What Is ACOS and How It Impacts Amazon PPC Optimization
As an Amazon seller, if you are looking to boost visibility and sales, Pay-Per-Click (PPC) advertising is essential. Just like a PPC ad helps websites attract more traffic, an Amazon PPC ad helps you get noticed by customers. As a professional Amazon PPC optimization service in the US, we have compiled this guide to help you understand one of the most critical aspects of PPC campaigns: Advertising Cost of Sales (ACoS). As an Amazon seller, you must have a clear understanding of how you can optimize your campaigns effectively. ACoS is key to maximizing ROI from your advertising efforts. So, let’s delve into this chapter in detail.
The Importance of ACoS in Amazon PPC
ACoS is a crucial metric (represented in percentage) that helps Amazon sellers assess the performance and profitability of their PPC campaigns. It calculates the ratio of ad spend to sales revenue generated from the particular ad. A low ACoS indicates an effective investment in ad spending. On the other hand, a high ACoS means that the investment in the ad is less effective. In other words, the cost of the ad is higher than the sales generated from the ad. At this point, you know that you must make some adjustments to your ad to improve profitability. A professional Amazon PPC optimization service is your best bet in improving your ad spend especially at this stage.
What is Considered a Good ACoS?
A good ACoS percentage depends on different factors including product margins, business goals, and competition. But to give you a reasonable number which indicates healthy profit, you should aim for below 30%. That said, products that have slim margins and a higher ACoS might still be acceptable if they result in overall profitability.
How to Lower ACoS Percentage?
Amazon sellers must aim at lowering ACoS percentage to optimize their PPC campaigns. Here are strategies professional Amazon PPC optimization service recommends to achieve the goal:
Optimize Keywords: Target relevant and high-converting keywords to improve your keyword strategy. It helps to use tools such as Amazon’s Keyword Research and other third-party tools to identify profitable keywords.
Manage Bids Effectively: Make a habit of adjusting your bids on a regular basis considering the performance data. Increase bids for keywords that are performing well and lower or pause bids for keywords that are underperforming.
Focus on Negative Keywords: Use them to remove irrelevant search terms that waste your budget and do not deliver sales.
Optimize Ad Creatives: Work on your ad copy, images, videos, and calls to action to improve CTR and conversion rates.
Improve Campaign Structure: Organize your campaigns into targeted ad groups with specific themes. This will help you have better control over the optimization of your ad spend.
Setting ACoS Targets Based on Product Margins and Business Goals
The ideal ACoS percentage differs depending on specific business objectives and product margins. It is easy for sellers with a high-profit margin to aim for lower ACoS. However, those with narrower margins may need to accept higher ACoS to remain profitable. In addition, your business goals such as launching a new product or maximizing overall sales will impact the ACoS result.
You can align ACoS targets with specific product margins and business goals to optimize your PPC campaigns. You can consider hiring an expert Amazon PPC campaign optimization service to yield the best results. This will make sure that your ad spend is driving sales and is also contributing to long-term profitability and business growth.
Avoid Analyzing ACoS In Isolation
ACoS is not the only critical metric that helps in optimizing your PPC campaigns. Hence, this metric should not be used alone to determine the end results. ACoS should be analyzed in conjunction with other essential metrics such as:
Click-Through Rate (CTR): A high CTR means your ad aligns with what the target audience is looking for. If you combine a high CTR with a low ACoS, it indicates effective ad targeting and compelling ad content.
Conversion Rate: Analyzing ACoS in relation to conversion rate helps assess the efficiency of ad spending in driving actual sales. A low ACoS combined with a healthy conversion rate indicates successful advertising campaigns.
Using Historical ACoS Data for Refining Bidding Strategies
Historical ACoS data is a valuable resource for improving bidding strategies and campaign features. As an Amazon seller, if you examine the trends over time, you can identify patterns between ad spend and sales performance. For example:
Identifying Seasonal Trends: Past ACoS data can help you understand seasonal variations in campaign performance. You can adjust the bidding strategies accordingly to make profits during peak periods and minimize spends during off seasons.
Optimizing Keyword Bids: Historical ACoS data analysis helps sellers recognize well-performing keywords with low ACoS. Consider allocating more budget towards these keywords and adjusting bids for underperforming ones. This will help you optimize ad spend and enhance overall ACoS.
