Amazon Advertising ACoS
ACoS is the most important key figure of your Amazon PPC strategy. In this post we will take a closer look at how to optimize your ACoS:
Why is it important to optimize ACoS?
Sponsored Products ACoS
ACoS – Advertising Costs of Sale – is a KPI for Amazon Ads that describes the sales you make through your Pay-Per-Click ads, in relation to the advertising costs. Thus, ACoS reflects the measurable advertising efficiency.
ACoS provides you with the necessary insights into revenue & costs
With an analysis of your ACoS, you can check, for example, whether your products promoted in Amazon PPC were sold often enough to keep your ad placements profitable. At the very latest when it turns out that your ads cause more costs than they yield profit, you should get to work and optimize your ACoS! This way you can avoid additional costs caused by products that convert less.
In the performance analysis, ACoS is analyzed at the macro level (account level, campaign level) on the one hand. However, more interesting with regard to the performance optimization of keyword bids is your ACoS on the micro-level. It refers to individual products and keywords.
When should I optimize ACoS?
The starting point to the optimum ACoS is the question of what I would like to achieve with my Amazon Advertising Ads:
- Is it the launch of a new product?
- Do I have a sale to promote?
- Do I want to push a product in particular?
A comparably high ACoS can pay off with advertising campaigns that revolve around a specific moment in time, such as, special offers, discounts, Black Friday, etc., which cause higher cost over a short period. Allowing more flexibility regarding campaign budgets and ad spend will typically boost your campaigns.
Is my aim to promote my product range on a long-term basis in order to continually increase the visibility of the products and to boost sales figures?
The ACoS should be as low as possible, but as high as necessary, in order to achieve the economic turnover targets. To reach this point, I need to optimize the ACoS towards my ACoS goal - either through continuous, manual tweaks and bid adjustments, or with the help of data-driven bid management technology.
How can I optimize ACoS?
As described in the example "half finger gloves" in our Ultimate Amazon PPC Guide, ACoS is directly related to revenue. If the numbers of sold products or successful conversion increase, your ACoS will also improve. Every step you take to sell your product with maximum success contributes to ACoS optimization:
- Amazon SEO: Landing page and Listing Optimization (Description, Title, Your name as a Seller/Vendor)
- Feed and Inventory Optimization
- Product Price
If ACoS of your campaign is higher, you should cut the problem at its roots with click price optimization. If you allocate more of your budget to successful keywords through higher bids, and at the same time cut it back for keywords that convert less well, the efficiency of your ads will increase and with it also your revenue in relation to the costs generated.
A financially sustainable cost distribution over all keywords is, however, not yet achieved. In order to really leverage your PPC ads, you need to make use of the full keyword spectrum. In the following section we will explain how:
What is the right keyword strategy to optimize ACoS?
To leverage the whole keyword range, you cannot stop at the long-tail:
Head, mid and long-tail keyword
The long-tail is made up of keywords with a usually higher word count, but which appear less often in search queries. In sum, they make up a considerable part of the search queries. The long-tail holds a lot of potential, because the best click prices can be expected here, while head and mid-tail keywords can lead to costly clicks. Long-tail optimization often fails due to the by definition low data availability for these keywords. In the machine learning approach, however, similar keywords can learn from each other and thus enrich the database. If long-tail keywords are leveraged successfully, the ACoS automatically improves due to their low click prices.
You create the best conditions for an ideal keyword strategy with the right campaign structure and maintenance:
Amazon PPC Advertising campaign setup
Want to get started? Be sure to check out our step-by-step guide for creating the ideal campaign setup by combining the gems of both campaign types – manual and automatized – in our Ultimate Amazon PPC Guide: "How can I structure Amazon PPC Campaigns?"