The biggest task for any agency is proper reporting. If you are an advertiser, you have insights about different metrics which you need to translate to your clients in order for them to understand the growth of their account. So which are the most important PPC metrics on Amazon that show the real results of your marketing efforts?
The essential thing when it comes to reporting is that you keep track of trends over time. If you have a decrease of conversion rate in one day, it doesn’t mean that all of your efforts are useless. It is far more worrying if you notice that certain metrics have a descending trend during longer period of time.
ACoS – Real or blended?
One of the metrics that advertisers and sellers mention the most is spend as a percentage of total revenue. Some call it real, blended or total ACoS and it’s one of the most important metrics. The ACoS percent varies depending on the size of an account. Biggest accounts on Amazon which have high income, usually have smaller percent of ACoS. Smaller businesses which just started selling, have higher ACoS percentages and are ready to invest more and earn less in order to build their account. Anyhow, you should keep track of this metric and, at any account size. You should start examining your advertising strategy if your ACoS is constantly over the roof. There are also some things that influence this metric and are beyond our control like COVID 19 global pandemic which brought profit increase to some and financial loss to others.
Some sellers want to push the sales, or have new product launches so in that case ACoS is often higher. You should keep track of ad revenue as a percentage of total revenue which is a really similar metric to blended (or real) ACoS. So when you try to push sales, blended ACoS is going up, but total revenue is not increasing, then maybe your ads are not profitable that much since these metrics should grow together.
If you just started advertising on Amazon, read about the basics of Amazon PPC advertising.
CPC – Cost per click
You have certainly noticed how your CPC is going down these days. Why? Well, lots of new customers come to Amazon everyday. They click on your ad no matter the placement and sometimes move on, searching for other similar products. As more people click on your ad, Amazon thinks that you are relevant and it shows them to more people so your click -through rate is going up and the cost per click is obviously going down.
Talking about CPC in different countries, it depends on the number of Amazon customers, the size of the market etc. For example,US cost per click is the most expensive one, while Spain and Italy are among the cheapest with 30,40 Euro cents per click. One country that stands out in the positive sense is Mexico which has 9 cents US cost per click which is outstanding. These results vary from one country to another, but one country that comes as a surprise is Canada. It is more costly than anyone would think for a smaller population, its cost per click is a little above UK CPC which is around 70, 80 pence.
CPA – Cost per acquisition
When we mention CPA, you may think of cost per acquisition, but on Amazon this metric refers more to a cost per sale. You can track it in two different versions. One is for PPC only, which lets you track the money you spent on PPC to get one PPC sale. The other version refers to overall CPA, which is basically how much money you spent to get one sale.
Why should you track it on PPC and overall CPA level? When you divide total ad spend with total order items, you get an information about how much money you should spend on PPC. Sellers who advertise on Amazon usually skip this part and focus just on spend as a percentage of total revenue. By tracking two different versions of this metric, you will be sure that the money you spend on advertising gives you real results.
CR – Conversion rate
Amazon tracks conversion rate a little bit differently than the other advertising platforms. They have unit session percentages regarding the units being sold per one session. This metric is always higher than what we usually consider as normal conversion rate (on other platforms).
For example, if you buy one unit, or several ones, that is still a conversion. If you look at it from a typical conversion rate perspective, that percentage is going to be lower than units sold per session. On Amazon it doesn’t really matter how many units you’ve sold, it’s about orders. So every order counts as one conversion.
Find out how to create an overall PPC strategy for your account.
ROAS – Return on ad spend
You must have heard that ROAS and ACoS are almost the same metrics. ACoS is basically your ad spend divided with your revenue from ads. On the other hand, ROAS is your revenue from ads divided with ad spend. Interesting thing is that they are valued differently.
When it comes to, to return on ad spend, you have two variations. One variation is for PPC. The other one is when you divide total revenue with your ad spend. So basically it’s just like blended ACoS. To get the best ACoS results, you will aim to have this percentage as low as possible. With return on ad spend, it’s different since if you want to have a great ROAS, the higher percentage will mean better results. For example, if your ROAS is 5, that means that for every dollar invested you get $5 back.
If you have a downfall of some metrics, it doesn’t have to mean that your brand is going to end up with zero sales on Amazon. You have to monitor different metrics through some period of time and notice the trends that happen frequently. By taking a close look at the metrics, you will find the answer for drop in sales, high ACoS or higher CPC.
On the other hand, you have to be aware that some things will be out of your control, like global pandemic, so your metrics will go up or down depending if you have the best selling products or not. Analyze, keep track of your ups and downs and from that get useful insights of what you need to do next.
If you are interested in learning more about PPC metrics on Amazon, read this article.
About the author
Emilija Kovačević is a Content Writer and Social Media Manager at Sellers Alley. She has been involved with Amazon PPC for a year now. Before, she was working on content and social media strategies for different clients in the FMCG industry.