Best Practices on ACoS Management
ACoS management calls for a balanced approach that aligns with your business objectives and market conditions. Here are some of the best practices recommended by expert Amazon PPC optimization service:
Establish a Balance Between Aggressive and Conservative ACoS Targets
Take your business goals, product margins, and competitive landscape into account to set a realistic ACoS percentage. Although aiming for a low ACoS is good, it is essential to keep a balance that makes sure you are not compromising the visibility and sales volume while making profits.
Adjust Bids and Budgets Based on ACoS Performance Data
Keep a regular check on ACoS performance and adjust keyword bids and campaign budgets accordingly. Increase bids for keywords that contribute to low ACoS and decrease bid or pause keywords that raise the ACoS without generating sales.
Test and Optimize Campaign Features Regularly
Implement A/B testing to assess ad creatives, bidding strategies, and targeting options. Ensure you are optimizing campaign features on a regular basis based on the performance data to identify the most effective tactics that can lower ACoS and maximize ROI.
Tools and Resources for Monitoring and Optimizing ACoS
Effective monitoring and optimization of Advertising Cost of Sales (ACoS) in Amazon PPC campaigns require the right tools and resources. Amazon sellers can leverage various platforms, including Amazon PPC dashboards and third-party analytics tools, to gain valuable insights and make informed decisions for ACoS optimization. In addition, automated bidding tools can help streamline the process, enabling efficient ACoS management. Professional Amazon PPC optimization services can also help you get access to the best tools in resources.
Amazon PPC Dashboards and Third-Party Analytics Tools
Amazon provides robust PPC dashboards within Seller Central and Advertising Console, offering detailed insights into campaign performance, including ACoS, CTR, conversion rates, and more. Sellers can utilize these dashboards to monitor ACoS trends, identify top-performing keywords, and optimize bids based on performance data.
In addition to Amazon's native tools, third-party analytics platforms such as Sellics, Jungle Scout, and Helium 10 offer advanced features for monitoring and optimizing ACoS. These tools provide comprehensive campaign analytics, keyword research capabilities, and automation features that enhance ACoS optimization efforts.
Using Automated Bidding Tools to Optimize ACoS Efficiently
Automated bidding tools automate keyword bid adjustments based on predefined rules and performance targets. Sellers can set ACoS targets or ROAS (Return on Ad Spend) goals, and these tools will adjust bids in real-time to optimize ACoS efficiently.
Popular automated bidding tools include:
Ad Badger: Offers AI-driven bidding automation and campaign optimization features tailored for Amazon PPC.
PPC Entourage: Provides advanced bid management and optimization tools to maximize ROI and minimize ACoS.
Ignite by Seller Labs: Employs machine learning algorithms to automate bidding and optimize ACoS across Amazon PPC campaigns.
Common Mistakes in Amazon PPC and ACoS Optimization
Despite the benefits of ACoS optimization, sellers often encounter common pitfalls that hinder campaign effectiveness and profitability. Amazon PPC optimization services recommend recognizing these mistakes for refining PPC strategies and achieving optimal ACoS performance.
1. Overlooking the Impact of ACoS on Overall Profitability
Some sellers prioritize sales volume over profitability, leading to inflated ACoS and reduced margins. It's essential to strike a balance between sales growth and profitability by setting realistic ACoS targets aligned with business objectives.
2. Failing to Align ACoS Targets with Product Pricing and Margins
ACoS targets should be tailored to product pricing and profit margins to ensure sustainable advertising ROI. High-priced items may lead to a higher ACoS threshold, whereas lower-priced items require stricter ACoS control to maintain profitability.
3. Neglecting Continuous Optimization and Monitoring
Optimizing ACoS is an ongoing process that requires continuous monitoring and adjustment. Failing to regularly analyze campaign performance and refine strategies can result in missed opportunities for cost savings and revenue growth.
Get Amazon PPC Optimization Service Tailored to Your Individual Goals
YourSeller is an established Amazon marketplace management service based in the US providing comprehensive business optimization solutions to e-commerce sellers. With our experience and expertise, you can refine your advertising strategies and ensure success.
Whether you are looking to optimize your existing PPC campaigns or want to start a new advertising initiative, we have tailored solutions that can unlock your business potential. Get in touch with us today for a personalized consultation with our PPC experts. Contact us at +1 510 648 3933 to leverage our Amazon PPC optimization service or other Amazon advertising services.
