Important metrics to monitor on Amazon PPC
There is always room for growth in Amazon PPC. You may not get enough impressions, an average click-through rate, a low-quality lead conversion rate, and excessive ad spend...There is no such thing as a perfect campaign. In order to succeed in this war of bids, continuous improvement and optimization are essential.
Nevertheless, you must first evaluate your current progress before you can make improvements. Providing insights into your performance requires finding the right data and analyzing it. Amazon PPC performance metrics are the most effective method of tracking your performance when using Amazon PPC. These key metrics should be understood, evaluated, and goals should be set based on them. This blog will cover the 7 main Amazon PPC metrics, what they mean, and how to analyze them.
If you are a new seller and have little understanding of metrics seek help from an amazon consulting agency to clear all confusion. Check us at Urtasker we have a dedicated team of PPC experts to assist you in any way possible. Now let’s get started on those metrics.
- Total Clicks
Clicks are what you pay for. Hence, it is the most significant metric on this list. A PPC advertisement on Amazon is known as a "Pay-Per-Click" advertisement, which entails paying Amazon a small amount for each click on a Sponsored Ad.
Obviously, your goal should be to increase clicks for your keywords. However, it is important to remember that a click does not automatically translate to a sale. Whenever you analyze your clicks per keyword, make sure not to get tunnel vision. Take into consideration sales as well as other metrics. Seeing how many clicks you get in Amazon PPC is only part of what you should be looking at. Those who provide Amazon PPC management service or some experienced seller can guide you better how many clicks matter on your Ad.
- Amount of impressions
An impression is the number of times that your advertisement is displayed and viewed by consumers. The Pay-Per-Click system of Amazon allows you to avoid being charged for impressions received. The results of your ad campaign are determined by impressions. What are your chances of securing a sale or a click if your ad isn't displayed? It is crucial to track impressions.
You may want to review your keyword list, for instance, if your campaign has been running for a week and you have not received any impressions. This means that if you are not getting enough impressions for that keyword, your bid needs to be increased.
Your Amazon PPC analysis depends heavily on impressions, as well as clicks. Impressions and clicks influence many other performance metrics.
Upon clicking an ad on Amazon, you are charged for each click, which translates into a CPC, or Cost-Per-Click, for short. CPC can be calculated using the following formula:
CPC = Ad spend / Total clicks
Amazon determines your CPC for you automatically, so you do not have to calculate it manually. In the case of a campaign that is run automatically, Amazon will assist in gathering CPC data for you over the campaign period. Prices vary according to product category and competitor. In Amazon, the CPC is the standard for keyword bidding, if your bid is below the CPC, there is very little chance that you will win.
- Click-Through Rate (CTR)
A click-through rate refers to the number of shoppers who clicked on your ad as compared to the number of impressions you received. In other words, it serves as an indication of how relevant your advertising is to a shopper's search query. A low CTR is likely to be achieved by an advertisement that receives a high volume of impressions but relatively few clicks. This may indicate either the following:
- There is nothing very compelling about your ad, such as if it has a poor quality image, low perceived value, or lacks reviews.
- Your target keywords are not very relevant and, as a consequence, you are not selling what the shopper wants.
Generally, the CTR is influenced by the image, title, number of reviews, and price of your ad, so simply optimizing them will boost your CTR. Additionally, your fulfillment method, including if you use FBA or FBM, as well as if you hold any Amazon badges, such as bestseller status, Amazon's Choice, etc. also affect your conversion rate.
Ultimately, a high CTR will lead to more traffic being sent to your listing and, therefore, will increase the chances of you making sales. That's why it is important to continually monitor and improve the conversion rate of your listings.
Adverting Cost of Sale, or ACoS, is another performance metric that should be taken into consideration. ACOS has long been a topic of discussion among Amazon sellers. Ad cost per sale is calculated by dividing total revenue by the amount of ad spend. It can be calculated as follows:
ACoS = ( Total ad spend / Total revenue) *100
For ad campaigns, you should keep the ACoS below 40% as a general guideline. Obviously, an ACoS between 10-20% is exceptional.
In contrast, ACoS is not as straightforward as some Amazon sellers would have you believe. Occasionally, a high ACoS is required, especially for products that are launching. In such cases, even an ACoS of 50-60% will suffice, provided it will result in increased sales over the long run.
How can you determine if your ACoS is effective? Based on your particular circumstances, we recommend setting an ACoS target and then sticking to it. You can use it to track the effectiveness of your advertising campaigns and achieve your marketing objectives.
Orders (or sales) and clicks are measured by conversion rate, or CVR. CVR refers to the number of clicks that resulted in a sale: How many clicked into a sale?
The CVR is calculated using the following formula:
CVR = (Total orders/ Total Clicks) *100
The performance metric is becoming increasingly popular among Amazon PPC advertisers. CVR should be as high as possible for a product, a keyword, or a campaign. The CVR for your advertising campaign should be at least 10% or you must do some troubleshooting.
It is clear that CTR and CVR are linked since they both involve clicks. When identifying red flags, you should analyze CTR and CVR simultaneously. If your CVR is low, but your CTR is high, it means that people are clicking on your ad, but not many are converting. Your ad must be optimized.
Total sales divided by total advertising spend is the return on advertising spend or ROAS. ROAS is calculated as the inverse of ACoS:
ROAS = Total Sales / Total Ad spend
When your ACoS is 20%, you have a ROAS of 5. ROAS is similar to ROI, which is Return on Investment. It is an easy and effective way to measure the effectiveness of your campaigns. In general, a ROAS of 3 or higher is considered good.
It is crucial to understand the performance metrics of Amazon PPC campaigns in order to optimize campaigns. As a matter of fact, tracking seven or more performance metrics takes a considerable amount of time. Couldn't you use your time more wisely if you automatically received consolidated data?
Fortunately, there are tools that can assist in this process. For you to collect all the information necessary, you will need a good Amazon PPC automation software. Contact us at Urtasker if you are seeking PPC management software or expert guidance on running PPC campaigns.