Are your PPC ads performing at their potential? The most efficient method is to check what you are using on your Amazon ACoS.
Good, low, high, bad…there’s so much talk among knowledgeable FBA sellers on the way that Amazon ACoS is used and how crucial it is.
An effective advertising strategy is crucial if you’re looking to achieve a return on investment goal and make sure you are on the right track to an enjoyable new year for your business world.
In this article, we’ll cover the most important elements of Amazon ACoS, how to analyze it, and the best way to ensure that your advertising strategy is performing for you, and not against you.
Amazon ACoS: What It Is and How To Calculate It
Amazon ACoS refers to the advertising Cost of Sales. It is the method used to calculate your advertising expenditure for all pay-per-click (PPC) advertisements. It is essentially, ACoS is the ultimate measure of the success of your PPC ads for Amazon.
According to Amazon the website, the Amazon website states that an Amazon FBA seller’s ACoS will be determined by dividing your advertising expenditure by your total ad revenue and then changing it into the percentage.
This is in contrast to ROAS which is merely the amount you get back from your advertising. This is a more detailed look:
ACoS: Ad spend (divided by) advertising earnings (total sales) (times) 100. Example: $30 (divided by) $100 profits = 0.3. Multiplied by 100 = 30 for your total ACoS.
ROAS: Total earnings from your PPC advertising campaign (divided by) the total amount of advertising spent on the campaign.
Important Points to Note About Amazon ACoS
When you are calculating the value of your Amazon ACoS to see if your PPC advertisements are performing in the manner you would like to you must of course consider the other aspects of your budget. This is a way of accounting for Amazon FBA fees manufacturing costs, inventory, and much more.
To maintain any form of profitability, you need every single cost including advertising costs not to exceed the total amount you earn.
Are There Even a ‘Bad’ ACoS?
When you’re looking for information about Amazon ACoS, you’ll likely find articles that talk about “good” and “bad” ACoS. However, the reality is that there isn’t a general ACoS that is good or bad.
Many elements affect the FBA retailer’s performance on Amazon, ACoS is only “good” or “bad” concerning your business. It’s a different metric that can be customized and used to assess the progress on the part of an Amazon business.
For an FBA seller, the most important thing to be focusing on is a strategy that works for you to ensure that your profit margins are maintained or the growth of your brand within the marketplace – whatever your goal is.
However, the “good” percentage when calculating your Amazon ACoS is typically between 15 to 20 percent. It’s a reasonable amount to keep in mind for those who want to remain profitable even after incorporating your inventory budget, manufacturing, and other factors.
Something to Keep In Mind.
When you are putting together your strategy for advertising for your business on Amazon to create PPC ads We suggest going through your goals for your business to ensure you can determine where you would like to be in your ACoS.
If you want to make huge profits and sales and profits, then you need a low ACoS. In contrast, If you aim to build brand visibility, then you should spend more on your advertising budget since the higher ACoS is more common in this scenario. A high ACoS is more concerned with visibility than high profits.
Ways to Lower Your Amazon ACoS
We’ve discussed that your profit margins have to be greater than your ACoS to be successful.
If you’ve analyzed your FBA goals for your business and would like your ACoS to be less Below are some great strategies to be aware of to cut down on the cost of your Amazon ACoS
Master your keyword strategy
Like many other aspects that make up the Amazon marketing strategy, the best outcome begins with a well-thought-out strategy for SEO and keywords.
A good place to start is to ensure that the content of your Amazon store’s content matches the keywords you’ve set on your website.
Go back to the basics and ensure that what you sell is listed in your shop and that you plan to build off those keywords as well as essential phrases.
Additionally, regularly reviewing the keywords that are most suitable for your store is among the most effective methods to create the bids you will need for PPC ads.
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Make sure you optimize your Amazon store
Titles and descriptions. Images and videos that are eye-catching. It’s a long process, however, constantly improving the performance of your Amazon store is essential to ensuring your success in the marketplace.
Being constantly updated with algorithms implies it is essential that the Amazon business page must be regularly updated with the latest videos that will attract your customer’s pictures that tell a story, as well as titles and descriptions of your products that explain the products you’re selling as well as the purpose behind it.
When a potential buyer clicks your PPC advertisement an optimized page will usually be more likely to result in a sale.
One of the best strategies to increase awareness and sales on the market is through Amazon-sponsored ads. Additionally, solid and useful data is essential for an optimal strategy.
SellerApp’s Amazon PPC Audit tool digs through all your data and cuts straight to the point.
If you aim to sell as many items as you can, you want your advertising dollars to be noticed and your ACoS percentage will increase. Optimized product listings offer increased potential for reducing your Amazon ACoS.