, this strategy only reduces bids for clicks that are unlikely to convert, potentially saving you money on clicks that won’t lead to sales.
Fixed Bidding: This strategy maintains a constant bid amount that you set for your targeted keywords.
Our experience suggests that ‘down only’ bidding can often be the most effective strategy for achieving optimal CPC. This is because it helps you avoid overspending on clicks that are less likely to convert, while still allowing you to compete for clicks that have a higher conversion potential.
6. Advertising Cost of Sale
ACoS calculates the ratio of advertising spend to attributed sales and is expressed as a percentage. It measures the efficiency of your advertising campaigns in generating revenue relative to the amount spent on advertising. A lower ACoS indicates that your campaigns are generating sales at a more profitable rate, while a higher ACoS may suggest that you need to optimize your ads.
Tips to Improve ACOS:
Negative keywords: Add negative keywords to exclude irrelevant searches. This prevents your ads from showing for terms that won’t convert and saves you money.
Refine bids: Increase bids for high-performing keywords and decrease bids for those with low conversion rates or high CPCs.
Optimize placement modifier: Amazon lets you fine-tune your ad visibility by adjusting bids for three key placements: Top of Search, Product Pages, and Other Search Results. Your goal should be to drive maximum impressions on placements that deliver the best results for your campaigns.
7. Break-Even ACoS
Break-Even ACoS represents the ACoS threshold at which your advertising spend equals your profit margin, resulting in a breakeven point. It helps determine the maximum ACoS you can afford while still maintaining profitability. Understanding your Break-Even ACoS allows you to set realistic advertising goals and optimize ad campaigns accordingly.
Tips to Calculate Breakeven ACOS:
Find your product’s sale value. This is simply the price you list your product for on Amazon.
Calculate your COGS. This might involve adding up the cost of manufacturing your product, shipping it to Amazon’s fulfillment centers, and any Amazon fees associated with selling it (storage, fulfillment, etc.).
Plug the values into the formula. Subtract your COGS from your sale value, then divide that number by the sale value again. Multiply the result by 100 to express it as a percentage.
8. Total Advertising Cost of Sale (TACoS)
TACoS represents the ratio of total ad spend to total sales, including both ad-attributed and organic sales. It provides a comprehensive view of your advertising investment’s impact on overall sales performance, accounting for both direct ad-driven revenue and organic sales influenced by advertising efforts.
Tips to Improve TACOS:
Focus on ACoS: A lower ACoS (Advertising Cost of Sale for individual campaigns or products) directly translates to a lower TACoS. Apply the ACoS improvement tips mentioned earlier to achieve this.
Optimize organic ranking: A higher organic ranking means more sales without ad spend, lowering your overall TACoS. Utilize SEO best practices for product listings to improve organic visibility.
Track profitable products: Identify products with high-profit margins that can handle a higher ACoS while still contributing positively to overall profitability. This can help offset the impact of lower-margin products on TACoS.
Consider lifetime value: Factor in customer lifetime value (CLTV) when analyzing TACoS. Acquiring a new customer with a high potential for future purchases might justify a higher initial TACoS.
Final Thoughts on Key Amazon PPC Metrics
The world of Amazon Ads can seem complex, but by focusing on these key metrics and applying the provided tips in your advertising strategy, you can take control and set your campaigns towards success. Remember, PPC is an ongoing optimization process. Experiment, analyze, and refine your strategies to continuously improve your ad performance, lower costs, and achieve your Amazon advertising goals.
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